Maryland SREC Values Increase Due to New RPS Law

Posted on June 16, 2021August 11, 2021 by Callie Sofis-Scheft

Maryland SREC Values Increase Due to New RPS Law

Policy | 16 Jun 2021

By Callie Sofis-Scheft

On May 30th, Senate Bill No. 65 (SB 65) went into law, which revised Maryland’s renewable energy portfolio standard (RPS). The bill increased the solar alternative compliance payment (SACP) which utilities must pay when they do not meet RPS requirements but decreased the percentage of energy that utilities must procure from Tier I renewable resources and from solar resources under the solar carve-out.

By increasing the SACP, the law effectively increased the “price ceiling” for solar renewable energy credits (SRECs), and therefore the likely price at which SRECs will sell. Currently, the SACP is $80 per SREC for 2021 and $60 per SREC for 2022. Before SB 65, the SACP was set to drop to $45 per SREC in 2023, then $40 in 2024 and $35 in 2025. SB 65 increased these price ceilings to $60 per SREC in 2023 and 2024, and $55 in 2025.

While the Tier I and solar carve-out requirement decreases may seem negative, the amended requirements paired with the SACP increase may positively impact Maryland SREC prices and Maryland solar build. The new requirements should help Maryland solar supply and demand move closer together. To date, Maryland’s actual solar supply has lagged behind the demand for solar. By decreasing utility demand and increasing supply incentives (SREC prices), solar project origination and generation should increase accordingly.

We are already seeing Maryland SREC pricing rise and expect solar project origination to increase as well. These developments are exciting and beneficial to homeowners, installers, and developers throughout Maryland.

To compare all the RPS and SACP changes in Maryland, please refer to the table below.

Year	Old Solar Carve-Out	New Solar Carve-Out	Old Tier I Requirement	New Tier I Requirement	Old SACP	New SACP	Tier I ACP (Unchanged)
2021	7.5%	n/a	30.8%	n/a	$80.00	n/a	$30.00
2022	8.5%	5.5%	33.1%	30.1%	$60.00	$60.00	$30.00
2023	9.5%	6.0%	35.4%	31.9%	$45.00	$60.00	$30.00
2024	10.5%	6.5%	37.7%	33.7%	$40.00	$60.00	$27.50
2025	11.5%	7.0%	40.0%	35.5%	$35.00	$55.00	$25.00
2026	12.5%	8.0%	42.5%	38.0%	$30.00	$45.00	$24.75
2027	13.5%	9.5%	45.5%	41.5%	$25.00	$35.00	$24.50
2028	14.5%	11.0%	47.5%	43.0%	$22.50	$32.50	$22.50
2029	14.5%	12.5%	49.5%	47.5%	$22.50	$25.00	$22.50
2030+	14.5%	14.5%	50%	50.0%	$22.50	$22.25	$22.35

New Jersey’s Legacy SREC Program Reaches a Transition Point

Posted on April 17, 2020January 11, 2023 by The Sol Systems Team

Blog

New Jersey’s Legacy SREC Program Reaches a Transition Point

Policy | 17 Apr 2020

By The Sol Systems Team

New Jersey plans to
close its legacy Solar Renewable Energy Credit (“SREC”) program at the end of
April. However, the closure of the program is by no means the end to solar in
New Jersey.

Per the Clean Energy Act of 2018, New Jersey is required to close the current SREC incentive program once the New Jersey Board of Public Utilities (“BPU”) determines solar electricity generation equals 5.1% of the total state electricity generation load. Last week, just over a year later, the BPU announced that it will meet the 5.1% and will move forward to close the legacy program by May 1, 2020.

Importantly, solar projects that are already in the legacy program will remain eligible under the legacy program and will continue to generate SRECs for the term of their qualification life. However, moving forward the Clean Energy Act of 2018 tasked the BPU to develop a successor solar program.

While the design and structure of the successor program is not final, the BPU has proposed and finalized a new, temporary transition incentive program. Solar projects that have submitted a complete application to the legacy SREC registration program, but are not yet operational, will be eligible for this transition program and its new Transition Renewable Energy Credits (“TREC”) which, like the legacy SREC, a TREC will be generated on a per MWh production basis. This TREC program will officially open on May 1.

Under the new TREC program, a new solar project will be eligible for TRECs for 15 years and each TREC will have a two-year life. The TREC price is proposed at a fixed rate of $152 for the 15-year eligibility period. However, unlike the legacy program, the new price per TREC will be factored based on project type. The factors are as follows:

The incorporation of this factorization means the value of each TREC will differ based on project type. A project’s TREC value will be the base compensation rate of $152 times that project type’s factor. For a residential customer the TREC value is calculated by multiplying $152 by residential’s 0.6 factor, which yields a residential price of $91.20 per TREC for 15 years.

