Posts Tagged ‘New Jersey SREC’

Governor Christie backs solar in New Jersey’s final 2011 Energy Master Plan (EMP)

Posted December 7th, 2011 by SRECTrade.

Governor Christie’s administration has released the 2011 Energy Master Plan, which can be viewed in its entirety here.  The Plan is generally positive for the stability of NJ SREC markets, and signals overall support by the Governor’s Office for solar in NJ.  The plan specifically lists support for the following:

1. Accelerate the RPS:

A temporary acceleration of the RPS would provide some interim relief for the current market in SRECs and an opportunity for the industry to adjust. This acceleration would require increasing the RPS over the next three years and reducing the outlier years of the RPS schedule to minimize the impact to ratepayers.”


2. Give preference to smaller, distributed projects:

Projects that offer a “dual benefit” should take priority for approval and any legislative expansion of SREC eligibility by modifying the definition of “distribution system” should also provide the BPU with the ability to review and approve subsidies for grid-supply projects to ensure compatibility with land use, environmental and energy policies. Additionally, the development of solar projects should not impact the preservation of open space and farmland.

We read that second bullet as support for giving the BPU the ability to manage large utility scale projects so that they don’t flood the SREC market.

Other interesting points include support for extending Electric Distribution Company contracting programs and support for a requirement to set up a supply queue that will give the market insight into pipeline of future non-residential systems.

The Governor also calls for reducing the Solar Alternative Compliance Payment (SACP) schedule to minimize impact of the previous changes to ratepayers.  This seems to be a reasonable concession on the part of SREC sellers, especially given that the current oversupply situation makes the SACP irrelevant.

The EMP by itself does not make policy or change the current NJ renewable portfolio standard.  However, it does signal the Governor’s position on any legislation that he may be asked to sign that would change the portfolio standard law, like Assembly Bill 4226 which contains many of the items listed in the EMP.

The EMP process itself has been illuminating, revealing a Governor’s office that is responsive to stakeholder input and seems to be responsive to data over dogma.  The draft EMP released earlier in the year was far less positive toward solar, however over several public meetings and hundreds of public comments the Governor’s office heard a great deal about the impact of solar on jobs and NJ’s energy supply.  The final Plan reflects much of this input and is a very different document from the draft.

Overall, the 2011 EMP indicates that the Governor supports solar, but he isn’t willing to write the industry a blank check.  The solar industry will need to continue to prove it’s value to New Jersey, and as long as it continues to do so it appears to have the support of Governor Christie.

 Accelerate the RPS
A temporary acceleration of the RPS would provide some interim relief for the current market in
SRECs and an opportunity for the industry to adjust. This acceleration would require increasing
the RPS over the next three years and reducing the outlier years of the RPS schedule to minimize
the impact to ratepayers.

New Jersey falls short of 2011 SREC target

Posted June 22nd, 2011 by SRECTrade.

The New Jersey SREC program runs on a June 1 to May 31 Energy Year (EY), referred to by the year in which it ends. EY2011 concluded last month on May 31, 2011. The final EY2011 SRECs will be minted for May 2011 generation beginning next week, commencing the end of year true up period. Load-Serving Entities will have until the end of September to finalize their purchases to meet state requirements. Though most of the remaining 2011 SRECs will be sold in the July auction, SRECTrade will continue to host auctions for remaining EY2011 SRECs in August and September. Given the shortage of EY2011 SRECs, prices should remain high, trading near the $640 mark that has cleared throughout the year.

According to the BPU, as of April 30, 2011, there was 330 MW of solar installed in the state. Due to interconnection and other delays, by the end of May, the actual number of solar facilities that were active in the SREC market was 310 MW. A common misperception in the SREC market relates to how supply and demand interact. Since there was a 255 MW requirement in New Jersey for 2011, it would appear that the state would experience an oversupply of SRECs having achieved 310 MW by the end of EY2011. In fact, New Jersey will fall short of its SREC requirement by approximately 40,000 SRECs. Here’s how we arrive at that number:

The New Jersey RPS requires a fixed number of SRECs each year:
EY2011 RPS Requirement = 306,000 SRECs or MWhs

The common annual production factor used in New Jersey is 1200 MWh per MW of installed capacity:
306,000 MWh / 1200 = 255 MW of required capacity

It is important to keep in mind that this is the capacity required to be running on average throughout the year. At the beginning of EY2011, on June 1, 2010, there was 133 MW of solar installed and active. Using the 310 MW installed and active at the end of the year, we can estimate the average capacity:
EY2011 Average Active Solar Capacity: (133 MW + 310 MW) / 2 = 222 MW

Converting back into SRECs, we can estimate the number of SRECs produced through EY2011:
222 MW * 1200 = 266,000 MWhs or SRECs

With this estimate, we can calculate the shortfall in New Jersey for EY2011:
306,000 SRECs required – 266,000 SRECs projected = 40,000 SREC shortfall

This is the same number projected by the BPU in the April report on the status of the SREC program. This should be good news for market participants with EY2011 SRECs, however, this is only a 13% shortfall and as the compliance period comes to an end in September, it is unclear if outside factors may influence pricing as the year closes out. For example, some buyers may opt to pay the SACP instead of procuring SRECs in the market. In other cases, prices may be influenced by oversupply concerns and falling prices for EY2012. With 310 MW active as a starting point and a 368 MW requirement for EY2012, the picture is not as bright for the future of New Jersey’s SREC market. A potential 2012 oversupply will most likely drive prices down in August when the first 2012 SRECs are created for June generation.

With 3 months left for buyers to procure EY2011 SRECs, it is unclear if market prices will finish the year on a strong note despite the under-supply.

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.