Posts Tagged ‘New Jersey Renewable Portfolio Standard’

New Jersey RPS Bill Proposes Pull Forward to Address Oversupply

Posted June 3rd, 2016 by SRECTrade.

Last week, New Jersey Senators Robert Smith (D) and Christopher Bateman (R) introduced a bipartisan energy bill in the Senate, with a broad coalition of support from solar energy owners, installation and development stakeholders, renewable energy advocates, and other environmental groups. S2276, which was referred to the Senate Environment and Energy Committee upon its introduction on May 23, will adjust New Jersey’s renewable portfolio standard (RPS) to address the impending “solar cliff” of oversupply. In addition, the bill establishes a Solar Energy Study Commission to enable the Garden State to evaluate potential paths and long term solutions for the future of solar policy in the New Jersey.

Under the Solar Act of 2012, New Jersey utilized a “pull forward” mechanism to adjust the RPS so that the increased demand could absorb an excess of SRECs in the market; unfortunately, the mechanism created a “valley of death” starting in Energy Year 2019 (June 2018), with initial impact hitting in EY2017 and EY2018. Based on current build rates, the market may build between 80 MW and 231 MW more than the RPS will require in those years. In the EY2019 to EY2025 years, the market may build between 183 MW and 335 MW in excess of the RPS demand. Under current conditions, it is not until EY2026 that retirement impacts will provide relief to the oversupply.

Figure 1 below shows SRECTrade’s projections for three potential capacity growth scenarios, and the resulting oversupply/undersupply, based on the current RPS schedule. Case 2 is the base case, where 15.6 MW per month is the historic trailing twelve month (TTM) average build rate in New Jersey. Case 1 represents the bear case, or 75%, of the TTM average build rate. Case 3 represents the bull case, or 150%, of the TTM average build rate.


Scenario Chart Before Demand Pull

Percent Scenarios Before Demand Pull

Figure 1.

In an effort to forestall the cliff, S2276 proposes to once again pull forward demand from future years for the EY2019 – EY2021 energy years as follows: in EY2018, pull forward 52 MWs; in EY2019, 122 MWs; in EY2020, 115 MWs; and in EY2021, 115 MWs. This pull forward would accelerate SREC demand by 62,400 SRECs in EY2018; by 146,400 SRECs in EY 2019; and by 138,000 SRECs in each EY2020 and EY2021.  The adjustments will allow for the continued growth of New Jersey’s solar industry, which employs more than 7,100 people across 528 solar companies. To date, New Jersey has installed more than 1.6 GW of solar capacity, which is enough to power 257,000 homes and rank the State 4th in the nation.

Figure 2 below represents the potential oversupply/undersupply scenarios with the demand pull forward, using the same three potential capacity growth scenarios from Figure 1. The RPS demand figures for 2018, 2019, and 2020 have been adjusted upward by the SREC-equivalent demand increases proposed in S2276.


Scenario Chart After Demand Pull

Percent Scenarios After Demand Pull

Figure 2.

In addition to the short-term solution of the pull forward of RPS demand, the bill aims to stimulate the development of long-term solutions through its establishment of the Solar Energy Study Commission. The Commission will be composed of 22 relevant stakeholders, who will provide policymakers with information and best practices for designing and implementing long term solar policies. Under the proposed amended RPS schedule, which ends in June 2021, the Commission would be charged with presenting policymakers with  recommendations for New Jersey before the end of the 2021 Energy Year.

S2276 has earned support from members of the New Jersey-based New Jersey Solar Energy Coalition, the New Jersey Solar Grid Supply Association, national and regional members of SEIA and MSEIA, and the IBEW. The bill will be heard at the Senate Environment and Energy Meeting on Monday, June 6.

SRECTrade will continue to track and report on the status of the bill as it progresses this summer.


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Governer Christie’s Draft Energy Master Plan criticized by Solar Alliance.

Posted September 8th, 2011 by SRECTrade.

