Delaware Legislation Would Expand Solar Requirement

Posted July 15th, 2010 by SRECTrade.

New legislation which would modify Delaware’s Renewable Portfolio Standard (RPS)  has passed in both of Delaware’s legislative bodies and is awaiting the Governor’s signature. This bill, titled SS1 for SB119, will change the RPS by increasing and extending the required minimum percentage of renewable energy supply and contribute to the growth and longevity of the SREC market in Delaware.  The RPS currently requires that 20% of energy come from renewable sources. The new legislation will expand this requirement to 25% by 2025 and will also increase the proportion of renewable energy which must come from solar generation each year. For example, for the 2011 compliance year the solar requirement will change from .048% of the renewable energy mandate to .2%.

Key Changes:
1. The number of SRECs required will dramatically increase
2. The SACP which sets a ceiling price for SRECs will be raised to levels competitive with other states
3. The municipal utilities that have been exempt thus far will now be required to comply

The alternative compliance payment (ACP) an energy supplier must pay if failing to meet the solar requirement will also increase following this bill being signed into law. The solar ACP will strengthen from $250 to $400 per missed SREC, with this payment increasing to $450 if an ACP were paid in the previous year and to $500 if non-compliance continued for a third year. This will effectively raise the ceiling on SREC prices in Delaware to $400+.

The legislation also adds a premium to SRECs produced by systems created by in-state resources.  An additional 10% credit toward meeting RPS requirements is granted for any SREC obtained from a facility constructed or installed with at least a 75% in-state workforce.  The same credit is granted for systems with at least 50% of their components manufactured in Delaware.  These provisions together will likely lead to a premium on SRECs from in-state solar systems.

Though well-intentioned, it is unclear how the state will track this premium given that it essentially will result in two markets for SRECs… one for normal SRECs and one for the special “Made by Delaware Labor” SRECs.  Other states have tried to implement various types of multipliers with limited success and more likely resulting in more trouble than their worth.  However, it could be particularly useful in giving an advantage to local Delaware companies on the larger projects that face tough competition from well-capitalized out-of-state developers.

Nonetheless, the intent is clear: Delaware wants to develop a strong solar industry in-state.  This is a positive sign for the solar market there and in some ways a contrast to other states.  SREC markets have a variety of benefits to a state.  Besides a move to renewable energy, a properly setup program will also encourage the development of a commercial and residential solar industry.  In some cases,  like New Hampshire and North Carolina, the state will benefit from the former, but it doesn’t necessarily mean a boost to the latter.

Overall this is a huge win for the Delaware solar industry.  Today, most of our customer base from Delaware sells their SRECs in the PA or DC markets.  It will be great for them to know that their future SRECs will likely be sold in their home state!  Delaware now joins Maryland and New Jersey who have also passed recent legislation directed at strengthening their respective SREC markets.

The full text of SS1 for SB119 can be found here.

Details can be found here: Delaware SREC Program

Chart numbers are based on 2007 electricity sales into Delaware assuming a 1.5% annual growth rate

PA Bill Could Alter Regional SREC Market

Posted July 9th, 2010 by SRECTrade.

House Bill number 2405, currently waiting for review in the PA house of representatives, contains many changes that would significantly alter the PA SREC market. The Bill has yet to be subjected to a vote, largely because its supporters understand that the bill is a solid 10-15 votes shy of the 102 votes it would need to pass the 203 person house of representatives in Pennsylvania. The House is currently not in session, so the Bill remains stagnant for now, and is most likely not to be voted on before the legislative period ends in November.

Notable changes in the Bill include a six-fold increase in the solar requirement for utilities. The requirement is currently slated to reach .5% by the 2024-2025 energy year, but would be 3% in this same year if Bill 2405 were passed. The Bill would also set an SACP of $450 per credit starting in 2011, decreasing by 3% each year. The SACP as currently stated in PA is double the average price of SRECs in the state for each year ($550 for 2010). The bill would also close the Pennsylvania SREC market, limiting buyers to SRECs exclusively from in-state solar facilities. Each of these changes is geared toward promoting the growth of the solar industry in Pennsylvania, keeping the job creation and other economic benefits local.

Changes from this bill, if it is passed, would be scheduled to be put in place on December 31, 2010. Regarding systems from out of state that have already been approved for the Pennsylvania AEPS program, unfortunately, if this legislation passes, buyers will be unable to purchase SRECs from out-of-state, even if they have previously been accepted into the Pennsylvania AEPS program.  The pending legislation states the change shall apply to “all contracts and short-term purchases made after December 31, 2010.”

