Interestingly enough, in May of 2011, Pennsylvania State Representative, Chris Ross (Chester County) introduced new legislation that could assist the PA solar industry and SREC market. Ross is proposing legislation that would increase the amount of SRECs that utilities would need to purchase through 2015. His bill would also make Pennsylvania a closed SREC market, disallowing out-of-state generators the ability to register and sell there SRECs in Pennsylvania.
 

 
More on Flett Exchange:
 
Flett Exchange is largest volume SREC exchange and brokerage firm. Our online trading platform brings transparency, price discovery, and liquidity to Solar Renewable Energy Certificates (SRECs). Over 2,800 active clients utilize Flett Exchange to negotiate the price, quantity, and details of SRECs in a secure and seamless online trading platform. Upon each SREC transaction Flett Exchange remits immediate payment to our sellers (its simple sell a SREC and receive a check!) Flett Exchange operates SREC markets in NJ, PA, DE, MD, OH, CT, MA, and DC and supported by trained solar professionals with specialized knowledge and proven experience.
 
Flett Exchange brokers bilateral long-term SREC contracts between qualified counterparties. Flett Exchange buyers and sellers can secure price, quantity, and terms of SREC contracts 1-5 years in duration. Our stringent vetting process ensures that quality solar projects are presented to the market in a skillful manner. Buyers and sellers utilize Flett Exchange for long-term SREC contracts gain direct access to large pools of SRECs, while mitigating risk and locking-in profits. Please visit www.flettexchange.com to learn more about our services.

• have a capacity of 6 Megawatts or less
• be located in the Commonwealth of Massachusetts (which includes municipal light districts territories)
• use some of its generation on-site and be interconnected to the utility grid, and have a commercial operation date of January 1, 2008, or later

 
    All competitive and regulated Retail Electricity Suppliers who serve load in Massachusetts need to procure SRECs to satisfy their RPS Solar Carve-Out compliance obligation. Retail Electricity Suppliers/Load Serving Entities (LSEs) must submit Annual Compliance Filings to the Department of Energy Resources (DOER) documenting that they own SRECs to meet their compliance obligations. If not the buyers do not procure enough SRECs in the open marketplace, they are subject to an Alternative Compliance Payment (ACP), which is currently $600 in Massachusetts.
 

 
    Solar Generators must qualify their facilities with the Massachusetts Department of Energy Resources (DOER) RPS Solar Carve-Out Program. Flett Exchange SREC Management Services www.flettexchange.com conveniently assists solar generators with this registration process by completing the Aggregator/SREC Owner Agreement and submitting Statement of Qualification Applications (SQA). The MA DOER does not specify how long SRECs good for, however Regulation 225 CMR states: “the process by which DOER will determine when the Solar Carve-Out Minimum Standard and the auction process will come to an end. The determination will be based on the achievement of 400MW of Carve-Out qualified PV installation in Massachusetts and the longest remaining auction Opt-In Term for any Carve-Out qualified Units but will be lengthened to accommodate the shelf-life on any re-minted SRECs” (Massachusetts DOER website.)
 
    Massachusetts solar projects must also register with NEPOOL-Generation Information System (GIS) before they can begin generating SRECs. If approved, SRECs are then minted on a quarterly basis and are deposited into a solar generator’s NEPOOL-GIS account. NEPOOL-GIS is an electronic tracking system that allows buyers and sellers record and transfer SRECs from one account to another. In simplistic terms after a solar project gets approval from the MA DOER, its metered production is then recorded at the NEPOOL-GIS, the GIS tracking system mints the SRECs, and the SRECs can be monetized on Flett Exchange’s competitive MA spot market.
 
    Spot and bilateral SREC agreements are encouraged by the MA DOER. Flett Exchange brings transparency, price discovery, and liquidity to spot SREC transactions and facilitates long-term bilateral SREC contracts with accredited buyers. Our MA SREC markets are based upon free market competition so that SREC generators can receive the best executable price in a secure and seamless manner. Depending on the SREC market conditions, solar generators might be able to achieve a higher price in the open market if SRECs are in short supply. The Massachusetts DOER offers a Solar Credit Clearinghouse Auction for SRECs that are not sold in the open market. Solar generators will have the option to deposit unsold SRECs in the Solar Credit Clearinghouse Auction on July 15, 2011. The auction will be opened to qualified bidders and have a fixed price of $300 minus the 5% auction fee or $15/MWh = $285. All institutional MA solar projects must use a revenue grade meter for which generation data is reported and residential solar facilities (10kW and less) can be reported automatically or manually. SREC generators can receive a penalty for failing to report their metered data. Owners and/or agents who do not report their metered data during the reporting period run the risk of forfeiting their generated SRECs during the unreported period.
 
    As the Massachusetts Renewable Energy Markets continue to grow, Flett Exchange looks forward to being of valuable service to its clients. We look forward to providing valuable market commentary and providing superior SREC execution. Partner with Flett Exchange and gain direct access to the most trusted and respected firm in SREC transaction and monetization.
 
More on Flett Exchange:
 
    Flett Exchange is a leading environmental exchange and brokerage firm. Our online trading platform brings transparency, price discovery, and liquidity to Solar Renewable Energy Certificates (SRECs). Over 2,000 active clients utilize Flett Exchange to negotiate the price, quantity, and details of SRECs in a secure and seamless online trading platform. Upon each SREC transaction Flett Exchange remits immediate payment to our sellers (it’s simple sell a SREC and get a check!) Flett Exchange operates SREC markets in NJ, PA, DE, MD, OH, CT, MA, and DC and supported by trained solar professionals with specialized knowledge and proven experience.
 
