Renewable Energy Certificate Markets and Future Projections
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Transcript of Renewable Energy Certificate Markets and Future Projections
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
For more information, contact [email protected] or 713-968-0000
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
202.349.2881
London, Houston, Washington, Jersey City, Portland, Calgary, Santiago, Bogotá,
Johannesburg, Dubai, Singapore, Tokyo, Beijing, Sydney, Moscow, Astana, Kiev and Berlin