On Monday, June 25th, the New Jersey legislature provided strong hope for a correction in the volatile New Jersey solar renewable energy credit (“SREC”) market. Both the Assembly and the Senate passed S1925 which contains an amended schedule for increasing the solar carve-out in the Renewable Portfolio Standard (“RPS”) and decreasing the Solar Alternative Compliance Payment (“SACP”) beginning in 2014. The final version of the bill contains the schedules as originally noted in the Assembly Solar Bill (A2966). Although the increases in the solar carve-out and the decreases in the SACP are not as aggressive as originally laid out, the quick movement of both Houses to pass a version of this solar bill provides a positive sign for the New Jersey solar credit market.
Ideally, the reduced SACP and increased solar requirements will work to stabilize falling prices in the SREC market and create a more viable incentive for new solar installations. Increasing the RPS requirements will require utilities to procure a larger amount of SRECs each year. The reduction in the SACP will cushion the potential impact of the increased SREC volume requirements on ratepayers; which is significant because utilities tend to pass compliance costs onto ratepayers.
Table 1. S1925 Proposed SACP Values and Solar Carve-Out Requirements
It is important to remember that it may still take a few years before the market is undersupplied again. However, forward prices in the market have already begun to rise by 20% indicating that SREC prices are beginning to increase at a more substantial level. With the potential for a more viable SREC market and higher SREC prices that this New Jersey solar bill provides, the New Jersey – and the national – solar industry would not experience the decline that they were previously expecting.
On June 26, 2012, in early morning trading, SRECs for Compliance Year 2012 were trading at $155 per SREC, while 2013-2015 SREC bids were at $165 and offers were at $190. Due to this immediate increase in pricing, Sol Systems expects the market to be plus $200 in the near future.
About Sol Systems
Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.
Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying the origination, diligence, and financing processes. Developers seeking financing for projects can access over $2.5 billion in capital through the Sol Systems investor network.
In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.
For more information, please visit www.solsystemscompany.com.