This Bill is still a long way from being passed. In order to become law, the Bill would need to gain the extra 10-15 votes it needs in the PA House of Representatives, presumably through key revisions, and then pass the state Senate as well. Because the representatives are currently on summer recess, these changes do not appear to be imminent, but could be on the horizon.

Here is a table detailing the changes made by PA HB 2405, and comparing them to the market under current legislation:

For more information, click here to see the entire Pennsylvania House Bill No. 2405


PACE Energy Efficiency Program Derailed

Posted July 8th, 2010 by SRECTrade.

Property Assessed Clean Energy (PACE) programs face push back from Fannie Mae and Freddie Mac. PACE is a financing program through which local governments raise money for renewable energy retrofits by selling municipal bonds. Homeowners can then access this capital to help finance home energy improvements, such as solar panels for their roofs. The loan is paid back over the course of 15 to 20 years through a property tax assessment, which stays with the home in the event of a sale.

The problem, in the eyes of Fannie and Freddie, is that the loan is senior to the home mortgage. In a foreclosure process, the energy efficient loan is paid off before the mortgage lender gets their money back. The financing structure was implemented with other types of specialty property taxes in mind. Other property tax assessments for municipal improvements (i.e. sewers and sidewalks) are senior to home mortgages and have not raised red flags from mortgage lenders in the past. Additionally, the loan’s first lien status helps during the fundraising process when cities sell municipal bonds.

The Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, announced that it directed the mortgage lenders to allow current borrowers with existing energy efficient liens on their homes to participate without penalty. Additionally, the FHFA instructed Fannie and Freddie to consider avoiding the programs or tightening lending standards in areas where PACE programs move forward. Tightened standards could include approval from the lenders prior to borrowers implementing PACE financing or require homeowners to payoff the assessment in a sale or refinancing.

These tightened standards could seriously hinder PACE programs, which were intended to increase clean energy jobs and incentivize renewable energy adoption. Some municipalities have been holding back PACE applications because of the future uncertainty of the program. The municipalities are wary of putting the homeowner in a position that would violate their mortgage. The FHFA announcement was followed by letters from Reps. Henry Waxman  and Barney Frank stating that resolutions should be developed to continue the PACE programs without increasing the risk taxpayers or mortgage investors take on.


North Carolina launches NC-RETS for tracking SRECs in state

Posted July 8th, 2010 by SRECTrade.

The North Carolina Renewable Energy Tracking System (NC-RETS) designed by APX, Inc. launched earlier this week.  This will be North Carolina’s online mechanism for the issuance and tracking of SRECs.  Both solar photovoltaic and solar hot water projects are eligible to receive Solar Renewable Energy Certificates (SRECs) through NC-RETS, and North Carolina electricity producers will use this system to demonstrate their compliance with North Carolina’s Renewable Energy Portfolio Standard.

Registration of a solar project with NC-RETS requires the creation of a NC-RETS general account and prior registration of the project with the North Carolina Utilities Commission (NCUC). Projects under 1 MW will be able to self-report their energy production data into the NC-RETS system to receive SRECs, while larger projects will require a designated “Qualified Reporting Entity” with a separate NC-RETS account to upload generation data on their behalf.    There are no fees associated with the creation of NC-RETS accounts, and the cost of operating the tracking system will be billed to NC electric power suppliers based on each one’s percentage of load in the state.

RECs are readily transferrable between NC-RETS accounts and will be “retired” in the accounts of NC electricity suppliers in order to demonstrate their portfolio compliance.  NC-RETS also allows account holders to import SRECs from and export SRECs to tracking systems in other states.   As of now, there is 2-way transferability with the North American Renewable Registry (NARR) tracking system.  Transferability with PJM GATS is expected shortly and conversations are ongoing with WREGIS, ERCOT, and MRETS.  There is a negligible $.01 fee per SREC exported but imports will be free.

Although there is a “bulletin board”, no financial agreements will take place on NC-RETs, and SRECTrade is accepting bids from both sellers and buyers in NC in anticipation of a North Carolina SREC auction.  Our EasyREC program will streamline the process for solar power generators looking to receive and sell their SRECs efficiently in North Carolina.  When a solar facility owner signs up with EasyREC, SRECTrade will quickly take care of registering the project with the NCUC  and NC-RETS!  As always, the solar facility owner retains ownership of all SRECs until they are sold at auction, at which point SRECTrade takes care of transferring the SRECs to the buyer through NC-RETS.  Our EasyREC service also covers annual updates required for continued NCUC registration.

