In late spring, the Connecticut Light & Power Company (CL&P) and the United Illuminating Company (UI) announced the joint issuance for the second year of the Low and Zero Emissions Renewable Energy Credit (LREC and ZREC) Program. The utilities issued the program in the form of a Request for Proposal (RFP) for bids for 15 year contracts with LREC and ZREC projects larger than 100 kW (AC).
2013 Program Summary
The program will include three separate tiers for bidding: LREC, Medium ZREC, and Large ZREC. The LREC or Low Emission Renewable Energy Credit tier will include all qualified renewable energy projects less than or equal to 2,000 kW that emit no more than 0.07 pounds per MWh of nitrogen oxides, 0.10 pounds per MWh of carbon monoxide, 0.02 pounds per MWh of volatile organic compounds, and one grain per 100 standard cubic feet. The Medium ZREC or Zero Emission Renewable Energy Credit tier will include all qualified projects (i.e. solar, wind, and hydro) between 100 kW and 250 kW in. Finally, the Large ZREC tier will include all qualified projects (i.e. solar, wind, and hydro) between 250 kW and 1 MW in size.
Qualifying projects must:
- Be located behind the customer revenue meter
- Gain approval to interconnect to the contracting Company’s distribution system through the standard Company interconnection process
- Install a separate meter dedicated to the measurement of the project’s energy output for the purpose of determining the quantity of Class I RECs created from a qualified facility
This program occurs through a competitive bid process, and projects will be evaluated and selected based on pricing, with any ties to be settled through a random selection process. Bids are due by 1:00pm EST today, June 13, 2013. Both utilities have encouraged bidders to submit bids prior to the deadline to ensure successful submission of a bid in anticipation of an overwhelming number of applications.
After all bids have been submitted, the utilities expect to notify winning bidders by July 18, 2013. After notification, bidders must return partially executed contracts within approximately 15 business days. Winning bidders must also provide performance assurance within 5 business days of the Effective Date of the standard contract. Failure to provide performance assurance during this time will automatically terminate the agreement. Finally, bidders must select one of four allowed Delivery Term Start Dates. The Delivery Term Start Date is the date upon which the system may begin production and delivery of qualified ZRECs or LRECs.
2012 Program Results and Lessons Learned
CL&P and UI held the first round of this program in the summer of 2012 and successfully awarded 67 and 19 ZREC contracts, respectively. The below table provides an outline of the number of applications submitted, and weighted average bid prices for each tier and utility.
2012 Connecticut Medium and Large ZREC Number of Bids and Pricing
Although CL&P and UI awarded a number of contracts to qualified projects in the first year’s solicitation, both utilities experienced a major bump in the road as it became clear that some bids seemed to be more speculative in nature and did not have a high probability of execution. Sol Systems spoke with a number of developers last year who soon began to realize their low winning bid prices created an inability to obtain and secure financing for their projects. This then prevented developers from meeting the contract requirements for the program, including the ability to post bid security or performance assurance as they did not have the capital to support this requirement. This year, we expect developers and projects owners have learned their lesson and hopefully will look to bid in at more realistic prices that will ultimately make the project financeable.
Financing for Connecticut Solar Projects
Sol Systems invites developers who are submitting a bid into this program and are looking for financing to contact our team at firstname.lastname@example.org or (888) 235-1538 x2. Our team would be happy to discuss your project with you and assess financing opportunities.
About Sol Systems
Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.
For more information, please visit www.solsystemscompany.com.