    Flett Exchange brokers bilateral long-term SREC contracts between qualified counterparties. Flett Exchange buyers and sellers can secure price, quantity, and terms of SREC contracts 1-7 years in duration. Our stringent vetting process ensures that quality solar projects are presented to the market in a skillful manner. Buyers and sellers utilize Flett Exchange for long-term SREC contracts gain direct access to large pools of SRECs, while mitigating risk and locking-in profits. Please visit www.flettexchange.com to learn more about our services.

The Pennsylvania SREC market could become oversupplied. The following factors are contributing to the oversupplied scenario.
 

Renewable Portfolio Standard (RPS) buyers are developing utility-scale solar: RPS buyers (utility and energy companies) have been expected to enter into spot and long-term SREC contracts with solar developers to satisfy their state-mandated RPS. This would be a win-win situation for both parties. RPS buyers could purchase SRECs without installing solar and solar developers could receive SREC contracts that assisted in their financing of projects. However it appears a new trend is developing in which RPS buyers are actively developing their own solar projects to satisfy their RPS requirement. The utility and energy companies believe they can develop or co-develop solar cheaper and more efficiently than solar developers. This trend is creating issues for the solar industry, because it decreases the underlying bids for SREC contracts and inhibits the solar developer’s ability to secure long-term financing. Centrally controlled solar development by a few select large energy producers diminishes the opportunity and development for the broad-based participation by a diverse group of small, medium, and large privately and publicly owned solar arrays over the state. American Electric Power (AEP) recently announced that it is co-developing a 50MW solar facility with Turning Point Solar in southeastern Ohio. Senate Bill 221 states that AEP supply .06% of its electricity load in 2012 from solar generation, .09% in 2013, and .12% in 2014. AEP has already met its benchmarks for 2010 and 2011 with its 10MW Wyandot Solar facility in Upper Sandusky, Ohio. This is a proficient way for AEP to meet its solar requirement without having to competitively purchase SREC contracts in the open market. These large utility scale solar projects will have a direct affect on the Pennsylvania solar market because 50% of Ohio’s renewable energy requirement must be met by in-state facilities and the remaining 50% can be met by bordering states (PA, WV, KY, IN, and MI). These two large utility-scale solar projects will basically eliminate AEP’s need to enter into bilateral SREC contacts with solar developers. With only a handful of accredited buyers in the Pennsylvania SREC market this presents a significant setback to East Coast diversified solar development.

SREC Oversupply: Solar photovoltaic facilities which are located in Delaware, Illinois, Maryland, Ohio, Virginia, North Carolina, West Virginia, and Washington DC can register their SRECs in Pennsylvania. The RPS Solar Requirement for 2011 is .0203% or 33,000 required SRECs that need to be purchased by Load Serving Entities (LSEs) and Electric Distribution Companies (EDCs). However there are approximately 46,000 SRECs registered in Pennsylvania, creating a SREC supply that is greater than the demand. This does not account for the large commercial-scale installations (1MW-4MW) that are being developed in the state, potentially creating an even greater oversupply.

House Bill 1128: was introduced by lawmakers in September 2010. It is Pennsylvania’s most recent attempt to increase its solar RPS. The objective of HB 1128 is to amend Pennsylvania’s Alternative Energy Portfolio (AEPS) by increasing the amount of renewable energy that comes from solar photovoltaic technologies. HB 1128 would more basically double Pennsylvania’s solar requirement for each energy year 2012-2021, but cut the Alternative Compliance Payment (ACP) in half making the economics of developing solar more difficult.
 

*MW=Megawatts

Fixed Alternative Compliance Payment (ACP) HB 1128 is also proposing a fixed Alternative Compliance Payment (ACP). Currently the Pennsylvania’s ACP is 200% of the solar weighted index paid by the buyers during the energy year (ACP for 2008 was $528.17 and the ACP for 2009 was $550.15). HB 1128 would create the following ACP schedule:

The HB 1128 lower fixed ACP would be unfavorable to the Pennsylvania SREC market and possibly inhibit solar development. A $260 ACP for energy 2012-2016 would make it difficult for solar developers to finance projects at lower levels. A low ACP gives no incentive for RPS buyers to enter into long-term SREC contacts and without long-term SREC contracts solar development by independent contractors will cease and deter the growth of renewable energy.
 

More on Flett Exchange:
Flett Exchange is a leading environmental exchange and brokerage firm. Our online trading platform brings transparency, price discovery, and liquidity to Solar Renewable Energy Certificates (SRECs). Over 1,500 active clients utilize Flett Exchange to negotiate the price, quantity, and details of SRECs in a secure and seamless online trading platform. Upon each SREC transaction Flett Exchange remits immediate payment to our sellers (it’s simple sell a SREC and get a check!) Flett Exchange operates SREC markets in NJ, PA, DE, MD, OH, CT, MA, and DC and supported by trained solar professionals with specialized knowledge and proven experience.
 

Flett Exchange brokers bilateral long-term SREC contracts between qualified counterparties. Flett Exchange buyers and sellers can secure price, quantity, and terms of SREC contracts 1-7 years in duration. Our stringent vetting process ensures that quality solar projects are presented to the market in a skillful manner. Buyers and sellers utilize Flett Exchange for long-term SREC contracts gain direct access to large pools of SRECs, while mitigating risk and locking-in profits. Please visit www.flettexchange.com to learn more about our services.

