A rising tide around the Basic Generation Service (BGS) Auction has been lifting all New Jersey SREC vintages, with prices for the forward three years of the curve (EY2017, EY2018, and EY2019) erasing most of their losses from November’s market-wide sell-off.
In this research brief, Karbone discusses the background of Oregon’s RPS and provides an overview of the market prior to S.B. 1547. The report then addresses the implications of the new legislation on demand and supply fundamentals in the Oregon REC market.
Over the past year, the Massachusetts SREC-II program has been facing significant programmatic risks as both the net metering and the solar carve-out caps were quickly reached. In April, Massachusetts lawmakers finally passed net metering reform that increased the private and the public caps by 3%, allowing the build of a large number of commercial solar projects that had accumulated on the waiting list for months. In the same month, the Department of Energy Resources (DOER) filed an emergency regulation after receiving a quantity of SREC-II applications in-excess of the available remaining capacity under the SREC-II program cap. The emergency regulations contained several key provisions that aimed to address market uncertainty and establishing a smooth transition to the next incentive program beyond SREC-II.
Despite a post-BGS retreat, New Jersey SREC prices have climbed steadily since the beginning of the spring through much of Q2 2016, retesting four-year highs for front-of-the-curve vintages.
This past December, Gov. Andrew M. Cuomo directed the New York Public Service Commission (PSC) to design and enact a new Clean Energy Standard (CES), mandating that 50% of all electricity consumed in New York must come from a renewable energy source by 2030. The CES is the planned successor to the New York Renewable Portfolio Standard (RPS), which expired at the end of February, 2016.
In the following research report, Karbone provides preliminary analysis of the potential impact this new market design will have on the renewable energy market outlook in New York.
A group of policy makers in Maryland gathered in December to draft a plan to expand and accelerate the state’s existing Renewable Portfolio Standard (RPS) program. Introduced as amendments to the Maryland Clean Energy Jobs Act of 2016, a draft of the proposal circulated in the marketplace early last month. On February 5th, S.B. 921 was introduced in the Senate, proposing to boostthe current RPS to a 25% goal by 2020 from the current mandate of 20% by 2022.
While NEPOOL Class I REC pricing saw a retreat in 2015 compared to 2014, prices for the spot vintages in all markets (except Maine) remained robust near their newly established low-$50sresistance level. NEPOOL Class I REC pricing tracked within 95% of their respective ACPs in 2013 and most of 2014, bringing into focus assumptions of persistent undersupply. Nevertheless, as REC generation increased in 2015, the NEPOOL Class I REC market became adequately supplied and REC prices pulled back.
New Jersey SREC pricing has reached four-year highs, recording levels not seen since December 2011. Breaking through what appeared to be 2015’s $250 resistance level in early November, front-of-the-curve pricing and liquidity have strengthened ostensibly through the end of the year and start of 2016. The first week of January saw EY2016 and EY2017 SRECs trade north of $290 before settling in the $285 context by the week’s end. In light of the considerable surplus of SRECs in circulation, this price rally seems to render the market paradoxical.
After the recent failure of the Massachusetts legislature to pass a compromise bill to raise the net metering cap before winter recess, many projects are at risk of heading off a cliff. Coupled with the Investment Tax Credit (ITC) step-down from 30% to 10% for commercial projects, the delay in raising the net metering cap may jeopardize the installations of over 115 MW in 2016. In this Report, the Karbone Research Desk addresses the impact of these recent developments on the SREC-II market and discusses forward build rates scenarios, historical pricing trends, and the impact of legislative uncertainty on market fundamentals.
To ensure the reliability of the Mid-Atlantic grid, earlier this year PJM instituted the Capacity Performance (CP) plan. This created a regime with higher capacity revenue expectations, accompanied by more rigorous plant performance criteria and greater penalty payments. Given the 2018/2019 Base Residual Auction (BRA) results, how well has the CP achieved its goals? Can similar results be expected in future auctions? What are the broader market implications from the CP program change? In the quiet between the storm of PJM auctions this summer and end of year EFOR-D assessments, Karbone’s Research Group and Power Market Brokerage Desk have taken the opportunity to explore these considerations below.