Archive for the ‘New Jersey’ Category

NJ Market Nearing Closure and Transition Program

Posted December 2nd, 2019 by SRECTrade.

The Clean Energy Act, signed by New Jersey Governor Phil Murphy in May 2018, states that new rules and regulations will be adopted to close the NJ SREC program upon attainment of 5.1 percent of the kilowatt-hours sold in the state by solar electric power generators. Based on recent build rates, the NJ SREC market is expected to reach the program’s maximum capacity of 5.1% by mid-2020, at which point, the New Jersey Board of Public Utilities (NJ BPU) will transition the state to a new program. While the NJ BPU released a straw proposal in 2018 on the anticipated market closure, the exact strategy of determining the 5.1% attainment and eventual transition program is yet to be confirmed.

The enclosed analysis further details the implications of this market close and SRECTrade’s estimated market dynamics through 2022. The analysis assumes flat load through 2022 and utilizes a capacity factor of 12.56%, the approximate running average capacity factor across NJ certified solar facilities since 2012. In each depicted build scenario, the market will close to new capacity once 3,460 MW is hit, or on June 1, 2021, whichever occurs first.

On September 6, 2019, the NJ Board of Public Utilities (“BPU”) released a memo that detailed Basic Generation Service Provider (“BGS”) load exemptions in 2019. This exempt load dynamic has an impact on market demand through EY 2023 and is further detailed in the analysis.

Data from the New Jersey Office of Clean Energy (“NJOCE”) shows that solar build rates have increased slightly over the past six months in comparison to the past twelve months, increasing by 3.6% in that time frame. With this data from NJOCE and credit data from GATS, SRECTrade estimates that the market is over-supplied by 7.5% for the 2020 Energy Year. Assuming flat load growth and no drastic increase in build rates, the market will likely become under-supplied in 2021 and 2022.

In line with this market dynamic, NJ SREC pricing has seen an upward trend over the past twelve months. The enclosed analysis further details the current standing as well as future scenarios for the NJ SREC market.

 

New Jersey BPU Publishes Guidance on SREC Market Closure & Transition Program

Posted January 2nd, 2019 by SRECTrade.

As per The Clean Energy Act, which was signed by the New Jersey Governor into law in May, “the [New Jersey Board of Public Utilities] shall adopt rules and regulations to close the SREC program to new applications upon the attainment of 5.1 percent of the kilowatt-hours sold in the State by each electric power supplier and each basic generation provider from solar electric power generators”. On December 26th, the New Jersey Board of Public Utilities (“BPU”) published a straw proposal which provides further guidance to the closure of the current SREC program and implementation of a “transition program” in New Jersey. The proposal provides the following guidance:

  • Provide maximum benefit to ratepayers at the lowest cost
  • Support the continued growth of the solar industry
  • Ensure that prior investments retain value
  • Meet the Governor’s commitment of 50% Class I Renewable Energy Certificates (“RECs”) by 2030 and 100% clean energy by 2050
  • Provide insight and information to stakeholders through a transparent process for developing the Solar Transition and Successor Program
  • Comply fully with the statute, including the implications of the cost cap
  • Provide disclosure and notification to developers that certain projects may not be guaranteed participation in the current SREC program, and continue updates on market conditions via the New Jersey Clean Energy Program (“NJCEP”) SREC Registration Program (“SRP”) Solar Activity Reports

In addition, the proposal schedules a robust stakeholder process for the 2019 calendar year to discuss the logistics of the closure of the current SREC program and implementation of the subsequent transition program. Specifically, the BPU requests that stakeholders provide input on:

  • How the attainment of 5.1% of electricity sales coming from solar will be calculated
  • How the pipeline projects (non-operational assets with SRPs) will be treated at market closure
  • Ensuring cost caps are not exceeded during an “18-month period”

SRECTrade will continue to monitor this process and provide updates accordingly.

NJ BPU Issues Order Effecting 10-Year SREC Eligibility

Posted October 29th, 2018 by SRECTrade.

Earlier today, the New Jersey Board of Public Utilities (BPU) issued an order to clarify that all SREC applications submitted after October 29, 2018 will only receive 10 years of SREC eligibility.

This order means that all New Jersey Office of Clean Energy SREC Registration Program (SRP) applications submitted after 11:59pm ET today will be subject to 10 years of SREC eligibility instead of 15 years.

Please also note that applications received by the BPU for conditional certification pursuant to Subsection T prior to today’s deadline that fulfill all conditions established by the BPU shall receive 15-year SREC eligibility.

Since the May 23rd passage of Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314) to increase the state’s Renewable Portfolio Standard (RPS) requirements, there had been some confusion regarding when the effective date took place for the new 10-year eligibility period. Today’s NJ BPU order clarifies that confusion.

