Today, New Jersey Governor Chris Christie signed into law legislation to increase the state's solar goals by amending the Renewable Portfolio Standard (RPS). Both Senate Bill 1925 and Assembly Bill 2966 were passed on June 25, 2012. The bill, which attempts to address the state’s SREC oversupply, adjusts the Renewable Portfolio Standard (RPS) Solar requirements by amending the following:
1) Solar RPS Requirements Increased beginning in Reporting Year 2014: Beginning June 1, 2013 the market will see an increase in SREC requirements, shifting the state’s solar goals from a fixed megawatt hour requirement to a percentage based requirement. Although the requirements increase in the near term, later dated requirements decline over the current solar goals.
2) New Solar Alternative Compliance Payment (SACP) Schedule: Beginning in the 2014 energy year, the SACP will be reduced to $339 declining to $239 by 2028.
3) Grid Supply Projects Capped at 80 MW Per Year in 2014-2016: In 2014, 2015, and 2016 only 80 MW of aggregated grid supply solar can be installed. Certain exemptions for landfills and parking lots have been made. The capacity of a single project shall not be greater than 10 MW.
4) SREC Life Extended to 5 Years: SRECs will be eligible to meet compliance obligations the year in which they are generated and the following four compliance periods.
5) Rules Set for Public Entity Net Metering Aggregation: The bill implements regulations for aggregate net metering for public entities such as schools, counties, or other municipal agencies.
NJ Solar RPS in 2014 and Beyond: Summary of Solar % Requirements and SACP
The charts below demonstrate the % Solar Requirements set under the new bill as well as the proposed SACP schedule. It is important to note that the existing 2012 and 2013 reporting year (RY) requirements do not change under this piece of legislation. RY2012 and RY2013 have an SREC requirement of 442,000 and 596,000 SRECs, respectively. Additionally, the SACP for RY2012 and RY2013 are $658 and $641, respectively.
Slow Down New Jersey, You're Installing Too Much Solar - The NJ SREC Market Looking Forward
On July 19, 2012, the New Jersey Office of Clean Energy estimated installed solar capacity to be 831.6 MW as of 6/30/12. This represents an increase of approximately 29 MW from the prior month. Also, the state's solar project pipeline increased by approximately 30 MW to 590 MW as of 6/30/12 from 560 MW the month prior.
As of the latest SREC issuance data in PJM GATS, we estimate the RY2012 market to be oversupplied by approximately 230,000 SRECs. Taking into consideration this oversupply and installed capacity through 6/30/12, the RY2013 market will be oversupplied by more than 600,000 SRECs without any new projects installed in the remaining compliance period (July 2012 - May 2013).
Looking forward to 2014, the state needs to realize a substantial reduction in installed solar capacity on a monthly basis to see the market come into balance in future reporting years. Using similar forecast cases from our prior analysis, Case 1 shows oversupply by approximately 97,000 SRECs through 2015. This is under a scenario in which install rates decline to 18.8 MW/month; representing half of the last twelve month (LTM) average - now 37.6 MW/month through June 2012.
The legislation signed into law today is a step forward to allow ongoing development of solar projects in the Garden State. This bill was needed to ensure companies servicing the NJ solar market are able to continue forward, existing solar projects see some stabilization, and rate payers are protected from excessively high SREC prices. The future development of projects needs to be monitored closely by all stakeholders as this bill requires current install rates to decline in the near term for the market to come into balance with the revised RPS requirements in future reporting years.
This article was originally posted on SRECTrade's blog at http://www.srectrade.com/blog/
The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.
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