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Renewable Portfolio Standards: Solar RECs – A Monetary Incentive

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  • 1. Renewable Portfolio Standards: Solar RECs – A Monetary Incentive Michael Lee Maryland Public Service Commission Maryland, DC, Virginia - Solar Energy Industries Association Solar Energy Focus Conference: Fall 2009 December 3-5, 2009 1
  • 2. What is a Renewable Portfolio Standard? Renewable Portfolio Standard (RPS): •A requirement on retail electric suppliers… •To supply a minimum percentage or amount of their retail load… •With eligible sources of renewable energy (e.g., solar) Typically backed with penalties of some form Often accompanied by a tradable renewable energy credit (REC) program to facilitate compliance Never designed the same in any two states (e.g., penalties vary) Source: Lawrence Berkeley National Laboratory 2
  • 3. Mid-Atlantic States’ Renewable Portfolio Standards: a relatively new policy mechanism – New Jersey: began in 2004 – Maryland: requirements in effect in 2006 – Pennsylvania: requirements in effect in 2007 – District of Columbia: requirements in effect in 2007 – Delaware: requirements in effect in 2007 – Virginia: enacted a voluntary goal in 2007 Source: PJM-EIS, Database of State Incentives for Renewable Energy (DSIRE) 3
  • 4. 2008-2009 RPS:4 new states, 13 state revisions 4 Source: Lawrence Berkeley National Laboratory
  • 5. State RPS Policies: 29 States: Policies, 5 States: Non-binding Goals 5 Source: Lawrence Berkeley National Laboratory
  • 6. Source: Lawrence Berkeley National Laboratory 6
  • 7. Mid-Atlantic States’ Solar Tiers – New Jersey – Maryland – Pennsylvania – District of Columbia – Delaware Source: DSIRE 7
  • 8. Mid-Atlantic States’ Solar Tiers • PJM Interconnection •New Jersey •Maryland •Pennsylvania •District of Columbia •Delaware Source: DSIRE 8
  • 9. PJM: The Region’s Wholesale Bulk Power Market • PJM Interconnection PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. 9
  • 10. PJM – EIS Generation Attribute Tracking System • GATS - a regional environmental registry and information system that will track the environmental and fuel attributes of generation. • The system will: • assist LSEs in their compliance with applicable emissions and fuel disclosure requirements and with state-level Renewable Portfolio Standard (RPS) regulation or renewable policy • enable voluntary bilateral markets and marketing claims for renewables. • provide state agencies with reporting and verification • provide renewable generators with a means to monetize their renewable attributes and qualification Source: PJM-EIS 10
  • 11. Generation Attribute Tracking System (GATS) • Publicly available bulletin board where account holders can post REC’s that are available for sale • In April 2009, the bulletin board report was enhanced to allow sellers to include a Requested Price for REC’s • Suppliers can contact parties with state-eligible SRECs for sale • In early 2010, PJM-EIS expects to have enhancements in place to allow buyers to post the quantity and price of RECs they would like to acquire. 11
  • 12. Solar Facilities Registered in GATS • 4,306 solar facilities registered and qualified in PA, DE, MD, DC, and NJ • Total nameplate capability of 103,216.21 kW • 41,177 Solar RECs created in GATS since 2005 (As of September 11, 2009) Source: PJM-EIS 12
  • 13. Solar Generators Registered in PJM GATS by State • DC - 5 • NC – 2 • DE – 381 • NJ – 3,606 • IL – 2 • PA – 100 • KY – 1 • VA – 15 • MD – 171 • WV - 1 • MN - 1 Source: PJM-EIS, September 2009 13
  • 14. SRECs Issued in States (Nov. 2009) DE 798 MD 216 NJ 6,192 PA 402 14 Source: PJM-EIS, December 2009.
  • 15. SREC Newsletter November Auction Clearing Prices • District of Columbia $313 • Delaware $200 • Maryland $360 • New Jersey $660 • Pennsylvania $290 Source: SRECTrade, December SREC Newsletter 15
  • 16. Mid-Atlantic Market Comparisons Alternative Compliance Solar Weighted Average Penalty Price (12/08-12/09) • NJ: $711/MWh (08/09) • NJ: $385-$649 (49,042) • MD: $400/MWh (09) • MD: $297 - $415 (2,367) • DC: $500/MWh (09) • DC: N/A • PA: 200% ave. mkt value • PA: $225-$357 (2,074) for RECs sold in PJM All: $310 - $591 • DE: $250, $300, $350, • DE: $232-$358 (4,763) respective shortfall • VA: $415-$430 (83) Source: PJM-EIS, December 2009. 16 Note: (trades), certain months without data for certain states
  • 17. 17 Sources: PJM-EIS
  • 18. GATS Solar REC Auction Platform Launch Date: Spring 2010 (“Envisioned”) • Purpose hold monthly auctions • Clear Solar REC bid and offers in all states simultaneously, with a single market clearing price calculated for each state • PJM Interconnection, LLC will launch a new subsidiary to own and administer the proposed Solar REC auction platform. 18
  • 19. PJM: Who wants this monthly auction for solar RECs? • Small Resource Owners & Aggregators (requested) – “Now, how do I sell my RECs?” – Cost-effective way to maximize value of RECs • Load Servers (supported) – Reduces administrative cost of RPS compliance • State Agencies (supported) – Reduce cost of RPS compliance – Provides price transparency – Reduces the use of Alternative Compliance Payments as a means of RPS compliance – Supports the development of distributed resources Source: PJM-GATS Subscribers Group 19
  • 20. Source Information: • Database of State Incentives for Renewable Energy (DSIRE) • Lawrence Berkeley National Laboratory – Renewable Portfolio Standards: A Factual Introduction to Experience from the United States, Wiser et al. – State of the States: Update on RPS Policies and Progress, Wiser & Barbos • PJM-Environmental Information System 20
  • 21. Questions? Now: Later: Michael Lee Jerry Hughes Director, IRP Chief Engineer Maryland Maryland Public Service Commission Public Service Commission MLee@psc.state.md.us JTHughes@psc.state.md.us 410-767-8242 410-767-8069 21
  • 22. 22
  • 23. 23 Source: Lawrence Berkeley National Laboratory