Michael Flett, President and CEO, of Flett Exchange is speaking at the Carbon TradeEx America on September 28th -29th, 2010 in Chicago. This is a leading Trade Show and Conference in North America serving international business, finance, technology, venture capital, government communities in abatement, trading, monitoring, crediting and compliance of emissions. The conference is organized by Koelnmesse, Carbon Markets & Investors Association, Environmental Markets Association, and Bloomberg New Energy Finance. Industry, technology, and service providers in the environmental business as well as government agencies from developing countries will be among the exhibitors. Attendees will be Emission Traders and Broker, Utilities, Financial Institutions, Corporate Representatives, Venture Capital Funds, Project Developers, Technology Providers Research & Development Departments, Science Institutes and Universities.
 
         The Carbon TradeEx America is designed to be a “hands on” program for professionals in environmental management positions working on strategic planning and investing, energy efficiency improvements, compliance programs, performance benchmarking and market and finance monitoring. The inclusion of EMA into this event has broadened the platform for this event as it now addresses not only Carbon but all environmental markets including SO2, NOx, RECs and GHG.
 

• “Investment Opportunities” will focus on subjects such as investment risk in climate change, success stories in voluntary offsets projects, the correct use of market standards, and an insight how renewables match against other energy sources.
• “Market Insight” will examine the role of forestry and agricultural offsets, provide an outlook on the NAFTA offsetting scheme and insights into current business opportunities in existing environmental markets.
• “Business Strategies”, a new conference track added for the first time, will examine strategies of the transport sector, the effects of Clean Air Interstate Rule (CAIR) replacement rule, EPA newest proposals on regulating GHG, SO2 and NOx emissions and the impact of the RPS on the renewable industry.

The Atlantic City Electric Company (ACE) is requesting a declaratory order with respect to the definition of Solar Renewable Energy Certificates (SRECs). ACE is a regulated electric distribution company (EDC) who is engaged in the transmission and distribution electric energy to residential, commercial, and industrial customers. ACE services 13% of New Jersey’s electric distribution load, has approximately 547,000 customers, and its territory spans eight southern New Jersey territories. ACE has submitted a verified petition to the New Jersey Board of Public Utilities (NJBPU) asking them to decide if solar renewable energy projects that interconnect with the Company’s 69 Kilovolt (“kV”) system or lower voltage lines are eligible for SRECs as defined in N.J.S.A. 48:3-51. “Without the ability for ACE to attach larger solar projects to the Company 69 kV and lower voltage lines, ACE’s distribution system will be unable to accommodate all the requests for interconnection, especially those from Net Energy Metering (NEM) customers seeking to participate in State-sponsored generation projects.” (Petition of Atlantic City Electric Company Pages 3-4).
 
The ACE territory has been targeted for large solar projects because of its rural nature and the high payment of Solar Renewable Energy Certificates (SRECs). Southern New Jersey has access to large parcels of open land and available farms that are ideal for developing large solar projects. ACE currently has 64 grid-connect solar projects requesting interconnection, that totals 950 MW and is nearly double the total number of solar generated MWs installed in the United States in 2009. ACE’s transmission lines cannot accommodate the influx of current solar projects, their“12kV distribution system, which it employs throughout most of its service territory, cannot accommodate larger solar projects as can the higher voltage distribution lines utilized by other EDCs in the State. It should be noted that ACE’s 69kV lines—no matter how they might be classified before any State or Federal agency—do not directly interconnect with facilities of any out-of-State electric distribution or transmission lines.” (Petition of Atlantic City Electric Company, Page 4). This eliminates any issues regarding the Commerce Clause of the United States Constitution by virtue of ACE’s physical inability to connect to ACE’s 69kV or lower voltage lines.
 
SRECs are the driving financial component that makes developing solar in New Jersey attractive. Power purchase agreement (PPA) providers, engineer, procurement, and construction (EPC) contractors, solar installers, and various other entities are flocking to New Jersey to develop solar, due to the favorable price of SRECs. The price of NJ SRECs has risen from $150 in 2007 to $683 in 2010 and energy year 2011 SRECs are currently trading $655 or 97% of the Solar Alternative Compliance Payment (SACP) on Flett Exchange. SRECs provide a revenue stream that can be monetized on a monthly, quarterly, or yearly basis for solar participants. For the past few years the NJ SREC market has only experienced upward price action. This was due to increased buying demand and less supply, a defined SACP schedule ($711 in 2009 to $594 in 2016), and favorable solar legislation. However the supply and demand equation for NJ SRECs could change with the introduction of larger solar projects. Grid-connect solar projects can bring more supply to New Jersey’s SREC market. Large blocks of SRECs could now be generated from grid-connect projects and cool red-hot SREC prices. In order for New Jersey to fulfill its lofty RPS goal (5,316 GWh by Energy Year 2026) large solar projects will need to be implemented and go online sooner rather than later.
 
ACE believes the State of New Jersey should encourage the development of renewable energy generation through regulatory policy. SREC eligibility needs to be clearly defined for State-sponsored programs and the PJM interconnection process: “ACE respectfully submits that the definitional language of the N.J.S.A. 48:3-51 was not intended to be limiting as it is currently being interpreted, such that only solar generators interconnecting with the distribution lines of an electric utility qualify for SREC payments. The Company believes the legislative intent and practical purpose of the law should be more broadly interpreted to (i) provide SREC payments to all solar generators who develop their solar facilities in the State and can directly interconnect to the electric delivery network operating within the State, and (ii) preclude solar generated MWs from the outside New Jersey, which are not directly connected to the State’s internal electric delivery network, from qualifying for SREC payments.” (Petition of Atlantic City Electric Company, Page 5). If this SREC issue gets resolved the bottleneck for large solar projects will begin to open up in New Jersey.
 