Find out more on North Carolina’s SREC program here


Arizona – Utility Solar Incentives

Posted July 1st, 2010 by SRECTrade.

Note: Refer to our Arizona SREC page for specifics about any SREC potential.

There is currently no viable SREC market in Arizona as the state Renewable Energy Standard does not have a solar carve-out. The Renewable Energy Standard in Arizona requires the utilities to acquire renewable energy bundled with RECs.

While trading AZ SRECs in an an online auction is currently not a viable option, some Arizona utilities offer upfront and performance based incentive programs to encourage the installation of solar. Below is an overview of the incentives currently in place.

Tucson Electric Power Company (TEP):

  • Owners accepting the upfront incentive sign a 20 year REC agreement with the utility.
  • The residential (systems up to 20 kW) incentive through TEP for 2010 is $3.00/watt for grid tied systems and $2.00/watt for off-grid systems.
  • The small commercial (systems up to 100 kW) incentive through TEP  for 2010 is $2.50/watt for grid tied systems
  • The large commercial (systems greater than 100 kW) incentive through TEP for 2010 differs from the upfront incentive payments for the residential and small commercial programs. Large commercial solar installations are provided with a performance based incentive (PBI), which means that customers will receive a fixed price for their SRECs over a set period of time. This PBI is offered to commercial grid tied systems as follows:
    • 10-Year REC and Payment Agreement for 18.2 cents / kWh (1 SREC for $182)
    • 15-Year REC and Payment Agreement for 16.7 cents / kWh (1 SREC for $167)
    • 20-Year REC and Payment Agreement for 16.2 cents / kWh (1 SREC for $162)
  • The total upfront incentive can’t be greater than 60% of the total system cost. The incentive amounts for 2011-2014 are scheduled at the 2010 rates, but are still to be approved. Also, TEP incentives in combination with all federal and state tax credits can be no more than 85% of total the project cost. A customer must cover at least 15% of the total project cost.

Salt River Project Water and Power (SRP) – Earthwise Solar Energy Program:

  • Home owners accepting the upfront incentive sign a 25 year REC agreement with the utility. Small commercial systems sign a 20 year REC agreement.
  • The residential incentive through SRP is $2.15/watt up to $10,750. This incentive level is set through April 30, 2011. Once a total capacity of 4.5 MW (4,500 kW) has been reserved, any additional applications received will be reserved at future incentive levels.
  • The small commercial incentive through SRP is $2.00/watt up to $60,000. This incentive level is set through April 30, 2011. The small commercial incentive currently has funds reserved for 0.5 MW (500 kW). As of 6/10/10,  46 kW has been reserved with another 120 kW pending approval.
  • The large commercial (systems greater than 30 kW) incentive through SRP for 2010 differs from the upfront incentive payments as outlined for the residential and small commercial programs. Large commercial solar installations are provided with a performance based incentive (PBI), which means that customers will receive a fixed price for their SRECs over a set period of time. The large commercial incentive currently has funds reserved for 5.0 MW (5,000 kW). As of 6/10/10,  864 kW has been reserved. This PBI is offered to commercial grid tied systems as follows:
    • 10-Year REC and Payment Agreement for 18.8 cents / kWh (1 SREC for $188)
    • 20-Year REC and Payment Agreement for 14.7 cents / kWh (1 SREC for $147)
    • SRP will receive the solar renewable energy credits for 20 years for both the 10 year and 20 year PBI plans.

APS:

  • System owners entering into an upfront incentive program sign a 20 year REC agreement with the utility.
  • The residential incentive through APS is $1.95/watt; as of June 17, 2010.
  • Non-residential systems can choose between upfront incentives and performance based incentives. Below is an overview of APS’ current offering:
    • Grid Tied:
      • Upfront incentive – up to $2.50/watt, capped at $75,000
      • Production based incentives –
        • 10 Year REC agreement / 10 Year Payment: 18.2 cents / kWh (1 SREC for $182)
        • 15 Year REC agreement / 15 Year Payment: 16.8 cents / kWh (1 SREC for $168)
        • 20 Year REC agreement / 10 Year Payment: 22.5 cents / kWh (1 SREC for $225)
        • 20 Year REC agreement / 20 Year Payment: 16.2 cents / kWh (1 SREC for $162)
    • Off Grid:
      • Upfront incentive – up to $1.50/watt, capped at $75,000
      • Production based incentives –
        • 10 Year REC agreement / 10 Year Payment: 12.1 cents / kWh (1 SREC for $121)
        • 15 Year REC agreement / 15 Year Payment: 11.2 cents / kWh (1 SREC for $112)
        • 20 Year REC agreement / 10 Year Payment: 15.0 cents / kWh (1 SREC for $150)
        • 20 Year REC agreement / 20 Year Payment: 10.8 cents / kWh (1 SREC for $108)
  • For systems under 100 kW, funding is divided into 6 bi-monthly allocation periods. Funding for systems over 100 kW is awarded on a competitive basis two times a year.