New Jersey SREC Market Update

Posted September 27th, 2018 by SRECTrade.

In May 2018, New Jersey Governor Phil Murphy signed Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314). The bill increased the state’s overall RPS requirements to 50% by 2030. Specific to the solar carve-out, the legislation increased NJ’s solar requirements to 5.1% by energy year 2021 and decreased the Solar Alternative Compliance (SACP). Pursuant to the bill, the Board of Public Utilities is currently working to adopt rules to close the market to new applications upon the attainment of the revised 5.1% requirement (i.e. the reporting year 2021, 2022, and 2023 requirement which declines thereafter beginning in 2024). Additionally, the board is working to complete a study to evaluate the implementation of the state’s next solar incentive program.

Solar build rates have remained steady over the last twelve months (LTM). Average LTM monthly build rates increased from 26.9 MW/month in April 2018 to 27.2 MW/month in August 2018. Installed solar over the last six months (LSM) declined 5.5% as compared to the last twelve month average build rate, shown in our analysis. While the total build in the last three months ending in July 2018 did increase by 46.9% compared to the three months ending in April 2018, much of this can be contributed to seasonality. The last three month build rate ending in July 2018 only increased by 3.4%  as compared to the same three months in 2017.

For full market update presentation click here.

Using reporting year 2017 retail sales of 75,031,955 MWh and an LTM build rate of 27.2 MW/month, we anticipate a relatively balanced market in NJ2019 with a marginal oversupply of approximately 4.0%. This includes an estimated banked SREC volume of 294,734 after NJ2018 compliance filings are completed (NJ2018 compliance filings are just about to be finalized). These figures are based on the new solar RPS requirements as passed.

Projecting out further under three build rate scenarios, 75%, 100%, and 150% of LTM average build rates, we see the market relatively well balanced in NJ2019 and under-supplied in NJ2020, barring any substantial increase in sustained monthly build. In NJ2021, the market will remain under-supplied to balanced in our first 2 scenarios and oversupplied in our 3rd build scenario (i.e. 40.9 MW/month).

Recent pricing in the spot market for NJ2019 SRECs has remained strong, with bids ranging between $210 and $225 throughout Q3 2018. Additionally, bids for the NJ2020 and NJ2021 vintages have been indicatively $205 and $170, respectively, as of late.

Please feel free to contact us with any questions or if we can be of assistance with any SREC management and transaction services.

NJ Gov. Murphy Signs AB-3723 / SB-2314 Increasing State RPS

Posted May 25th, 2018 by SRECTrade.

On Wednesday, May 23rd, New Jersey Governor Phil Murphy (Dem) signed Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314), increasing the state’s Renewable Portfolio Standard (RPS) requirements. The bill establishes renewable energy goals of 21 percent by 2020, 35 percent by 2025, and 50 percent by 2030, making the New Jersey RPS one of the highest in the nation.

Notably, the state’s solar carve-out requirement is raised and accelerated to 5.1 percent of total electricity sales by EY2021 before beginning to ramp-down in 2024. The requirement ramps down in consideration of solar facilities that will be reaching the end of their 15-year SREC production eligibility term.

On the other hand, the bill lowers the solar alternative compliance payment (SACP) schedule to $268.00 in EY2019 with an additional $10.00 reduction each following year.

The bill also shortens the 15-year period that qualified solar projects can generate solar renewable energy credits (SREC) to ten years, effective for all New Jersey SREC Registration Program applications received as of the enactment date. Lastly, the bill mandates that the current SREC program be closed upon reaching the 5.1 percent target and no later than June 1, 2021. It is anticipated that a supplemental “SREC-II” program will follow shortly after the closure of the first program.

The bill also introduces other clean energy initiatives, including:

  • Community Solar: establishes the Community Solar Energy Pilot Program to allow utility customers access to solar projects that are located away from their properties, but within their utility’s service territory. The pilot program is planned to be converted to a permanent community solar program within 36 months.
  • Energy Efficiency: requires individual utilities to implement energy efficiency measures to reduce electricity usage by 2 percent and natural gas usage by 0.75 percent.
  • Energy Storage: mandates Gov. Murphy’s goal of achieving 600 MW of energy storage by 2021 and 2,000 MW by 2030.
  • Offshore Wind: establishes a goal of 3,500 MW of offshore wind by 2030 that will be supported by an offshore wind renewable energy credit (OREC) program.

Simultaneously, Gov. Murphy signed Executive Order No. 28, requiring state agencies to update the Energy Master Plan (EMP) that prepares a strategy for achieving 100 percent clean energy by January 1, 2050. The new EMP is scheduled to be finalized and published by June 1, 2019.