The intent of the new
TREC program is to ease the transition between the legacy SREC program and what
we hope will be a robust, long-term successor program.

It is essential for Sol Systems and other renewable energy companies to remain involved in the process as the BPU moves forward to design and implement the successor program. As of now, the BPU is holding discussions with stakeholders and actively requesting and accepting feedback. Solar energy is key to success of New Jersey’s competitive energy market and the continued growth of the industry is necessary to provide much needed job growth along with community economic and environmental health benefits.

ABOUT SOL SYSTEMS

Sol Systems is a leading national solar energy firm with an established reputation for integrity and reliability across its development, infrastructure and environmental commodity businesses.To date, Sol has developed and/or financed over 850 MW of solar projects valued at more than $1 billion for Fortune 100 companies, municipalities, counties, utilities, universities and schools. The company also actively shapes and trades in environmental commodity and electricity markets throughout the United States. The company was founded in 2008, is based in Washington D.C, and is led by its founder. Sol Systems works with its team, partners, and clients to create a more sustainable future we can all believe in. For more information: www.solsystems.com

Pennsylvania SRECs Two Years After Act 40

Posted on August 29, 2019August 16, 2021 by The Sol Systems Team

Blog

Pennsylvania SRECs Two Years After Act 40

Policy | 29 Aug 2019

By The Sol Systems Team

Two years ago, SREC prices in the state of Pennsylvania were at an extreme low point of $4/SREC. In response to these low prices, the Pennsylvania legislature passed Act 40 which removed the eligibility of out-of-state systems to produce Pennsylvania SRECs. The effects of this supply reduction were not seen immediately, but since the Act’s passage SREC prices in Pennsylvania have begun to increase.

Border Close to Now

At the start of 2016, SREC prices in Pennsylvania were strong at $18 but as the year progressed prices slowly declined and reached $4 in the middle of 2017. These low prices slowed development in the state and made it very difficult for solar projects to enter the market. These factors came together to eliminate much of the benefit from Pennsylvania’s solar carve-out in its Alternative Energy Portfolio Standard to encouraging in-state solar deployment. This led to the decision under Pennsylvania Act 40 to close the SREC border, disallowing out-of-state systems to generate SRECs. Following Act 40, the rebound in pricing was not immediate. Despite the Act’s passage, prices from when Act 40 was implemented in October 2017 through January 2019 prices remained low, below $8/SREC. The delay in price reaction to the change is likely due to the haziness over interpretation of the act. The PUC made a ruling clearing up ambiguity in April 2018 that completely shut off the market to any generator not in Pennsylvania regardless of when they were interconnected and eliminated all SRECs that had already been minted from out of state systems.

Since the start of 2019, prices have risen to almost six times their previous value, with prices set at $45/SREC. This will mean a boon for solar development in the state that still has about half of its 0.5% solar carve-out to fill out by 2021. This boon will mean more solar jobs and build out in Pennsylvania over the coming year, building on a continuing trend. Pennsylvania is already seeing an uptick in solar installation with 228 more installations in the first quarter over last year. The border close did not eliminate all interstate REC trading in Pennsylvania. Out of state SRECs can still be sold in Pennsylvania can still sell their SRECs there as Tier I RECs.

Looking Forward

In April, a bill was introduced to the Pennsylvania legislature that would dramatically increase the AEPS and the solar carve-out. It would bring the AEPS to 30% and the solar carve-out to 10% by 2030, constituting a twenty-fold increase in demand for SRECs in the state from the original target of 0.5%. If this legislation were to pass when the legislature reconvenes in September, it would make Pennsylvania one of the more ambitious states when it comes to solar energy targets. It would exceed New Jersey’s 5.1% carve-out, matching Washington DC’s 10% solar by 2041, and falling short of Maryland’s 14.5% by 2030, the highest solar carveout in the country. The change would mean the potential for even more growth in SREC prices beyond 2021. The change to the AEPS would not alter the SACP schedule as it is but would just add on to it beyond where it currently stops. The schedule would be split into two different targets for 2030; 2.5% of the state’s electricity from residential solar and 7.5% from utility-scale systems. The Pennsylvania legislature will reconvene on September 17^th and will deliberate on SB600 by the end of the year.

