Renewable Portfolio Standards: Solar RECs –A Monetary Incentive

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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

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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)

Source: Lawrence Berkeley National Laboratory

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)

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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)

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2008-2009 RPS:4 new states, 13 state

revisions


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State RPS Policies:29 States: Policies, 5 States: Non-binding Goals

6Source: Lawrence Berkeley National Laboratory

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Solar Tiers

– New Jersey

– Maryland

– Pennsylvania

– District of Columbia

– Delaware

Source: DSIRE

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• PJM Interconnection


Solar Tiers

•New Jersey

•Maryland

•Pennsylvania

•District of

Columbia

•Delaware

Source: DSIRE

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• 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.

PJM: The Region’s Wholesale Bulk Power Market

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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

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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.

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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

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Solar Generators Registered in PJM

GATS by State

• DC - 5

• DE – 381

• IL – 2

• KY – 1

• MD – 171

• MN - 1

• NC – 2

• NJ – 3,606

• PA – 100

• VA – 15

• WV - 1

Source: PJM-EIS, September 2009

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SRECs Issued in States

(Nov. 2009)

402PA

6,192NJ

216MD

798DE

Source: PJM-EIS, December 2009.

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SREC Newsletter

November Auction Clearing Prices

• District of Columbia $313

• Delaware $200

• Maryland $360

• New Jersey $660

• Pennsylvania $290

Source: SRECTrade, December SREC Newsletter

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Mid-Atlantic

Market Comparisons

Alternative Compliance

Penalty

• NJ: $711/MWh (08/09)

• MD: $400/MWh (09)

• DC: $500/MWh (09)

• PA: 200% ave. mkt value

for RECs sold in PJM

• DE: $250, $300, $350,

respective shortfall

Solar Weighted Average

Price (12/08-12/09)

• NJ: $385-$649 (49,042)

• MD: $297 - $415 (2,367)

• DC: N/A

• PA: $225-$357 (2,074)

All: $310 - $591

• DE: $232-$358 (4,763)

• VA: $415-$430 (83)

Source: PJM-EIS, December 2009.

Note: (trades), certain months without data for certain states

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Sources: PJM-EIS

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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.

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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

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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

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Questions?

Now:

Michael Lee

Director, IRP

Maryland

Public Service Commission

[email protected]

410-767-8242

Later:

Jerry Hughes

Chief Engineer

Maryland

Public Service Commission

[email protected]

410-767-8069

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Renewable Portfolio Standards: Solar RECs –A Monetary Incentive

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