Download the Official ACE Solar Declatory Petition (PDF)

Flett Exchange is pleased to announce the results of the Sparta Township Solar Renewable Energy Certificate (SREC) sale. 40 energy year 2010 New Jersey SRECs were sold at a clearing price of $679.00 on Flett Exchange Friday, August 13th 2010. The sale was conducted on Flett Exchange’s electronic marketplace under its Public SREC Auction and total market proceeds equaled $27,160.00 Registered buyers and the public could observe the bidding in real time by logging in to Flett Exchange.
 
The $679.00 clearing price is 98% of the $693 Solar Alternative Compliance Payment (SACP). The SACP is the payment electric producers have to pay to the State of New Jersey if they do not produce a specified amount of electricity using solar energy or through the purchase of SRECs from facilities located in New Jersey. The auction was oversubscribed and there was strong participation by Load Serving Entities (LSE’s) trying to procure SRECs. This activity supports solar development in New Jersey and SREC revenue goes to entities that take risk in developing solar facilities.
 

   New York has the opportunity to become one of the nation’s leading solar states. The Empire State is pursuing a solar measure that could stimulate the economy, create permanent jobs, establish a new manufacturing base, reduce climate change, increase sustainability, and preserve precious natural resources that over 20 million New Yorkers depend upon daily. The New York Solar Industry Development and Jobs Act of 2010 has been introduced to the state assembly and senate. The bill would responsibly require investor owned utilities (IOUs) and public power authorities to gradually incorporate solar electricity in their energy mix over the next 15 years. In 2009, New York installed only 34 Megawatts of solar electricity. This proposed solar measure would increase the statewide installed capacity to at least 5,000 Megawatts and assist New York in achieving its clean energy goals at the lowest cost to the ratepayer.

 
   New York has always been a gateway for new ideas and progress. The solar industry, environmentalists, and conservation groups are calling on government officials to act on a solar plan which can deliver serious results. The New York Solar Energy Industries Association (NYSEIA) is “calling on Governor David Paterson, the State Legislature, and the Public Service Commission (PSC) to immediately take needed actions to put the state on target to reach its goals of meeting 45 percent of the state’s electricity needs through the improved efficiency and clean renewable energy by the year 2015.” (NYSEIA Proposes Long-Term Solar Electric Incentive Plan, 7/2/2010).
 
The proposed solar bill could benefit New York in the following ways:
 

• Economic Growth- Proponents of the New York solar act exclaim that it could generate $20 billion in economic stimulus over the next 15 years. This comes at a time when the state deficit is at alarming levels (over $8 billion) and at risk of a double-dip recession.
• Green Jobs- The solar industry has been steadily adding real jobs nationwide and providing competitive salaries to the US workforce (i.e. the average salary for solar jobs is $61,000 depending on the company, location, and experience.) The New York Solar Industry Development and Jobs Act of 2010 is estimated to support 22,000 new jobs.
• Solar Manufacturing Plants are coming to New York- Solar manufacturing factories are being established in upstate New York. This is an enormous win for New York and one that needs to continue. New York has the ability to attract emerging industries and provide a fertile environment for world-class solar technology, research, and development companies.
  • SpectraWatt- a manufacturer and supplier of advanced silicon photovoltaic cells has recently opened its solar factory in Hopewell Junction, NY. SpectraWatt’s $81 million investment will create a state-of-the-art facility and bring 161 new jobs to Dutchess County, NY. The facility will be capable of producing over 50 million solar cells annually which is enough to power 35,000 homes.
  • Solartech Renewables- is opening a $10 million production facility in Ulster County, New York. When completed in 2010, the “Tech City” complex will create 100 new full time permanent jobs and produce 12 Megawatts or 55,000 solar panels utilizing technology from the Spire Corporation.
• Solar for All- Solar is a level playing field in which all parties can participate. Unlike other renewable energies (i.e. wind, biomass, and geothermal) which can be difficult to develop and only achievable on a larger scales solar is affordable and equally available to homeowners, schools, universities, townships, municipalities, corporations, and government agencies.
• What a “Fracking” Mess- Unregulated natural gas drilling is being seriously considered in the New York, Pennsylvania, and Delaware watershed regions. “Hydraulic fracturing or fracking is a means of natural gas extraction employed in deep natural gas well drilling. Once a well is drilled, millions of gallons of water, sand, and proprietary chemicals are injected, under high pressure, into a well. The pressure fractures the shale and props open fissures that enable natural gas to flow more freely out of the well.”(www.gaslandthemovie.com) Natural gas fracking has destroyed ecological systems and contaminated the water supplies of many parts of Arkansas, Colorado, Kentucky, Louisiana, Montana, Nebraska, Texas, and Wyoming.
  • Flammable tap water – that’s what people across the US have discovered in the wake of the unconventional method of natural gas extraction known as hydraulic fracking.
  • The 65 compounds that are used in natural gas drilling are harmful to human health.
  • 80,000 pounds of chemicals are injected into the earth’s crust to frack each natural gas well.
  • 70% of the fracking fluid that remains in the ground is not biodegradable.
  • A loophole in the 2005 Energy Bill exempts natural gas drillers from following EPA guidelines like the Clean Water Act. Natural gas fracking is totally unregulated and will begin in New York unless state legislature acts immediately.

