CA RPS: Market Outlook Compliance Period 2

Karbone Market Research Briefs

January 1, 2014 saw the official kick-off of Compliance Period 2 (“CP2”, 2014-2016) in the California Renewable Portfolio Standard (RPS) market. As the market gears up for this latest program phase, some highlights (and lessons learned) from the first Compliance Period have helped set the stage.

North Carolina Solar Market Update

Karbone Market Research Briefs

The current installed capacity according to North Carolina Renewable Energy Tracking System is 236 MW of solar PV and is forecast to reach 285 MW by year-end 2013. This capacity could generate 250,000 solar RECs in 2013, already surpassing the NC 2018 RPS solar target of 0.2%. Additionally, a 100 MW project in Duplin County is planned for construction in 2014, making it one of the largest solar farms to be built on the East Coast. According to SNL Financial, there are an estimated 800 MW or more of solar projects in advanced development or under construction in NC.

PJM Class I REC Pricing Update

Karbone Market Research Briefs

The PJM Class I REC price rally continued strongly through to August 2013, climbing above $15 for the most liquid markets of New Jersey, Maryland and Pennsylvania, and to the high-$13 level even in the less liquid markets of Ohio. Prices have since retreated slightly from last month’s peak, settling in the mid-$13 range as of September 6 for the premium markets.

PJM Class I and Tier I RECs Market Overview

Karbone Market Research Briefs

With the threat of the cessation of the PTC in late 2012, wind was the driving force behind Class/Tier I REC supply expansion in PJM over 2011 and 2012. Karbone estimates more than 5m wind RECs were added to PJM in this period, bringing the total potential generation to more than 19m wind RECs for PJM eligible states.

NEPOOL REC Market CT Regulation Update Class I & II RECs

Karbone Market Research Briefs

The State of Connecticut has two proposed bills that could potentially affect Renewable Portfolio Standards (RPS). On January 22, 2013, Rep. Lawrence Miller (R) introduced House Bill (HB) 5475, which aims to provide additional time for compliance with the RPS requirements by extending each deadline beginning in 2016. On January 25, 2013, Rep. John E Piscopo (R) introduced HB 6086 with the purpose of amending general statutes to “include all types of hydropower as a Class I renewable energy source”. All hydropower currently defined as Class II renewable energy sources would be included in the Class I renewable energy source classification, according to the bill’s statement of purpose.

Maine RPS Update New (Class I) RECs

Karbone Market Research Briefs

Maine Governor LePage (R) recently indicated that the evidence from the report “The Economic Impact of Maine’s Renewable Portfolio Standard”, suggested the program was raising costs on the state while providing little environmental benefits. As many reviewers point out, these conclusions run counter to those of similar studies completed that indicate no increase in rate payer costs due to RPS programs in other states. With Democrats taking control of both the Maine Senate and House, coupled with Senator Angus King deciding to caucus with Democrats, it seems likely that political support for renewables will continue in ME on a state and federal level. Despite this likely ongoing support, ME prices have continued to decline due to NEPOOL supply flowing back into ME.

NEPOOL REC Market Q2 2012 Update Class I RECs

Karbone Market Research Briefs

The Massachusetts and Connecticut Class I REC markets experienced the expected seasonal downturn in supply, with wind REC generation dropping the most of all technologies. Year-on-year quarterly generation was up for both biomass and wind, while LFG declined by approximately 45,000 RECs.

NEPOOL REC Market 2012 MA Class I REC Q1 2012 Update

Karbone Market Research Briefs

The MA Class I market remains the most attractive NEPOOL REC market with record high prices, trading just below the ACP of $64.02 for the first half of 2012. The delay in production data release of three and a half months has kept prices at these highs, despite the market expectation that supply in Q1 2012 would remain at Q4 2011 levels. The shared market sentiment on the buy-side is that these prices could come off, as high NEPOOL Q1 2012 production data of the three key Class I technologies – Biomass, Wind and Landfill Gas (LFG) – met expectations by exceeding Q4 2011 supply (Table 1). Coupling this with strong potential supply estimates for the remaining quarters of 2012 and a robust bank of 2011 RECs, 2012 REC supply for the balance of the year in NEPOOL seems well positioned to meet the modest increase in the MA Class I RPS obligation.

Massachusetts RPS Update Biomass Regulation

Karbone Market Research Briefs

The Massachusetts DOER hosted a webinar on May 16 providing an overview of the key components of the new regulatory framework for biomass. While adoption of the new regulation will limit biomass as a proportion of the RPS, key components still present trading and compliance opportunities. The new framework will be constrained by a new green house gas (GHG) emissions target. The following brief provides an overview of biomass GHG accounting, followed by a summary of other key elements from the webinar.