New Jersey SRECs: BGS & Running of the Bulls

Karbone Market Research Briefs

NJ SREC pricing has appreciated to levels not witnessed since Q1 2012. Breaking past the $200/SREC threshold in the last weeks, forward vintage pricing and liquidity have strengthened ostensibly in advance of the state’s focal Basic Generation Service (BGS) Auction. With the Auction still over two months away however, questions remain as to how high the price rally will reach, and what other forces could be behind it.

New Jersey SRECs Q2 Wrap up & Q3 Outlook

Karbone Market Research Briefs

New Jersey SREC prices held steady throughout Q2 after rallying back from a post-BGS dip in the last week of Q1. RY 14-16 vintage values started Q2 in April at $180 and climbed to the $188 range by the end of May before settling back around $182 at the end of Q2 in June. With the start of Q3 however, prices have begun to fall off, with value for RY 14-16 vintages dropping to the mid-$160s range as of mid-July.

NJ SREC Market Update

Karbone Market Research Briefs

Large projects in the development pipeline have finally impacted the market as preliminary February installation numbers were estimated at 44.1 MW. Large-scale projects accounted for 32.6 MW of this volume and included a 10 MW Subsection Q project that had reached commercial operation in Q4 2013 and two behind-the-meter projects, one at 13.1 MW and another at 9.5 MW.

New Jersey SREC Market Update

Karbone Market Research Briefs

Recent rule-making by the NJ BPU limited the number of grandfathered grid-tied projects to 12 MW, approving only 3 of the 50 projects. This unexpected BPU decision caused an appreciation in SREC prices above $140 for the first time since July 2012. The NJ BPU rejected 26 projects and suggested they apply under Subsection Q for 80 MW per year of new grid-tied projects. 21 projects totaling 230 MW were deferred a decision pending further review for approval under Subsection S for farmland projects. It is unclear how many of the 230 MW of projects may impact the market.

New Jersey SREC Market Pricing Update

Karbone Market Research Briefs

The much-anticipated July 23 signing of Senate Bill 1925 into law has not resulted in stabilizing the current SREC market. With 856 MW of installed capacity in New Jersey through the end of July, there is currently enough SREC supply to ensure that the market will be adequately supplied through at least EY 2014 (Figure 1). While S-1925 enables SRECs generated after July 23 to have an increased life of 5 years, EY 2012 useful SREC life remains at 3 years with eligibility only through EY 2014.

New Jersey SREC Market Legislative Update

Karbone Market Research Briefs

After a year of extensive lobbying work from the NJ solar industry, Governor Christie has signed into law Assembly Bill 2966. The market expectation is that the bill will revitalize the NJ solar market. However, this optimism is constrained by the fact that the market must pare back growth from the current monthly installation rates in excess of 30 MW.

New Jersey SREC Market Proposed RPS Change

Karbone Market Research Briefs

Karbone recently received draft legislation detailing plans to revive the NJ solar market. The key features include the doubling of the RY 2014 SREC requirement to approximately 1.48m SRECs, reducing the SACP from $625 to $350, and extending the SREC life from 3 to 5 years.