 
   Solar energy is the responsible and viable energy solution for New York. It allows the state to meet its Renewable Portfolio Standard (RPS) in an efficient and healthy manner. Solar energy does not contaminate the water supply nor proposes harmful health risks to New Yorkers. The question New Yorkers should be asking their legislators is “does New York need a self-inflicted Gulf Oil Disaster?”
 
   Solar Renewable Energy Certificates (SRECs) have also been incorporated in the proposed solar bills. SRECs are a proven market based solution that augments solar development and financing. SREC markets have remained vibrant even as state incentives and rebates have diminished or terminated. One SREC is equal to 1,000 kilowatt hours of solar electricity and is typically purchased by utilities and energy companies who need to comply with a state mandated Renewable Portfolio Standard (RPS). State mandated SREC markets successfully operate in DE, OH, PA, MA. MD, NJ, and Washington DC and fluctuate pricing ($250.00 – $693.00). SRECs are the driving financial component that makes solar economically feasible. SREC markets promote free market competition and reward participants who take renewable energy risk with a revenue stream from SREC monetization. SRECs could incentivize New Yorkers to install solar provide a market mechanism that delivers proven results.
 
   Now is the time for New York to become a leader in solar energy. New York is the United States third most populous state, yet its solar industry lags neighboring states. In 2009 New York installed less than 35 MW or 1,200 photovoltaic systems compared to New Jersey’s 181 MW or 6,281 installed photovoltaic systems. New Yorkers need to reclaim their energy independence. Instead of depending on expensive foreign oil or harmful natural gas, government officials can implement a renewable energy policy with an increased solar carve-out that would immediately benefit the state. An aggressive Renewable Portfolio Standard (RPS) would demonstrate that New York is serious about clean energy, the health of its residents, and illustrate its environment stewardship to the rest of the nation. Solar energy is the smartest, safest, and quickest way for New York State to achieve its renewable energy goals. Solar energy can elevate the environmental consciousness of the Empire State and responsibly benefit our two most prized possessions: the earth and mankind.

 
More about the ACUA: “The Atlantic County Utilities Authority is responsible for enhancing the quality of life through the protection of waters and lands from pollution by providing responsible waste management services. The Authority is an environmental leader and will continue to use new technologies, innovations and employee ideas to provide the highest quality and most cost effective environmental services.”
 
The ACUA generated these Solar RECs from a solar facility located on their waste water treatment plant.
 
Click Here To View Our Upcoming Public Auction Schedule

However if too many solar generators register to sell their SRECs in a particular state or region an oversupply scenario could occur. Market saturation could diminish SREC demand and depress prices. It is also important to note, that a solar facility generating SRECs outside of Ohio and also registered within Ohio might not receive the same price of an Ohio sited SREC. For more information please click on the application for certification as an Ohio Renewable Energy Resource Generating Facility.

Click Here To Download Details from Ohio.gov

Contact:
Public Utilities Commission of Ohio
Email: AEPS@puc.state.oh.us
Toll-Free: (800) 686-PUCO (7826)
Phone: (614) 466-3292 (in Columbus area)
Fax: (614) 752-8351
180 East Broad Street
Columbus, Ohio 43215

      The CPUC has outlined a market and compliance structure that promotes a transparent, fair, and easily operational TREC market. The Commission’s most significant proceeding was their decision to distinguish between bundled (energy plus renewable energy credits) and unbundled (renewable energy certificates only) transactions used for RPS compliance. Bundled transactions “must serve California customer load, without needing any intermediary energy transactions that in effect substitute energy that is not RPS-eligible for energy that is. The decision concludes that bundled transactions with renewable energy—or those which serve California customer load – are those where:

• the RPS-eligible generator’s first point of interconnection with the Western Electricity Coordinating Council (WECC) interconnected transmission system is with a California balancing authority, or
• the RPS-eligible energy from the transaction is dynamically transferred to a California balancing authority.” 3/11/10, Decision Authorizing Use of Renewable Energy Credits for Compliance with the California Renewables Portfolio Standard.

      The CPUC’s decision to separate the electricity commodity from the environmental attribute allows Load Serving Entities (LSEs) to use TRECs to comply with California’s growing renewable energy requirements. Creating two separate tradable commodities is advantageous to renewable energy development because the TRECs can help subsidize the financing and development of renewable energy projects.
      The CPUC has also disclosed a few important amendments that buyers and sellers of TRECs should pay close attention to:

• A 40% to 25% decrease in the amount of RECs that Investor-Owned Utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) can pledge toward their annual RPS compliance obligation.
• Bundled transactions for out-of-state facilities will be re-classified using firming and shaping as TREC specific transactions and be included in the 25% cap.
• The introduction of a $50 cost cap for TREC transactions. Contracts exceeding this limit will not be approved by the CPUC. (Alternative Compliance Payments (ACP) have been lifted, increased, or extended in other REC states over time.)
• The CPUC has the ability to modify or extend their decision before December 31, 2011.
• The Western Renewable Energy Generation Information System (WREGIS) will assist in the tracking and retirement of TRECs. “TRECs must be tracked in WREGIS and retired in WREGIS for RPS compliance within three calendar years of the year of electricity associated with the TRECs.” 3/11/10, Decision Authorizing Use of Renewable Energy Credits for Compliance with the California Renewables Portfolio Standard.