For more information on the bill and its passage through the New Jersey legislature, please visit our previous blog post on the topic here. SRECTrade expects to publish a detailed New Jersey supply and demand analysis reflecting this new legislation soon.

NJ Solar RPS Increase – New Jersey Assembly and Senate Pass AB-3723 / SB-2314

Posted April 13th, 2018 by SRECTrade.

On Thursday, April 12th, the New Jersey Assembly and Senate passed Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314). The bill now sits on the desk of Governor Phil Murphy (Dem) waiting to be signed, after passing the Assembly by a margin of 49-20-2 and the Senate by a margin of 29-8. The bill requires a number of action items to be carried out, including:

  • Requiring the New Jersey Board of Public Utilities to:
    • Administer an energy storage analysis
    • Advance, increase, and extend the solar carve-out schedule and reduce and extend the solar alternative compliance payment schedule
    • Introduce structural changes to the state SREC program
    • Implement energy efficiency and peak demand reduction programs
    • Implement a “Community Solar Energy Pilot Program”
    • Offer tax credits for specified offshore wind facilities
  • Requiring the Department of Labor and Workforce Development to establish job training programs for professionals in manufacturing and maintenance of offshore wind facilities

The bill requires 21% of statewide electricity sales to be derived from Class I renewable energy sources by January 1, 2020, 35% by January 1, 2025, and 50% by January 1, 2030. The cost of this requirement shall not exceed 9% of the electricity purchased by all NJ ratepayers for each energy year 2019-2021 and shall not exceed 7% in each energy year thereafter. In addition, all facilities filing SREC applications after the bill’s enactment date will be subject to a reduced SREC eligibility term of 10 years, down from 15.

No later than 180 days after the enactment of the bill, the board will implement rules to close the SREC program to new systems upon reaching the 5.1% solar carve-out target. The legislation intends to close the existing SREC program to new projects on or before June 1, 2021. Within 24 months from signing the legislation, the Board of Public Utilities will be required to conduct a study that evaluates how to modify or implement a new solar incentive program. A variety of market stakeholders will be consulted in the process to determine the next best steps forward for the NJ SREC market.

As shown below, the bill brings forward and raises the state’s solar carve-out requirements beginning with EY2019 and extends the requirements through EY2033. The requirement peaks at 5.10% in EY2021-2023 before gradually declining through EY2033. The reduction mechanic was introduced to account for solar facilities that will be reaching the end of their SREC production eligibility term.

The bill also reduces the solar alternative compliance payment (SACP) beginning with EY2019 and extends the SACP schedule through EY2033. The SACP level drops to $268 in EY2019 and then gradually decreases by $10 each year following.

For more information on the historical progress of the bill, please view our previous blog post on the topic here. SRECTrade will be publishing an updated New Jersey Supply and Demand Analysis to its blog shortly in consideration of this bill.

New Jersey Senate Passes Concurrence on S-2276

Posted January 10th, 2018 by SRECTrade.

Update: Governor Chris Christie pocket vetoed Senate Bill 2276 (S-2276) when he left office on January 16, 2018.

Please note that the original blog post was slightly revised on January 11, 2018.

On Monday, January 8th, the New Jersey Senate passed the amended Senate Bill 2276 (S-2276), following the Assembly Telecommunications and Utilities Committee’s amendments from mid-2017. The bill now rests on the desk of outgoing Governor Chris Christie (R) for a decision. Although it appears likely that Gov. Christie will pocket veto the legislation when his term ends on Tuesday, January 16th, Governor-Elect Phil Murphy (D) has his eyes set on New Jersey accomplishing 100 percent clean energy by 2050 and leading New Jersey to regain its status as a national leader in solar.

The bill passed by a considerable margin (26-8), demonstrating a strong consensus for support of the Garden State’s renewable energy industry, and also sending an important message to Governor-Elect Murphy regarding the urgency of this legislation.

If signed into law, the bill would establish the New Jersey Solar Energy Study Commission and increase the state’s solar renewable energy portfolio standard. The commission is intended to analyze all aspects of New Jersey’s solar industry and report findings and recommendations to the Governor and Legislature, specifically:

  1. As to whether New Jersey’s solar renewable portfolio standard (RPS) should be modified and extended through a prescribed period, but at least through energy year 2031;
  2. The current trends in utility interconnection study processes and costs; and
  3. The status and future of the state’s solar renewable energy credit market

In the bill, the Legislature speculated that New Jersey’s current statutory solar RPS could result in the loss of over 120 MW of solar per year through 2021, over $240 million per year in lost solar projects, and 5,000 clean energy jobs per year. To ensure the continued success of New Jersey’s solar industry, it is critical that the state pass both interim and future long-term measures to stabilize the industry and promote long-term, sustainable growth.