SRECTrade Analysis – Upfront Incentive Payment vs. Selling SRECs On the Spot Market:

  • Currently, although there is no market Arizona SRECs can be sold into, SRECTrade has conducted an analysis to determine an approximate SREC value at which solar system owners in Arizona may consider forgoing their utilities’ upfront incentive payment to realize greater value selling in an auction platform.
  • The analysis is made up of the following assumptions:
    1. A market with a great enough demand exists in which AZ solar system owners can sell their SRECs into
    2. The system size is assumed to have a capacity of 5 kW
    3. The low end upfront incentive payment is $1.95/watt (APS) and the high end is $3.00/watt (TEP)
    4. Arizona systems receive approximately 5.5 sun hours per day (assumption from wholesalesolar.com)
    5. The system generates approximately 10 SRECs per year
    6. Both the upfront incentive and the SRECs are considered taxable income; assumed tax rate 35%
    7. 20 year fixed SREC agreement with utility
    8. 10% discount rate to determine net present value of future cash flow from SREC sales
  • After taking these assumptions into consideration, the following valuations would have to be achievable for system owners to consider foregoing the upfront incentive option. Systems that receive an upfront incentive of $1.95/watt would have to sell SRECs into a market that could support a valuation of approximately $115/SREC . Systems that receive an upfront incentive of $3.00/watt would have to sell SRECs into a market that could support a valuation of approximately $175/SREC. Both scenarios result in a simple payback on the upfront incentive of approximately 8.5 years.

SRECTrade is watching the SREC market place to see how our platform can generate more value for Arizona SRECs. We will continue to provide additional information as the landscape changes.

California TREC Market Held Up

Posted June 29th, 2010 by SRECTrade.

On May 6, 2010, the California Public Utilities Commission (CPUC) released its decision to stay the prior decision authorizing the use of tradable renewable energy certificates (TRECs) for compliance with the state’s renewable portfolio standard (RPS) program. This decision came after the April 23, 2010 workshop presentations, in which California’s IOUs discussed the valuation components and calculation of REC pricing.

The decision will be stayed pending resolutions of two petitions 1) the joint petition filed by Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas & Electric Company (the utility petition) and 2) the petition filed by the Independent Energy Producers Association (IEP).

As outlined in the CPUC’s decision, the petitions filed look to address the following points:

The utility petition seeks to:

  • Revise the criteria for what transactions are bundled and what can be unbundled for TREC trading
  • Apply the criteria only to contracts submitted for approval after the effective date of the decision
  • Eliminate the temporary limit on TRECs for compliance with the RPS by the large utilities
  • Expand the rules for “earmarking” TREC contracts to address current short-fall with future generation

The IEP petition seeks to:

  • Revise the criteria for bundled and unbundled transactions with revisions different from the utility’s petition
  • Expand the review of the least-cost best-fit methodology for RPS bid evaluation and set a time for its completion

In addition to the subjects the petitions seek to address, the decision also included the concurrences and dissents of the CPUCs commissioners. The full document can be viewed here.

SRECTrade will continue to watch the CPUC’s decision making process and provide updates as they become available.  We will maintain everything we know about it on our California SREC page.


Mountain View Solar & Wind to have Installation Aired on BBC

Posted June 22nd, 2010 by SRECTrade.

BBC world news is scheduled to feature the installation of solar panels on a home in Morgan County on BBC World News America’s 7 p.m. broadcast tonight. The piece was filmed on Thursday at the home of Dr. Donald and Selma Straus. The panels for the installation were provided by Mountain View Solar & Wind LLC, the largest solar and wind energy system installer in West Virginia. MVSW installs for both private homes, and for businesses, and hopes to use the publicity from the showing to get the word out about home and community-based renewable energy.

We are excited to see our partners at Mountain View Solar & Wind receive this recognition for their strong efforts in developing the solar industry in West Virginia. MVWS has been a pioneering force for solar in the state, helping their customers sell into the Washington DC and Pennsylvania platforms.

For more information on this story, see here, and be sure to tune in tonight to BBC World News America at 7:00 to see!


New Mexico SREC Information

Posted June 17th, 2010 by SRECTrade.

Note: Visit our New Mexico SREC page for specifics about any SREC potential.