      The CPUC’s decision regarding TRECs is being viewed as a significant policy statement. However the CPUC is not the only governing body deciding on TREC matters. The CPUC will be working collaboratively with the California Energy Commission (CEC) to serve in the implementing and overseeing California’s RPS. “The CEC and CPUC are expected to serve in advisory roles to help the CARB (California Air Resources Board) develop the regulations to administer the 33% by 2020 requirement… until the CARB regulations are adopted, the CEC and CPUC will continue serving in their current roles to administer the 20% by 2010 standard:
The CEC’s roles are to:

• Certify eligible renewable resources that meet statutory requirements; and
• Design and implement a tracking and verification system to ensure that renewable energy output is counted only once for the purpose of the RPS and for verifying retail product claims in California or other states”. (California Incentives/Polices for Renewable & Efficiency, DSIRE).

      On May 6, 2010, the CPUC placed a temporary stay on their March decision and a moratorium on TREC transactions. Hopefully going forward the CPUC and the CEC can work together for the betterment of California’s renewable energy policy, which has the potential to be the largest US tradable REC market.
      Flett Exchange looks forward to adding value to the California environmental markets. As a leading exchange for state-mandated and voluntary REC markets, Flett Exchange will bring liquidity, transparency, and price discovery to spot and long-term TRECs. Our team of skilled market professionals offers supply and demand intelligence, legislative commentary, forward pricing projections, and in-depth market research. With California taking a leading role in clean energy development, Flett Exchange looks forward to supporting the TREC market and providing guidance so that the masses can fully informed and benefit from renewable energy.

Flett Exchange is pleased to announce the results of the Lawrence Township Public Schools Solar Renewable Energy Certificate (SREC) public-auction. 238 Energy Year 2010 New Jersey SRECs were sold at a clearing price of $678.10. The sale was conducted on Flett Exchange’s online, transparent environmental exchange under its “Public-Auction SREC Market” and total market proceeds equaled $191,902.30. Qualified buyers and the public could observe the bidding in real time by logging in to Flett Exchange.
The $678.10 clearing price is 98.7% of the $693 Alternative Compliance Payment (ACP). The ACP is the payment electric producers have to pay to the State of New Jersey if they do not produce a specified amount of electricity using solar energy or through the purchase of SRECs from facilities located in New Jersey. This activity supports solar development in New Jersey and SREC revenue goes to entities that take risk in developing solar facilities.

Flett Exchange is pleased to announce the results of the North West Bergen Utilities Authority Solar Renewable Energy Certificate (SREC) sale. 100 energy year 2010 New Jersey SRECs were sold at a clearing price of $678.25. The sale was conducted Flett Exchange’s electronic marketplace under its Public-Auction SREC Market and total market proceeds equaled $67,825. Registered buyers and the public could observe the bidding in real time by logging in to Flett Exchange.

The $678.25 clearing price is 97.8% of the $693 Solar Alternative Compliance Payment (SACP). The SACP is the payment electric producers have to pay to the State of New Jersey if they do not produce a specified amount of electricity using solar energy or through the purchase of SRECs from facilities located in New Jersey. This activity supports solar development in New Jersey and SREC revenue goes to entities that take risk in developing solar facilities.

• Self Financed (Most Risk/Most Reward)– Self financed solar facilities are for residents and entities who want control of their solar destiny. These parties absorb the upfront costs for developing solar and the challenges of operating and maintaining their solar facility. This is the most capital intensive structure and poses the most risk and reward. The risk lies in the development of the project, the failure in properly monitoring and maintaining the facility, and the price associated with the Solar Renewable Energy Certificates (SRECs). The rewards are a reduced rate of electricity for as long as the facility can generate solar energy, declining installation costs, and a revenue stream generated by SREC monetization. Self-financiers take the risk of developing solar because there is the potential for them to payoff the facility in a shortened period of time and realize increased upside profit potential.
• Solar Lease Financing (Moderate Risk/Moderate Reward)– Solar lease financing structures are being executed in both the residential and commercial markets. The concept is simple, straightforward, and similar to an equipment or automobile lease. Instead of self financing your solar facility, parties can enter into a leasing contract and agree to make monthly lease payments on their solar installation. Similar to a PPA contract the client does not incur the expensive upfront installation costs or the responsibility of operating and maintaining the solar facility. In a best case scenario the lessee can take advantage of higher SREC values and an option to buy out the system in six years, while the lessor obtains the ITC and accelerated depreciation of the system. A solar lease structure is also an alternative to a PPA contract for non-profit organizations who want to take on SREC risk for potential reward, while the lessor passes on the ITC and accelerated depreciation indirectly through a lower lease payment. Solar leasing firms have a set of criteria that clients need to meet in order to participate in their solar leasing program: commercial clients may need to submit audited financial statements and residents may need to have a FICO score of 700 or greater to be considered. However there are also risks associated with solar leases. One risk is that a lessee could go upside down on their contract. This happens when the solar lease is more expensive than the SRECs being monetized. Another risk is the future price of electricity. Lessees could potentially pay more for solar electricity than basic generated electricity if demand diminishes. The financial crisis of 2008-2009 was a reminder that electricity prices do not always go up and that electricity demand could decline during lean economic times. Solar lease financing is becoming more popular because it is affordable, convenient, environmentally responsible, and lowers your electricity bills. However, interested parties should weigh the risks and rewards associated with solar leases and learn more about the leasing company before signing an extended contract.
• PPA Financed (Less Risk/Less Reward)– A Power Purchase Agreement (PPA) is a contract between a solar electricity generator and a client seeking solar energy. This financial structure is designed to provide the client with a reduced rate of electricity for an extended period of time (10-20 years), no upfront installation cost, and the option to purchase the solar facility at the end of the contract. The PPA Provider designs, develops, operates, maintains, and owns the solar facility located on the client’s property. In turn the client pays the PPA Provider for the electricity generated from the solar facility. PPA Providers enter into these agreements because there is a profitable margin between where solar can be developed and what electricity can be sold for. The PPA Provider can also take advantage of the Investment Tax Credit (ITC) and accelerated depreciation. PPA Providers gain ownership of the SRECs which are generated from the solar facility and can monetize them on the Flett Exchange live markets. This solar structure is popular with non-profit organizations that cannot take advantage of the ITC and realize the accelerated depreciation of their solar facility.