Year	Residential	Utility Scale	Total Solar	Full AEPS
2020	0.5%	-	0.5%	8%
2021	0.65%	0.94%	1.59%	10.444%
2022	0.82%	1.88%	2.7%	12.888%
2023	0.98%	2.81%	3.79%	15.332%
2024	1.13%	3.75%	4.88%	17.776%
2025	1.3%	4.5%	5.8%	20.22%
2026	1.5%	5.25%	6.75%	22.664%
2027	1.78%	6%	7.78%	25.108%
2028	2.11%	6.75%	8.86%	27.552%
2029	2.5%	7.5%	10%	30%

With the border for SRECs closed and the potential of a new AEPS on the horizon, prospects for SRECs and solar build in Pennsylvania are looking good. To be able to meet the ambitious proposed goal there will need to be thousands of more jobs in Pennsylvania in and around the solar industry to support the rapid and large scale build out of new solar in the state. When the legislature returns in September they will have multiple pieces of renewable energy legislation on the docket, including the increase to the AEPS as well as a bill that would require 100% renewable energy usage in the state by 2050. If passed, these bills could help to propel Pennsylvania towards catching up with its neighbors New Jersey and Maryland in the renewable energy industry.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last ten years, Sol Systems has delivered 800 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com

Maryland Clean Energy Jobs Act Bolsters SREC Prices

Posted on July 1, 2019August 16, 2021 by The Sol Systems Team

Blog

Maryland Clean Energy Jobs Act Bolsters SREC Prices

Policy | 01 Jul 2019

By The Sol Systems Team

On April 8^th, 2019 the Maryland General Assembly passed the Clean Energy Jobs Act (CEJA), an update to the state’s renewable portfolio standard. The bill raises the state’s renewable goal to 50% by 2030 with a 14.5% solar carve-out. This increases 2019 demand for SRECs from 1.95% to 5.5%.

SREC Prices on the Rise

As stated in The SOURCE earlier this year, to meet the 14.5% solar carve-out, based on current load, 5 GW of solar will need to be built. This increased demand under Maryland’s RPS has already begun sending market signals and translated into a major increase in state SREC prices. Before CEJA was passed, SRECs in Maryland were trading around $11; however, post CEJA becoming law we’ve seen SREC pricing rise as high as $74. CEJA has provided much needed price support to Maryland’s SREC market. However, we’ll likely never see it go back up to its 2016 high of $160 given that the alternative compliance payment, the effective price ceiling for the market, is set at $100. Even with the $100 cap, the higher SREC prices will create a stronger incentive for Maryland residents and business owners to install solar, helping the economy and the environment. This effect can be seen through the original introduction of the SREC program, which helped to establish Maryland as an early leader in residential solar. A similar effect could be expected from CEJA’s expansion of the program.

This renewed and increased demand for solar will help reinvigorate the solar industry in the state bring more solar jobs back to Maryland, which saw a decrease of over 900 jobs with the lull in the SREC market under previous legislation. According to the Solar Foundation’s Jobs Census, Maryland has lost about one thousand solar jobs in the last two years. The state of Maryland has already released projections from 2018 that anticipate that there will be over one thousand new electricians and related professionals in the state by 2020, many of which may be able to install solar.

Legislative Resistance

While CEJA was ultimately successful and faced some opposition from the legislature, the biggest unknown was how Governor Hogan would react. Governor Hogan who does support renewable development and acknowledges the dangers our natural environment is facing, has not been a supporter of the state’s RPS. In the end, CEJA passed the General Assembly with a veto-proof majority, showing strong support from the legislative branch, and Governor Hogan let the bill pass without his signature, allowing it to go into effect on May 25^th, 2019. In his statement on why he did not sign the bill, Governor Hogan wrote that the “bill is not clean enough, nor smart enough, nor does it create the intended jobs within Maryland” and that he plans on introducing his own legislation on the first day of the 2020 legislative session. It is yet to be seen what impacts Governor Hogan’s potential Clean and Renewable Energy Standard (CARES) on the broader RPS and on the solar carve-out since he hasn’t yet provided specifics, but the solar industry will continue to monitor, engage, and advocate for strong solar policy in Maryland.

Positive Steps Towards Greater Maryland Solar Build-out

CEJA wasn’t the only pro-solar bill that passed in Annapolis this session. Two other bills that passed alongside CEJA have the potential to increase installation rates in Maryland by making solar an even more enticing investment. The first was a bill that extended the state's community solar program until 2022 and increased maximum capacity of program systems to 2 MW. The other bill created an energy storage pilot program requiring utilities to facilitate the building of 10 MW of energy storage. These new pieces of legislation should compound to create an increase in the amount of solar installed in the state over the next ten years.

This legislative session, the state of Maryland has continued to set higher and more ambitious goals, which should act to bolster the SREC and solar markets. The Assembly’s expansion of the RPS and solar carve-out have already helped to create more demand in an over supplied Maryland SREC market. Even though SREC prices will never again reach their 2016 highs, there is still a lot of room for growth in both the SREC and wider solar market. This bill also does not mark the last potential RPS expansion for the state of Maryland. CEJA included a provision for the General Assembly to review the standard and assess the feasibility of a 100% goal by 2040, but that will have to wait until around 2025.

