Post on 11-Jul-2015
Current REC markets and future projections
Carrie Sisto
7 June 2011
London, Houston, Washington, Jersey City, Portland, Calgary, Santiago, Bogotá, Johannesburg,
Dubai, Singapore, Tokyo, Beijing, Sydney, Moscow, Astana, Kiev and Berlin
Agenda
• New Jersey markets face oversupply
• Connecticut, Pennsylvania and Maryland turning in-state
• Massachusetts, North Carolina solar mandates drive
development
• Existing contracts could stifle California REC market
New Jersey compliance by fuel
Wind61%
LFG27%
NJ LFG12%
NJ Wind0%
ACP0%
2010
Note: ACP stands for alternative compliance payment. Source: New Jersey Office of Clean Energy Draft 2010
Compliance Report
Wind48%
LFG38%
NJ LFG14%
NJ Wind0%
ACP0%
2009
New capacity hits forward prices
400
450
500
550
600
650
700
Jun-10 Aug-10 Nov-10 Mar-11 May-11
$/M
Wh
New Jersey solar RECs: 2011 vs 2012
2011 2012
SREC market backs capacity additions
0
50
100
150
200
250
300
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
MW
Source: NJ BPU Draft 2010 compliance report
New Jersey solar installations by year
Capacity added Installed capacity
ORECs
• New Jersey goal of 1,100MW of offshore wind
• No compliance schedule set
• Applications to be an OREC generator due next week
NEPOOL deadline eclipses oversupply
10
13
16
19
22
3-Jan 9-Feb 18-Mar 24-Apr 31-May
$/M
Wh
Connecticut Class I RECs: 2010 vs 2011
2010 2011
Historical Connecticut Class I compliance
Conn.2.5%
Maine54.8%
Mass.3.7%
N.H.19.3%
N.Y.6.4% R.I.
10.2%
Vt.3.0%
ACP0.2%
2007
Conn.4.0%
Maine45.0%
Mass.5.0%
N.H.29.0%
N.Y.5.0%
R.I.6.0%
Quebec 1.0%
Vt.5.0%
2008
Note: 2009 not yet available. ACP stands for alternative class compliance. Source: Connecticut DPUC RPS
compliance reports
New legislation?
• 450MW solar goal
– SREC price cap at $350/MWh
• Utility-funded solar incentives
• Long-term, in-state contract requirements
• Combine Departments of Public Utility Control and
Environmental Protection
• New CHP incentives for up to 50MW of in-state facilities
Solar market extinguished by wave of supply
75
125
175
225
275
3-Jan 9-Feb 18-Mar 24-Apr 31-May
$/M
Wh
Pennsylvania vintage 2011 solar RECs
Supply tight in first year of program
400
450
500
550
600
3-Jan 9-Feb 18-Mar 24-Apr 31-May
$/M
Wh
Massachusetts vintage 2011 solar RECs
Compliance needs driving solar development
0
5
10
15
20
Pre-2010 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11
MW
Note: Data as of 6 May 2011. 16.195MW are eligible but are not operational. Source:
Massachusetts DOER
Massachusetts eligible solar capacity on line
Capacity added Installed capacity
Maryland 2009 compliance by fuel
Solar0%
Wind1% LFG
12%
WDS25%
BLQ28%
WAT*34%
Tier I
MSW**19%
WAT *81%
Tier II
*Hydro systems must be <30MW for Tier I; other than pumped storage for Tier II Source: Maryland Energy
Administration
**MSW qualifies as Tier I from 1 October 2011.
Projected sources of Maryland RPS compliance
Regional
RECs69%
MD offshore
wind0%
MD onshore wind10%
MD biomas
s20%
MD solar1%
Current
Regional
RECs35%
MD offshore
wind37%
MD onshore wind
9%
MD biomas
s9%
MD solar10%
2022
Source: Governor Martin O'Malley, Maryland Energy Summit
Capacity swells before start of program
North Carolina eligible capacity
(as of 27 May 2011)
Fuel Capacity (MW) In-state capacity (MW)
Biomass* 260.85 210.86
Landfill Methane 74.16 69.36
Poultry Methane 1.63
Swine Methane 1.87 1.63
Hydro 57.9 35.5
Solar 84.7 53.6
Wind 5,942 0.1
Total 6,423.11 371.05
*Biomass includes Co-gen, ethanol and wood waste Source:
NCUC
Rules in limbo
• Whole tree biomass?
– NCUC decision challenged by Environmental Defense Fund
• “Electric demand reduction”
– Utilities can meet part or all of their RPS compliance with
voluntary actions by their customers
• Alternative compliance payment?
– No penalties or alternative compliance mechanisms in place
– NCUC has authority to enforce the RPS
Contracts in the California pipeline loom large
897 1,306
6,034
1,530
394
6,382
215881
13,368
0
4,000
8,000
12,000
16,000
Cancelled Delayed On track
con
tracts
Source: California Energy Commission
Renewable energy capacity contract status as of Apr-11
PG&E SCE SDG&E
Utilities on pace to meet 33pc target
20.8 21.4
25.1
20.9
25.4
28.7
12.6
16.1
24.9
0
5
10
15
20
25
30
35
2011 2012 2013
perc
en
t
Source: California PUC Q1-11RPS compliance report
Projected RPS compliance based on retail sales forecasts
PG&E SCE SDG&E
Conclusions
• Excess supply encumbers PJM markets
• Massachusetts solar just getting started
• Connecticut, Maryland, Pennsylvania looking to in-state
sources
• North Carolina rules in flux
• Existing contracts could hamper California REC markets
Thank you!
Carrie Sisto
Editor, Argus Air Daily
carrie.sisto@argusmedia.com
202.349.2881
London, Houston, Washington, Jersey City, Portland, Calgary, Santiago, Bogotá,
Johannesburg, Dubai, Singapore, Tokyo, Beijing, Sydney, Moscow, Astana, Kiev and Berlin