Many solar projects are contingent on tax benefits, rebates, and long-term SREC contracts. Without these incentives and risk mitigation strategies solar projects can be difficult to finance and pose significant risk to investors. Let’s examine some of the incentives and strategies that are allowing the solar market to flourish.

• Tax Benefits- At this juncture, tax incentives are an integral part of solar financing. The Investment Tax Credit (ITC) returns over 30% of a solar project’s capital cost to investors in the form of a tax credit. Sophisticated investors are utilizing solar as a tax-equity investment vehicle because tax credits can offset tax liability. Section 1603 of The American Recovery and Reinvestment Act of 2009 (Stimulus Bill) also allows investors to receive a grant in lieu of tax credit when the “specified energy property” is submitted to the “grant program.” This program runs out at the end of 2010, and the SEIA www.seia.org is lobbying to have it extended. Both the credit and grant programs promote renewable energy on the institutional level and help incentivize solar development.
• Accelerated Depreciation- Developers of commercial projects can realize additional tax benefits from the depreciating cost of their solar facility. An entity “can depreciate the installed cost of the system minus 50% of the business Investment Tax Credit (ITC) over the first five years of ownership (SEIA 2008) using the modified accelerated cost recovery system (MACRS) (DSIRE 2008). According to a report by Lawrence Berkley National Laboratory, the tax benefit of this depreciation is equivalent to 26% of the installed cost of the system, 12% of which comes from the ability to accelerate it over a five year period (Bolinger 2009).” –National Renewable Energy Laboratory, “Solar Leasing for Residential Photovoltaic Systems.”
• Long-Term SREC Contracts- are helpful in financing proposed solar projects. Flett Exchange brokers long-term SREC contracts between qualified institutional counterparties. Our ability to facilitate and streamline long-term SREC contracts is value-added to both buyers and sellers. Buyers gain direct access to large pools of SRECs at a discounted price to satisfy their RPS, while sellers have the ability to mitigate risk and lock-in profits. Counterparty credit risk is paramount in this market. Buyers and sellers enter into bilateral contracts to secure price, quantity, and term of the SREC contract. Counterparties agree to pay or delivery SRECs at a specified future date. Flett Exchange augments this process by employing a stringent vetting process and presenting quality and creditworthy solar projects to the market. Flett Exchange is currently brokering 1-7 year SREC contracts in the open market and growing our ability to facilitate longer term deals for eligible commercial entities.

As the solar markets continue to evolve new and innovative thinking will be the most prized commodity. The emergence of banks, lenders, financial institutions, and new financial structures will be welcomed and as solar makes the transition form a subsidized market to a self-sustaining market.

• Growth- Over the past decade, technological advancements have made solar energy more affordable, more reliable and less obtrusive. Lower barriers of entry have allowed solar installers, integrators, and developers to offer competitive pricing on residential and commercial facilities and reduce their installed cost per watt.
• Value- Solar energy is a potential hedge against higher electricity prices. It is estimated that electricity prices could conservatively increase by 3.0% a year. Solar energy is a wise alternative to higher electricity bills and can provide clean, green, and cheaper power. Self-Financing, Solar Lease Financing, and Power Purchase Agreement (PPA) Financing are all financial structures that can accomplish reduced electricity costs.
• Tradable SREC Markets- Solar Renewable Energy Certificates (SRECs) are environmental attributes that can be transacted and monetized. SRECs are the driving financial component that makes solar economically feasible. SRECs are generated from the production of solar energy and can be monetized on Flett Exchange’s live SREC markets. SRECs are market based. Unlike feed-in tariffs SRECs pass savings on to ratepayers over time, if overdevelopment occurs or if solar becomes less expensive.
• State Mandated Markets- SREC markets are state mandated. State governments are establishing stringent Renewable Portfolio Standards (RPS) and increasing their solar carve-outs. Electric suppliers need to procure SRECs to meet their RPS. If electric suppliers cannot procure enough SRECs in the open marketplace to satisfy their RPS they are subject to a Solar Alternative Compliance Payment (SACP) which is a penalty payment and can be considerably higher then the spot SREC market.
• Tax Benefits- Many solar projects are candidates for federal tax incentives and state rebates. The Investment Tax Credit (ITC) returns over 30% of a solar project’s capital cost to investors in the form of a tax credit. Section 1603 of The American Recovery and Reinvestment Act of 2009 (Stimulus Bill) also allows investors to receive a grant in lieu of tax credit when the “specified energy property” is submitted to the “grant program.” State rebates may also be available for residential and commercial solar installations. Rebate programs can differ from state to state and exist on a sliding scale depending on the size of the proposed solar facility.
• Escalating Fossil Fuel Demand- Global demand for fossil fuels is increasing while supplies are diminishing. Developed and emerging nations are competing for fossil fuels and all petroleum products come with political and environmental risk. Solar energy, on the other hand, is limitless, does not emit harmful emissions, and can be achieved without any political risks. Also if the US Dollar continues to depreciate the price of foreign fuel could continue to rise.
• Climate Change- Private and public corporations, organizations, agencies, and municipalities are implementing clean energy programs. Climate change is a growing social and political issue, both domestically and internationally. Insightful entities understand the benefits of renewable energy and the risks associated with not staying ahead of the climate curve. These players are implementing clean energy programs and are well positioned if climate legislation gets passed. The recent US healthcare decision demonstrates that political winds can shift momentarily and legislation can be passed swiftly. Renewable energy strategies and sustainability teams are becoming more conventional, as private and public entities recognize their social responsibilities to the environment and potential legislative risk.

