On June 13, Ohio made history by becoming the first state to “freeze” its Renewable Portfolio Standard (RPS). The passage of SB310 was a major setback for the renewable industry in Ohio, but who knew what happened in the Buckeye State could affect solar in Pennsylvania, Virginia, and even Kentucky?
Ohio’s legislative change froze not only the RPS, but the solar renewable energy credit (SREC) trading markets in the surrounding states. Because bordering states such as Indiana, West Virginia, Michigan, and Pennsylvania can sell their SRECs into the Ohio solar market, spot market SREC prices in these states have drastically declined, dropping down from $70/SREC to $30/SREC in a matter of weeks.
As Virginia solar energy system owners sell their SRECs into the Pennsylvania SREC market, the Virginia solar market has also taken a hit. This all happened just when the Pennsylvania solar market was on the rebound. Pennsylvania SREC prices were as high as $76/SREC earlier in the year, much higher than the $20/SREC we were seeing in 2012 and 2013.
In sum, since the passage of the Ohio RPS freeze, trading activity in the open SREC market has slowed down significantly, and little to no forward, fixed price contract opportunities are available (Sol Systems is one of the few entities continuing to offer 5-10 year forward contracts. Contact our team for more info.).
As SRECs are important for driving solar energy development in a given state, the downfall of the SREC markets is counterproductive for stimulating the solar energy industry. Indiana, Kentucky, West Virginia, Virginia and Michigan will see less solar build, and possibly lower employment, all thanks to a political maneuver in Ohio.
Despite falling SREC prices, there is still hope for solar in these states. For example:
- Sol Systems has financed Indiana commercial solar projects that have been awarded feed-in tariff contracts from their local utilities.
- The Michigan Public Service Commission’s (MPSC) Solar Working Group released a report on how to expand utility solar programs in the Mitten.
- After legislative progress last year and the election of a new governor, some are optimistic that Virginia may finally have a solar market (albeit, a small one…for now), though there is still much left to do.
Despite the hope for solar in these markets, SREC owners will still be disappointed with falling prices that have been a direct result of the Ohio RPS freeze.
About Sol Systems
Sol Systems is a renewable energy finance firm that provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. Founded in 2008, Sol Systems focuses on meeting the industry’s most critical solar financing needs, including tax structured investments, capital placement, debt financing, and SREC portfolio management. To date, the company has facilitated financing for thousands of distributed generation solar projects and hundreds of millions in investment on behalf of Fortune 100 corporations, utilities, banks, family offices, and individuals. For more information, please visit www.solsystemscompany.com.
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