The New Jersey State’s Energy Master Plan (EMP) draft, released every three years, is a vision for the use, management, and development of energy in New Jersey over the next ten years and beyond. It was released by Governor Chris Christie on June 7, 2011, but comments on the EMP were accepted up until August 25th, with the Solar Alliance, a solar industry trade organization, filing comments just before the deadline.

The position taken by the Solar Alliance is that some of the costs and benefits have been misconstrued. In particular, the Solar Alliance commented that:

  1. The Draft EMP has severely inflated the present cost of solar.
  2. New Jersey’s solar costs have already been pushed far below those assumed in the Draft EMP by competitive SREC markets.
  3. As opposed to statements in the Draft EMP, the costs of the SREC program comprise only a tiny fraction of ratepayers’ monthly electric bills
  4. The Draft EMP acknowledges external benefits of other energy resources but does not account for external benefits of solar.
  5. Contrary to statements in the Draft EMP, the quantified benefits of solar far exceeds the cost of solar incentives.

Carrie Hullen Hitt, President of the The Solar Alliance summarized the organization’s position this way, “we believe the analysis has left out important economic and social benefits. As currently drafted, the EMP will restrict New Jersey solar businesses from creating jobs and deploying clean, reliable solar electricity.” Below are three key points that the Solar Alliance feels should be included in any interpretation or revision of the EMP:

  1. The Board of Public Utilities should quantify all value streams, from manufacturing to investment and financing to development and installation, associated with solar when attempting to calculate the net economic benefit of solar projects.
  2. The EMP should use updated, universally recognized cost estimates of solar technology instead of out-of-date, inaccurate ones.
  3. The EMP should reassess its calculation of the cost of the SREC Program to ratepayers. The Solar Alliance estimates that the cost of the program is equivalent to $.09 per kW-hr.

The EMP is responsible for assessing the impact of, and recommending adjustments to, New Jersey’s Renewable Portfolio Standard (RPS) Program. The RPS is the program that created the NJ SREC market. While it remains to be seen if the EMP will be revised in the light of these comments, recent shifts in the SREC markets have since led to a new paradigm. At the time that the EMP was released SRECs were typically trading at 95% of the SACP. As of this writing, SRECs are trading at around 25% of the SACP.  This alone prompts a revisit to the calculation regarding the cost of solar on utility prices as the calculations were based on the assumption that SRECs are priced at 75% of the SACP.

New Jersey Enacts “OREC” Market for Offshore Wind

Posted September 2nd, 2010 by SRECTrade.

To catalyze the development of offshore wind farms, New Jersey has enacted legislation creating a carve-out for offshore wind generation within the NJ Renewable Portfolio Standard.  Commodities known as “Offshore Renewable Energy Certificates” (ORECs), essentially the offshore wind equivalents of SRECs, will have to be obtained by electricity suppliers to demonstrate that a percentage of their electricity has come from offshore wind.  This “Offshore Wind Economic Development Act” was signed by Governor Chris Christie on August 19th and may be necessary for New Jersey to reach its RPS goals from in-state resources.  As currently designed, the NJ RPS requires that 22.5% of energy come from renewable sources by 2021.

Proponents argue that this new OREC market will make NJ a national leader in offshore wind production and create green jobs, just as the high incentives from the SREC market  have made the State a solar powerhouse (In the US, NJ is second only to California in solar installations).  Opponents are skeptical of the costs involved, and estimates from business groups claim the price tag may be as high as $14 billion.  While offshore wind has inherently high fixed costs, due to in part to necessary transmission lines and other construction challenges, a market-based RPS is likely the most efficient way to incentivize a promising technology and ease the financing concerns of developers.

This legislation reinforces New Jersey’s status as a national leader in renewable energy development.  The New Jersey Board of Public Utilities has 180 days to determine the exact design of the OREC program, including the percentage of energy electricity suppliers must obtain from offshore sources.

The move to an OREC market is another example of the success that the SREC market has had in New Jersey.  Since launching in 2004, New Jersey’s SREC program has become a template for reaching RPS solar goals in several states.  That template is now being applied to other types of renewable energy.  In this case, the off-shore wind industry will benefit.

More information can be found here.