Solar energy is a favored renewable energy source. Solar is easy to install, is a hedge against higher electricity prices, generates a SREC revenue stream, and is beneficial to the environment. So far advantageous market conditions have attracted investors to solar.

However the future of the solar market also comes with challenges and risks. Increased competition could create an overpopulated market. Inexperienced players who are attracted by favorable market conditions could sacrifice engineering and construction quality for short term monetary gains. The reduction of federal and state incentives could make solar less appealing. As the solar market evolves it will be interesting to see if it could sustain itself and emerge as an established renewable energy source.

However if too many solar generators register to sell their SRECs in a particular state or region an oversupply scenario could occur. Market saturation could diminish SREC demand and depress prices. It is also important to note, that a solar facility generating SRECs outside of Washington, DC and also registered within Washington, DC might not receive the same price of a purely sited Washington, DC SREC.

DC RPS Rules:
http://www.dcpsc.org/pdf_files/commorders/dcmr15/Chapter29.pdf

Filing Instructions for District of Columbia:
http://www.dcpsc.org/pdf_files/customerchoice/electric/Electric_fileInstruc.pdf

Applications (2 options):

Streamlined application (for generators that already have certification in the PJM region):
http://www.dcpsc.org/pdf_files/customerchoice/electric/Electric_Streamline_app.doc

Regular application (for generator that not been certified in the PJM region):
http://www.dcpsc.org/pdf_files/customerchoice/electric/Electric_application.doc

In the 1990s Pennsylvania lawmakers moved from a regionally monopolized electricity market to a competitive electricity market. Pennsylvania consumers were paying about 15% more for electricity than the national average, so the decision to embrace a competitive electricity market was easy to make. Legislators restructured electricity generation to promote more competition. However to achieve the transition from a regional electricity market to competitive electricity market, legislators had to institute rate caps to protect from unpredictable price fluctuations and implement a “stranded costs” provision for electricity providers to pay for former infrastructure investments. “In return for the loss of their monopoly status, utilities were allowed to collect a surcharge above the price of electricity, otherwise known as stranded costs. Rate caps already have expired for six utilities statewide, and the transition period will end for all state utilities in 2011—ending the rate caps and the collection of stranded costs.” 4/9/2009, Pennlive.com, “Electricity Deregulation is a Win for Pennsylvania” –Elizabeth Bryan. As rate caps and the collection of stranded costs expire the Pennsylvania electricity market could experience unwanted changes during difficult economic times.

Electricity deregulation was established to promote competition and market efficiency. Unfortunately this is not always been the case. In 2001, California experienced the negative repercussions of a deregulated electricity market. California residents were forced to endure volatile electricity prices, while rolling blackouts plagued the state, and electricity could not be supplied during peak hours. For Californians, electricity deregulation equaled disaster.

The expiration of electricity rate caps could bring unwanted price increases to Pennsylvania. Consumers could experience percentage increases in their electric bills as regional rate caps expire. The following map exhibits regional Pennsylvania electricity territories and the electric providers that serve those areas. So far the consequences have been minor with rate cap expirations only affecting 14.1% of the Commonwealth. However from January 2010 – January 2011, rate caps for five major electricity service territories expire and the Pennsylvania electricity market will be completely deregulated.

Image Source: Pennsylvania Utility Choice (www.puc.state.ps.us)

Electricity rate caps for the Duquesne Light Company, PPL Electric Utilities, Inc., West Penn Power Company, Pennsylvania Electric Company, Metropolitan Edison Company, and PECO Energy Company expire between January 2010 – January 2011. This comprises 85.9% of Pennsylvania’s electricity market and could have an impact on electricity prices going forward. Fortunately Pennsylvania has learned from California’s missteps. Lawmakers are forcing utilities to diversify their electricity risk by securing both short- term and long-term contracts. This mixture of contracts could be helpful in mitigating risk, unlike California whose focus was concentrated on short-term contracts only. Regardless of the outcome, the Pennsylvania electricity market is one to monitor in the months and years to come.

Is there a way for Pennsylvanians to protect themselves from the upcoming deregulated electricity markets and future price uncertainty? The answer is yes. Pennsylvanians’ best solution is to embrace renewable energy. Solar energy can solve Pennsylvania’s electricity deregulation issue and act as hedges to potential higher electricity prices. Solar facilities level the playing field and allow businesses, federal agencies, non-profit organizations, and residents to participate in renewable energy, become less dependent on electric companies, and produce electricity during peak demand times. Parties that install solar facilities have the ability to achieve a fixed or reduced cost of electricity for an extended period of time, generate Alternative Energy Credits (AECs) (which are actively traded on Flett Exchange), and embrace clean energy that is absolutely vital to our environment. Pennsylvania also offers state incentives for affordable green energy. If you are a resident interested in solar click on, Pennsylvania Sunshine Program and for businesses interested in solar, click Pennsylvania Solar Energy Program to learn how to achieve clean energy.