Research

Washington DC Revises Solar Credit Laws

Washington D.C. has passed a law (B24-0950 / L24-0314) to change its renewable energy infrastructure requirements, making the District’s climate goals more aggressive than previously anticipated.  

 

With the number of installs in Washington DC doubling in the past few years, The Local Solar Expansion Act aims to re-balance the supply-demand fundamentals for the market. The bill will change the current solar carve-out from 10% of all delivered electricity to 15% by the year 2041. Additionally, the SACP (Solar Alternative Compliance Payment, or “penalty price”) is being reduced from $500.00 to $480.00 starting in 2024, and then gradually coming off $20.00 each year. This penalty price provides a theoretical ceiling for the cost of Solar Renewable Energy Credits (SRECs) in any given year. With that price being altered to a more conservative ramp-down, investor confidence will remain high and allow for further investment in the district. Although it is one of the smallest SREC markets in the country, the law’s passing allows Washington D.C.to remain one of the most premium. 


 

Year

Previous RPS

New RPS

Previous ACP

New ACP

2023

2.85%

3.00%

$500

$500

2024

3.15%

3.65%

$400

$480

2025

3.45%

4.30%

$400

$460

2026

3.75%

5.00%

$400

$440

2027

4.10%

5.65%

$400

$420

2028

4.50%

6.30%

$400

$400

2029

4.75%

7.00%

$300

$380

2030

5.00%

7.65%

$300

$360

2031

5.25%

8.30%

$300

$340

2032

5.50%

9.00%

$300

$320

2033

6.00%

9.65%

$300

$300

2034

6.50%

10.30%

$300

$300

2035

7.00%

11.00%

$300

$300

2036

7.50%

11.65%

$300

$300

2037

8.00%

12.30%

$300

$300

2038

8.50%

13.00%

$300

$300

2039

9.00%

13.65%

$300

$300

2040

9.50%

14.30%

$300

$300

2041

10.00%

15.00%

$300

$300


 

Flett Exchange will continue monitoring Washington, D.C. SREC markets and provide any additional updates as they are released.   

TAGS:
Washington DCResearch

New Jersey Board of Public Utilities Announces fixed $152 for TREC

The New Jersey Board of Public Utilities (BPU) announced on March 9, 2020 that the TREC will be a fixed $152 for 15 years. Prior it was set at $65 for the first three energy years and rising to $189 for the remaining 12 years.
 
The tiered SREC was a result of the cost cap implemented in the Clean Energy Act of 2018 limiting ratepayer costs to 9% in energy years 2019 to 2021 and then decreasing to 7% thereafter. 
 
On January 21, 2020 Governor Murphy signed into law amendments to the Clean Energy Act shifting the ratepayers savings potentially saved under the 9% to make up for modeled overspending when the 7% cap goes into effect in energy year 2022. The Board of Public Utilities has approved a fixed rate $152 based on the passage of the legislation and BPU staff recommendations. The amount of the $152 that a project actually receives is based on the following types of solar installations:
 
Landfill, Brownfield, Historic Fill = $152
Grid supply subsection (r) rooftop = $152
Net metered rooftop and carport = $152
Community Solar= $129.20 (85% of TREC value)
Ground mount (subsection r) = $91.20 (60% of TREC value)
Residential net-metered ground mount = $91.20 (60% of TREC value)
Residential net-metered rooftop and carport =  $91.20 (60% of TREC value)
Net-metered non-residential ground mount=  $91.20 (60% of TREC value)
 
 
Residential solar installers are especially pleased by this development. The new TREC program greatly decreases incentives for homeowners to invest in solar in New Jersey and the tiered incentive in the TREC would have made it especially hard for residential solar sales. 
 

DISCLAIMER: New Jersey SREC prices are volatile. Buyers and sellers of SRECs must do their own research. The above projections are subject to change as market dynamics change.

TAGS:
New JerseyResearchSolar

New Jersey AB 3723 Passage and its Effect on New Jersey SREC Prices

September 2018

In May 2018 New Jersey AB 3723 was passed which instituted major changes to the New Jersey solar incentive market revolving around SRECs.

History:

New Jersey was one of the early leaders in providing ratepayer incentives through SRECs to solar owners. Flett Exchange launched its’ New Jersey SREC market in June of 2007 to help facilitate an open and competitive market. The SREC program was created to provide a long-term 15 year pay-back as opposed to the large up-front incentive program that existed in New Jersey. Solar installation costs dropped quicker than expected during the last decade. As of the fall of 2018 New Jersey has close to 100,000 solar installations and produces over 3% of its electricity from solar. A major market reform was instituted in 2012 which increased demand for solar. This increase in demand averted a collapse in in SREC prices which kept solar investors whole and provided demand for a few more years of new solar development which satisfied solar developers. This same change slashed the cost cap by more than 50% to protect ratepayers. By 2016 it was apparent that once again costs to install new solar dropped quicker than expected. AB 3723 was passed in May 2018.

 

AB 3723 major changes:

  1. Closes the current SREC program to new applicants by June 2021

  2. Mathematically attempts to close the SREC program by timing the curtailment of supply of new solar while increasing demand at the same time thus “pinning” high SREC prices for the next 10 – 15 years.

  3. Adds a 7% cost cap by 2022 that is complicated/impossible to model and relies on BPU action and will most likely not kick in for years. The cost cap favors the wind development portion of the RPS by protecting it from this cap. The solar portion will be most likely be ratcheted down through reduced solar compliance costs.

(Plain English: Bail-out legislation for current solar owners (Attempts to keep SREC prices above $200 for years) that at the same time gives solar developers 2 to 3 years to cash in on projects before a new incentive program is created. Ratepayers who pay for it will never understand it which limits/reduces political risk for passing it. Provides for costs shifting 5+ years out from solar compliance to wind compliance thus potentially reducing SREC prices at that time)

Price Projection and Risks for Sellers of New Jersey SRECs:

AB 3723 prevented the New Jersey SREC market from a collapse which was inevitable by 2019-2021 due to the pace of solar development in New Jersey which was significantly more than what the legislation called for. In all SREC markets that experienced similar events – PA, MD, OH, SREC prices dropped to $10 or less for years. It appears that SREC prices will remain at the $180 to $250 range for the next 3 to 5 years (2018 to 2020/22) Analysis for prices and hedging strategies going out 3+ years are available to our registered and active customers.

DISCLAIMER: New Jersey SREC prices are volatile. Buyers and sellers of SRECs must do their own research. The above projections are subject to change as market dynamics change.

TAGS:
New JerseySRECResearch