Maryland & DC SREC Market Update

Karbone Market Research Briefs

Maryland and Washington DC present two cases of SREC markets in very different scenarios, highlighting the varied characteristics of the fixed target RPS markets. The DC market in July 2011 closed its borders to SRECs from solar facilities from other states, leading the market to be fundamentally short of supply of SRECs, as DC sited solar project development lagged.

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.

MA Solar Carve-Out Policy Update

Karbone Market Research Briefs

To address the oversupply of project applications for the Massachusetts Solar Carve-Out Program, the Department of Energy Resources (DOER) announced in its June 7, 2013 Stakeholder Briefing that it is instituting an Emergency Regulation to expand the current 400 MW Program cap. This expansion comes in response to the estimated 900 MW of current cumulative project pipeline capacity. The excess of potential Program supply is a result of rapidly accelerated Qualification Application rates, particularly since April 2013, as developers have rushed their efforts to get projects included within the 400 MW cap. MA qualified capacity as of May 20, 2013 was 287 MW, of which 217.9 MW was currently operating.

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.

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.

Massachusetts SREC Market Price and Rule Update

Karbone Market Research Briefs

MA SREC prices have rallied since mid January, with Vintage 2012 prices increasing from $205 to trade as high as $235 this month. Over the same period the vintage 2013 SRECs rallied stronger than 2012’s, moving from $155 to $215, with the spread narrowing from $50 to $20. 

The MA market currently has three uncertainties that require clarifying. In the short-term, the focus is on which proposed rule changes will be adopted, and how the Solar Credit Clearing House Auction (SCCHA) will play out. In the medium/long-term, parties are concerned with what happens when the market hits the 400 MW cap. This analysis will seek to analyze these uncertainties.

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.

California RPS Market Biomethane Electricity Generation Approval

Karbone Market Research Briefs

In April 2012, Karbone reported the suspension of biomethane injected into the natural gas pipeline system as an RPS resource. On September 27 2012, Governor Brown signed into law AB 1900 and AB 2196. Together, these bills fix liability concerns that previously inhibited landfill gas pipeline injection, while giving full RPS eligibility to electricity generation from pipeline injected biomethane, assuming several criteria metrics are met and CEC certification is obtained.