ABOUT SOL SYSTEMS

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com

Sol Systems Partners with Solar United Neighbors

Posted on August 28, 2018January 25, 2023 by The Sol Systems Team

Blog

Sol Systems Partners with Solar United Neighbors

2018 | 28 Aug 2018

By The Sol Systems Team

Sol Systems has recently rolled out a partnership with Solar United Neighbors, offering their members and co-op participants a streamlined solar renewable energy credit (SREC) experience.

Solar United Neighbors began about a decade ago when a teenager asked a simple question: “Mom, can we go solar?” When his mother found out how complex it was, she said that they would only do it along with a group of neighbors. The teenager and his friend went out and got 50 neighbors to go solar in a "co-op" together — and Solar United Neighbors was born.

Today, Solar United Neighbors works across the country helping thousands of people go solar each year, both through neighborhood based co-ops and by providing individual support to members. But helping people go solar is just the beginning of their work. Solar United Neighbors organizes solar supporters to protect the long-term value of rooftop solar and expand access to those currently locked out of the solar market. Solar United Neighbors gives solar homeowners a powerful voice to influence policies that bring the control and benefits of energy production back to local communities.

Sol Systems hopes that our partnership will help Solar United Neighbors on their journey towards building a modern, clean energy system with rooftop solar as the cornerstone. If you’d like to learn more about Solar United Neighbors, their programs, or this offering, click here.

ABOUT SOL SYSTEMS

Over the last ten years, Sol Systems has delivered 700 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

The Results Are In: MA Clearinghouse Auctions

Posted on August 21, 2017January 25, 2023 by Kate Brandus

Blog

The Results Are In: MA Clearinghouse Auctions

2017 | 21 Aug 2017

By Kate Brandus

Following suit from recent years, all SREC I and SREC II 2016 compliance-year solar renewable energy credits (SRECs) cleared in the first round of the Massachusetts Department of Energy Resources (DOER) Clearinghouse Auction on July 24^th. The DOER’s auction is designed to support SREC pricing for solar energy system owners in the event of an SREC market oversupply. Need a refresher on how the auction works? Check out last year’s blog.

Round One & Done

Despite the large volume of SRECs deposited by sellers, both SREC I and SREC II auctions cleared in the first round. Combined auction deposit volume for SREC I and SREC II totaled 261,805 SRECs, representing $78,541,500 of value at a fixed clearing price of $300 ($285 net to sellers) for the 2016 compliance year.

Right before the 2016 auctions, DOER established a strong market signal to bidders by setting aggressive 2018 compliance-year demand targets. Since SRECs purchased in the 1^st round can be banked into compliance-year 2018, the robust demand schedules are likely one of the main factors contributing to the success of this year’s auctions. Additionally, if the auctions proceeded to a third round, 2018 compliance-year demand would have increased automatically (providing yet another incentive for bidders with SREC obligations to acquire volume quickly).

How the Auction Works

The Clearinghouse Auction is essentially the “last resort” for system owners to sell their SRECs at the end of a compliance year. In an oversupplied market, system owners must deposit unsold SRECs into the Clearinghouse. Each auction has a fixed bid price (reference table below) that compliance entities (“bidders”) must pay to purchase SRECs in the auction. Bidders submit their bids based on the volume of SRECs that they would like to purchase. If the cumulative bid volume is insufficient to clear the volume of SRECs deposited in the 1^st round, the shelf life for the SRECs increases to three years and the value of the SRECs also increases. If the bid volume is insufficient to clear the volume of SRECs deposited in the 2^nd round, the minimum standard (demand) for the following compliance year is increased by the total number of SRECs deposited into the auction. If this condition is still not met, the auction proceeds to a 3^rd round and “fails”. In the 3^rd round, partial volume can clear and demand in the following compliance year would increase, thereby creating bid interest and providing price support to the market. Due to the dynamics of the auction mechanism, there is an incentive for compliance entities to buy SRECs in Round 1. Otherwise, they risk higher compliance costs in future years if they are unable to procure enough SRECs for their RPS obligation.

What can we expect in future auctions?

Will future auctions continue to clear in the first round? Nobody knows for sure. However, we do know that there will continue to be auctions in years that SRECs are deposited into the Clearinghouse and oversupply exists. We also know that 2016 marks the last year of fixed auction prices at $300 for the MA SREC II market. From the 2017 compliance-year onward, the auction floor price will gradually decline per the following schedule:

The SREC I auction floor price will remain fixed at $300 ($285 net to sellers) for the continuation of the program. For more information on solar news in MA, please contact our team at info@solsystems.com or check out or blog. We’d be happy to speak with you.

ABOUT SOL SYSTEMS

Over the last eight years, Sol Systems has delivered more than 600MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Tag: SREC