Posts Tagged ‘Transition Incentive’

New Jersey Governor Murphy Signs SB S-4275, Resolving Transition Incentive “Kink Year” Issue

Posted January 22nd, 2020 by SRECTrade.

On Tuesday, January 21st, New Jersey Governor Phil Murphy signed Assembly Bill 6088 (AB-6088) / Senate Bill 4275 (SB-4275) into law in a victory for New Jersey “Transition Incentive” program stakeholders. A New Jersey Board of Public Utilities (BPU) order last month established that the Transition Incentive program’s structure will feature a factorized, fixed-price, 15-year Transition Renewable Energy Certificate (TREC), but did not finalize the pricing schedule that will be used throughout the program.

SB-4275 helps address a “kink year” component in one of the pricing schedule options by allowing the BPU to increase costs to electricity customers in energy years (EY) 2022-2024, such that the average cost to electricity customers from EY2019-2024 does not exceed a 9% cost cap during EY2019-2021 and a 7% cost cap for EY2022-2024. This cost cap flexibility allows the BPU to set higher TREC prices in the near term while still remaining below the legislated cost cap. Prior to this legislation adding flexibility, the BPU had proposed drastically lower TREC pricing during the first three “kink years” of the program, followed by higher pricing in later years.

For example, the two pricing schedules that the BPU had considered are: 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 BPU still has not finalized some key aspects of the TREC program, including the final price levels. SRECTrade will continue to monitor the development of the Transition Incentive program and provide updates.

New Jersey Board of Public Utilities Approves Solar Transition Incentive Program

Posted December 18th, 2019 by SRECTrade.

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.