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Md. solar renewable energy credit prices advance; New Jersey begins new program

At the over-the-counter markets, Maryland solar renewable energy credit prices pushed higher during the week ended Dec. 19 amid renewed buying interest.

Reporting year 2019 SRECs came in at $80.71/MWh, up 54 cents week over week, as reporting year 2020 SRECs were assessed at an index of $80.50/MWh, gaining $1.17 from the week prior.

Maryland SREC prices rallied at the end of the spring into the $70s/MWh after legislation was passed to hike the state's renewable portfolio standard, which would increase demand. The bill sets a mandate of 50% renewable generation by 2030.

To remain compliant with the increased RPS, Maryland will need to build over 4,500 MW of solar capacity and almost 1,900 MW of wind capacity by 2030, according to estimates from S&P Global Market Intelligence. The 4,500 MW of estimated new solar capacity would represent a tenfold increase over the state's current level of capacity.

In New Jersey, SREC markets held firm at an average of $231.17/MWh during the week under review. New Jersey vintage 2020 class I REC prices were up about 25 cents in value on the week to an average of $9.56/MWh.

On Dec. 6, the New Jersey Board of Public Utilities, or BPU, issued an order approving a new solar incentive program to aid in the move from the current program to the yet-to-be-determined successor incentive program.

The Transition Incentive program will consist of factorized, fixed-price, 15-year Transition Renewable Energy Certificates, or TRECs. TRECs will be available to projects that are in the SREC pipeline after Oct. 29, 2018, but have not yet reached commercial operation at the time the BPU determines the 5.1% milestone has been reached.

The BPU will hold a cost-cap proceeding in early 2020 to finalize the annual value of the fixed-price TREC. The BPU will evaluate two pricing scenarios: a flat 15-year price of $152 and a price of $65 for the first three years followed by a price of $189 for the last 12 years.

TRECs will have a two-year life, including the energy year in which they were generated. If a TREC is not issued or sold during its two-year life, it will become a New Jersey class I REC. The order further clarifies that a Transition Incentive project will be eligible to generate class I RECs after its 15-year life.

The BPU order also directs electric distribution companies to procure a TREC administrator. Although the exact mechanics for how TRECs will be transacted are still being determined, the TREC administrator will ultimately purchase all generated TRECs and allocate them to load-serving entities for compliance based on their market share of retail sales.

The Clean Energy Act, signed by New Jersey Gov. Phil Murphy in May 2018, required the BPU to adopt regulations that close the SREC program to new applications when 5.1% of the electricity sold in New Jersey comes from solar or by June 2021, whichever comes first.

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