The strength in this spring’s New Jersey SRECs rally has pushed spot prices to their three-and-a-half-year high. Since post-BGS lows of $190, the front of the SREC curve has marched to the high $230s range following the June 9th EDC Auction and monthly solar installation data release for May.
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 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.
NEPOOL Class I data showed continued growth across all states and for almost all technologies. Class I REC generation increased 21% in Q1 2014 over Q1 2013 in Massachusetts, 23% in Connecticut, 42% in Maine, 42% in Rhode Island, and 8% in New Hampshire.
On June 11th, key solar policy decision makers unveiled a Proposal that would radically transition solar incentives in Massachusetts away from the SREC market and towards a more feed-in-tariff type regime. The Proposal outlines a Declining Block Solar Incentive Program that would supplant much of the recently launched SREC II program. If implemented, we estimate that the SREC II market size could be reduced from roughly 1 GW to closer to 300 MW.
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.
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.
The following research brief will focus on the recent developments in the NJ SREC market, including pricing and installation trends, followed by comparisons against the MA SREC market.
This research will provide an overview of the Delaware renewable energy and power markets. Delaware Public Service Commission in 2012 established a competitive solicitation mechanism through Delmarva Power and Light, known as the Delaware SREC Procurement Program, which is acting as a price-setting tool in the market. The transition was part of Delmarva Power becoming the only compliance buyer of SRECs in the market. Winners are awarded a 20-year contract, with the accepted bid price covering the first 7 years and the remaining 13 years receiving $50 per SREC. The last round of the solicitation completed in May 2013 saw prices average in the $34 to $40 range for existing system, and $46 to $87 range for new systems.
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.