New Mexico’s Renewable Portfolio Standard (RPS) requirements have a solar renewable energy target, but the current structure does not allow for a vibrant SREC market. The RPS requires that Investor Owned Utilities (IOUs) derive at least 20% of the state’s renewable energy from solar generation. While this is a step in the right direction, New Mexico has not put in place a Solar Alternative Compliance Payment (SACP) to drive a market price for SRECs. IOUs are required to purchase RECs to meet the RPS requirements, but if the requirements are not met within the year, the utilities have to make them up in the following year. Penalties can be implemented, but are in the form of retiring additional RECs within a designated generation category.

Although the current structure does not allow for monthly auctions, similar to what SRECTrade has created in other markets, New Mexico’s IOUs offer SREC purchase incentive programs. Below is an overview of their offerings.

PNM

Small PV Program: PNM will pay 13 cents/kWh ($130/SREC) for systems up to 10 kW. The system owner must enter into a 12 year agreement, but the agreement can be terminated upon 30 days written notice.

Large PV Program: PNM will pay 15 cents/kwh ($150/SREC) for systems greater than 10kW up to 1 MW. The system owner must enter into a 20 year agreement, but the agreement can be terminated upon 30 days written notice.

In addition to the SREC buy-back program, PNM offers a Net Metering program. This means that when your PV system produces more electricity in a given billing period than your facility uses, PNM will credit your account for the excess.

SPS (Xcel)

Solar*Rewards Small Program: SPS will pay 20 cents/kWh ($200/SREC) for systems between 0.5kW and 10kW. The system owner must enter into this agreement for a set term of 14 years.

Solar*Rewards Medium Program: SPS will pay 20 cents/kWh ($200/SREC) for systems between 10.1kW and 100kW. The system owner must enter into this agreement for a set term of 10 years.

Solar*Rewards Large Program: For systems greater than 100kW, SPS requests a proposal for REC buy-back. The contract term is negotiable for systems of this size.

In addition to the SREC buy-back program, SPS offers a Net Metering program. This means that when your PV system produces more electricity in a given billing period than your facility uses, SPS will credit your account for the excess.

El Paso Electric (EPE)

Small System Renewable Energy Certificate (REC) Purchase: systems 10kW and less are eligible to receive 12 cents/kWh ($120/SREC). System owners must enter into this agreement for a 12 year term.

Medium System Renewable Energy Certificate (REC) Purchase: systems between 10kW and 100kW are eligible to receive 15.5 cents/kWh ($155/SREC). System owners must enter into this agreement for a 12 year term.

Additionally, EPE offers a Net Metering program that will credit customer accounts for the excess energy produced by their solar panel systems.

SRECTrade will continue to watch the New Mexico market and keep participants up to date on the best methods for maximizing the value of their SRECs.


Massachusetts DOER Raises Solar Requirement for 2011

Posted June 17th, 2010 by SRECTrade.

The Massachusetts DOER made its final changes pertaining to the implementation of the solar carve-out program in the state’s RPS class I revised regulation. Most noteworthy of the changes, the DOER increased the solar requirement for the 2011 energy year to 69MW, or a total of 78,577 MWh. The increase in the solar requirement is a welcome development for SREC markets in Massachusetts, coming on the heels of the TransCanada legislation, which reduced the solar requirement for Massachusetts (more information on the TransCanada legislation here). This is a good indication that the state has levers it can pull to ensure the state supports a thriving SREC market, providing the market with some stability.

This should serve to counterbalance the change prompted by the TransCanada settlement that exempts certain buyers from the solar carve-out.

To see the all the changes made to the legislation see the RPS Class I Revised Regulation with Tracked Changes.


Solar Bill Could Create New York SREC Market

Posted June 16th, 2010 by SRECTrade.

A strong solar bill currently moving through the state senate has the potential to make New York a national solar leader. The New York Solar Jobs Act of 2010 establishes aggressive annual solar capacity targets, reaching 2.5% of the state’s total energy–an estimated 5GW–by 2025.

The legislation would also provide a strong economic opportunity in the state. According to NREL’s Job and Economic Development model, the program will support about 22,000 jobs. On top of this, New York is expected receive a $20 billion boost to its economy. Independent energy consultants from Crossborder Energy estimated the cost of the program to be a 39 cent increase in each NY resident’s energy bill.

If this bill is passed into law, New York will be in position for a robust SREC market. SRECTrade already has a presence with many New York solar companies, and as soon as this bill is passed we will be working toward establishing a market for SRECs in the state.

For more information on the bill, find the complete article here.