The Maryland Energy Administration (MEA) issued a letter earlier today addressing the concerns surrounding the State’s approach to managing the SRECs related to the recently built Mount St. Mary’s (MSM) 17.4 MW solar farm. With 75 MW of installed capacity already in Maryland, and the expectation that the state will surpass its 100 MW mark before the end of the year, many in the Maryland solar industry have raised concerns regarding the effect these SRECs will have on future SREC prices in the state.
The Mount St. Mary’s 17.4 MW solar farm, which was completed in August of this year, is Maryland’s largest solar facility. This project was financed through a 20 year commitment by the State of Maryland, through the Department of General Services (DGS), and the University System of Maryland (USM) to purchase both the energy and the SRECs generated from this project. The DGS is responsible for two-thirds, or 10.67 MW, of electricity and SRECs produced and USM is responsible for one-third, or 5.33 MW, of electricity and SRECs produced.
In the letter, Abigail Ross Hopper, Acting Director of the MEA, outlines DGS and USM’s SREC management plans. The SREC management plans will differ slightly between DGS and USM, considering they each have different drivers that will affect the management of SRECs for which they are responsible. The DGS plans to “act as an SREC ‘provider of last resort’ whereby the State will sell excess SRECs only if the SREC market needs them.” The MEA has recommended that DGS establish a price floor, for example 90% of the ACP, for the sale of these excess SRECs in order to maintain some level of price stability. USM will use the SRECs generated from their 5.33 MW share to meet their “future RPS requirements, voluntary carbon reductions, and/or potential future utility budget shortfalls.” Because the SRECs from the MSM project represent a significant share of the market in 2013 and 2014, USM also does not intend to sell any SRECs in those compliance years in order to prevent market instability from the SREC oversupply that is expected during those years.
This letter brings some relief to those concerned about the future of Maryland’s SREC market and the management of the SRECs produced from the Mount St. Mary’s project, in particular. Based on Sol Systems’ model, the SREC market in Maryland will remain oversupplied for the 2012 compliance year; however, compliance years 2013 through 2015 are expected to be undersupplied if the future growth rate mirrors the historical growth rate. Sol Systems will continue to monitor the Maryland SREC market and track any future legislation. Please visit our blog for further updates.
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