On Friday, December 6th, the New Jersey Board of Public Utilities (BPU) issued an order approving a new SREC program to aid in the transition from the current SREC program to the yet-to-be-determined “Successor Incentive” program. This “Transition Incentive” program will feature a factorized, fixed-price, 15-year Transition Renewable Energy Certificate (TREC). All projects that submitted complete SREC Registration Program (SRP) applications after October 29, 2018, but do not reach commercial operation at the time the BPU determines the 5.1% target has been reached, will qualify for TRECs.
The BPU will hold a cost-cap proceeding in early 2020 to finalize the annual value of the fixed-price TREC. Specifically, the BPU will evaluate two pricing scenarios: 1) a flat 15-year price of $152 and 2) a lower price of $65 for the first three years followed by a higher price of $189 for the last twelve years.
The different TREC project types and factorizations are displayed below:
TRECs will have a useful life of two energy years, including the energy year in which they were generated. If a TREC is not issued or sold during its two-year useful life, it will become an NJ Class I REC. The order further clarifies that Transition Incentive projects will be eligible to generate NJ Class I RECs after their 15-year TREC Qualification Life.
The BPU order also directs electric distribution companies to procure a TREC Administrator. Although the exact mechanics for how TRECs will be transacted are still being determined, the TREC Administrator will ultimately purchase all generated TRECs and allocate them to load-serving entities for compliance based on their market share of retail sales.
SRECTrade will continue to monitor the development of the final TREC levels and the Successor Incentive program.