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
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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
Source: Lawrence Berkeley National Laboratory
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Source: Lawrence Berkeley National Laboratory
State RPS Policies:29 States: Policies, 5 States: Non-binding Goals
6Source: Lawrence Berkeley National Laboratory
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Mid-Atlantic States’
Solar Tiers
– New Jersey
– Maryland
– Pennsylvania
– District of Columbia
– Delaware
Source: DSIRE
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• PJM Interconnection
Mid-Atlantic States’
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.
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
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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
21
Questions?
Now:
Michael Lee
Director, IRP
Maryland
Public Service Commission
MLee@psc.state.md.us
410-767-8242
Later:
Jerry Hughes
Chief Engineer
Maryland
Public Service Commission
JTHughes@psc.state.md.us
410-767-8069
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Source: Lawrence Berkeley National Laboratory
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