On Monday, July 23, 2012, Governor Chris Christie signed legislation that will help to bring stability to the growing solar market in New Jersey. Standing atop the list for installed capacity in Q1 2012, New Jersey continues to maintain a robust market for solar. However, this thriving market comes at a cost, and the increase in capacity installed has caused an oversupply in the New Jersey solar renewable energy credit (“SREC“) market. This oversupply has driven prices down to the mid-$100 range, as compared to $600 just over a year ago. The bills, S1925/A2966, provide a solution to address the concerns of many developers and end users over the decreasing value of SRECs.
As noted in a previous Sol Systems blog, S1925/A2966 contains two major provisions to help alleviate the oversupply in the market. First, this legislation will decrease the Solar Alternative Compliance Penalty (“ACP“) in 2014 to $339 per SREC from the original ACP of $625 per SREC. The Solar ACP is the payment that utilities and energy suppliers must make if they do not meet the requirement set forth in the solar carve-out of New Jersey’s Renewable Portfolio Standard (“RPS“). The ACP acts as a price ceiling in the SREC market. Second, the legislation contains an amended schedule for increasing the solar carve-out of the RPS. The solar carve-out is used to calculate the number of SRECs required by the RPS. The higher the carve-out, the greater the number of SRECs will be required. In combination, these two changes will help to bring SREC prices to a more stable level in the New Jersey solar market.
Most recently, Sol Systems has seen NJ 2012s bid at $135 and offered at $150, 2013s are bid at $135 and today there are not any live offers, and lastly, 2013-2015 strips are bid at $155 and offered at $185. Marks are expected to remain at this level for the near future. However, if the capacity build starts to ramp up again, marks will decline rapidly.
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 their 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.