SRECTrade will continue to provide updates on this and other New Jersey legislative efforts.

New Jersey SREC Update – November 2017

Posted November 22nd, 2017 by SRECTrade.

With the announcement of new NJ solar build data last week, we wanted to provide an update on the current status of New Jersey SREC supply and demand. Since our last update in June 2017, build over the last 6 months (through September) has declined, pacing at 22.7 MW/month. That is approximately a 23.7% decrease against the last 12 month (LTM) rate of 29.8 MW/month. Additionally, the 3 months ending September 2017 saw a 45.5% decline in total build to 48.1 MW for the quarter, against 88.2 MW for the 3 months ending June 2017.

Electricity load served for reporting year 2017, ending May 2017, is estimated to be up 1.3% over RY2016 to 75.2 million megawatt hours. This is a shift in the flat to declining trend the market has experienced since reporting year 2012. Given current build and scenarios based off the 29.8 MW/month LTM rate, the NJ SREC market can expect an oversupply of approximately 500,000 SRECs during reporting year 2018 (approximately 20-25% over the estimated RY2018 requirement).

With regards to pricing, since the beginning of September pricing in the spot and forward markets have experienced appreciation. Pricing for NJ2018 and NJ2019 vintages has risen by approximately 12-14%, while pricing for NJ2020 and NJ2021 vintages has increased by approximately 30%. Price increases for the current vintages could be attributed to slightly lower than expected build rates and annual activity taking place ahead of the basic generation service (BGS) electricity auction, scheduled in early February 2018. Looking forward, price appreciation could also be due to early BGS activity, but also potentially attributed to the possibility of increased RPS requirements, particularly in light of the recent election of NJ Governor Phil Murphy and his stance on clean energy initiatives.

For a complete update on the supply and demand outlook, see our presentation here.

SRECTrade will continue to provide updates as available. Thank you and wishing everyone a Happy Thanksgiving!

H1 2017 SREC Pricing, Presented by Market Insights

Posted July 5th, 2017 by SRECTrade.

The first-half of 2017 was a dynamic period in the SREC markets. SREC prices experienced highs and lows. In order to understand and clearly present pricing data, SRECTrade offers a subscription product – Market Insights. Login to your SRECTrade account and get started for free.

Please see the Year in Review video here:

 

New Jersey SREC Update – June 2017

Posted June 28th, 2017 by SRECTrade.

The 2017 energy year for New Jersey closed at the end of May, and with the latest NJ Office of Clean Energy Solar Activity Reports we have our first indication of total development activity for the full 12 months of the previous compliance period. We have taken the opportunity to update our state capacity model and dig into the available information in greater detail.

You can find our most recent capacity presentation here.

As of the most recent NJ Office of Clean Energy activity report, which tracks registered assets as of 5/31/2017, New Jersey has built a total of 2,169MW of solar capacity.  345MW of that has been built in EY 2017 alone. The most recently published report showed an increase of 38.9MW in solar installations since the figure reported through 4/30/17.  While much of the new capacity was certified in April and May of 2017, an unusually high amount of new capacity was attributed to December of 2016.

  • 12MW from May 2017
  • 11MW from the period between January and April 2017
  • 14MW from December 2016

Given the observed pattern in the delay of these reports accurately displaying the full capacity to be attributed to a given month, we assume that we will see another 5-15MW of capacity added to May 2017 in next month’s activity report, bringing the EY 2017 total new build figure in the range of 350MW to 360MW.

In terms of EY 2017 SREC supply and demand, our analysis shows that 2017 will be slightly (4.8%) oversupplied, but with the implied growth rate of 30MW/month quickly outpacing the growth of the RPS solar carve out schedule. Given a base case of 30MW/month and an assumption of flat load growth, we see an 24% oversupply in 2018 and a 57% oversupply in 2019.

An important piece of information to note however is that state electricity sales have shown a consistent negative trend, with sales dropping from over 83mm MWh in 2007 to 74mm MWh in 2016.  This is an annualized rate of decrease of slightly more than 1% over the previous 10 years.  We have included scenario analysis for both a flat load growth scenario as well as a negative growth scenario. Below demonstrates flat load growth scenarios.

scenario-1

supply

Given the high likelihood of significant market oversupply in coming years, either a drastic slow down in build rates or an expansion of the New Jersey SREC program requirements would be needed to address forecasted supply and demand dynamics.  Industry stakeholder groups are currently in process of evaluating how expanded NJ RPS requirements may be feasible in the framework of the existing program.

As always, we will follow the legislative process closely and keep our clients updated on any substantive changes in the market. Please feel free to reach out to your brokerage team coverage with any questions or comments.

 

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

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