Financing Projects with SRECs: Maryland, Massachusetts, and Washington, DC

Transcription

1 Financing Projects with SRECs: Maryland, Massachusetts, and Washington, DC Carrie Hitt, Senior Vice President of State Affairs, SEIA George Ashton, Vice President & CFO, Sol Systems LLC Amber Rivera, Renewables Trader, Sol Systems LLC Michael Judge, Associate RPS Program Manager, MA Department of Energy Resource Scott Wiater, President, Standard Solar

2 Antitrust Reminder As a trade association of competitors, SEIA must comply with and be mindful of antitrust laws. It is important that competitively sensitive matters are not discussed on this call, including product prices or costs; sales terms or conditions; production levels; sales territories; marketing plans; industry forecasts; or bid terms. If any such topic is raised, SEIA will stop the conversation and, if necessary, end the call. For more information, SEIA s antitrust guidelines are available on our website. June 14, Solar Energy Industries Association 2

3 No Legal or Tax Advice Provided by SEIA PLEASE NOTE THAT THIS PRESENTATION DOES NOT PROVIDE LEGAL, TAX, OR OTHER PROFESSIONAL ADVICE. SEIA DOES NOT PROVIDE LEGAL, TAX OR OTHER PROFESIONAL ADVICE TO ANY OF ITS MEMBERS OR THE PUBLIC. PLEASE CONSULT ATTORNEYS OR TAX ADVISORS TO DETERMINE HOW ANY MATERIALS DISCUSSED ON THIS WEBINAR MAY APPLY TO YOUR SITUATION. June 14, Solar Energy Industries Association 3

4 DC - Historical Spot Market Prices JUL AUG SEP OCT NOV DEC JAN FEB MAR APR-13 MAY-13 JUNE-13 $ 340 $ 340 $ 340 $ 320 $ 325 $ 335 $ 340 $ 400 $ 410 $420 $440 $470 Capacity 6.75 MW DClocated capacity 26.1 MW producing DC SRECs 7% of total capacity was installed in avg. mthly growth of 219 kw 1% total capacity installed in avg. mthly growth of 158 kw Solar Market Finance Expertise

5 DC Present and Future SREC Supply & Demand 2013 issued to-date: ~3,000 Expected in 2013: ~29,000 SREC RPS for 2013: ~62k Forward Prices $ by start of Q4 $ by Feb Legislation in 2013 Solar Market Finance Expertise Community Renewable Act of 2013 (B ) Energy Innovation Savings Amendment Act (B )

6 Spot Market Prices MD - Historical JUL AUG SEP OCT NOV DEC JAN-13 FEB-13 MAR-13 APR-13 MAY-13 JUNE-13 $ 225 $ 220 $ 185 $ 185 $ 149 $ 165 $ 130 $ 142 $ 154 $130 $135 $135 Capacity 122 megawatts producing SRECs 2012 avg. monthly growth: 5.8 MW 2013 avg. monthly growth: 6 MW 2013 market could be undersupplied if current growth sustains. 10 MW average monthly growth could keep it oversupplied Solar Market Finance Expertise

7 MD Present and Future SREC Supply & Demand 2013 Issued to-date: 46,000 Expected in 2013: 160k- 170k SREC RPS for 2013: 161,000 Forward Prices : $ : $ : $125 Legislation in 2013 SB MW+ systems must file for approval to construct through PSC and place deposit in escrow SB 1534 Definition of solar water heating system expanded HB1128 Community solar pilot for systems < 2MW HB % state ITC, can carry the credit forward Solar Market Finance Expertise

8 Spot Market Prices MA - Historical JUL AUG SEP OCT NOV DEC JAN-13 FEB-13 MAR-13 APR-13 MAY-13 JUNE-13 $ 310 $ 240 $ 225 $ 225 $ 200 $ 200 $ 220 $ 230 $ 220 $ 225 $ 205 $ 205 Capacity 218 MW operating capacity 287 MW qualified for 400-MW program Total of 906 MW is qualified or under review by DOER Expecting to reach 400 MW cap by average monthly growth: 9.8 MW 2013 average monthly growth: 10.4 MW Solar Market Finance Expertise

9 MA Present and Future SREC Supply & Demand Issued in 2012: 119,247 RPS requirement 2012: 81,559 Expecting ~395,000 in 2013 SREC RPS for 2013: 189,297 Forward Prices 2013: $ : $ : $ : $ : $185 Legislation & Policy in 2013 Changes to CMR went into effect on June 7 th Post-400 MW policy has been proposed Calter Bill (H.2915) - Referred to Joint Committee on Telecommunications, Utilities and Energy. Hearing scheduled for July 16 th Solar Market Finance Expertise

10 SREC PROGRAM DESIGN FEATURES Program design features help ensure market stability and balance Adjustable Minimum Standard maintains SREC demand/supply in reasonable balance Forward ACP Rate Schedule provides investor certainty Solar Credit Clearinghouse Auction Account essential price support mechanism to assure SREC floor price Opt-In Term provides right to use Auction Program Cap Enables sufficient market growth opportunity (exceeds Governor s goal of 250 MW by 2017) These features work together to ensure the market will remain in balance as more PV is built 10

11 SOLAR CREDIT CLEARINGHOUSE AUCTION Open every year from May 16 th June 15 th Auction for 2012 SRECs will be held this July 26 th Preliminary Minimum Standard adjustment will be announced before Deposited SRECs are re-minted as extended life SRECs (good for compliance in either of the following two Compliance Years) SRECs are offered to bidders for a fixed price of $300/MWh before being assessed a $15/MWh auction fee by DOER. Bidders bid on volume willing to buy at the fixed price SREC owners will be paid $285/MWh for each SREC sold through the Auction 11

12 CLEARINGHOUSE AUCTION PROCESS 12

13 DISCLOSURE The information provided in the following slides are part of a deliberative policy making process for which public input is valued. DOER has not finalized any decisions nor committed to any policy design or values presented in this presentation. 13

14 EMERGENCY REGULATION SCOPE/RATIONALE Statement of Qualification Applications were received by DOER at an accelerating rate starting in April 2013, resulting in a remaining capacity window that was rapidly diminishing to the market. DOER recognizes that the solar industry in MA includes a range of business size and experience, and wants to maintain a diverse and confident industry. DOER understands that some projects have been caught with serious sunk financial investments, but without prospect for qualification under the current program. DOER particularly recognizes the small (kw scale) market sector that has short project development cycles which are at risk for business suspension without available capacity for qualification. DOER also believes that many projects that have now sought qualification are not significantly developed and should have reasonably expected to be beyond the 400 MW cap and best suited for the post-400 MW program. 14

15 EMERGENCY REGULATION APPROACH DOER had several primary policy options available to accommodate the current overflow of applications. Begin an initial phase of the post-400 MW program Extend the current 400 MW program cap Establish new program and compliance obligation for interim projects Do nothing, and not qualify project applications beyond 400 MW cap DOER recognized the different impacts these alternative approaches could have on projects within and outside the 400 MW cut-off, solar market activity over the next 6 to 9 months, and ratepayers. After careful consideration of these impacts and our regulatory authority, DOER has decided to move forward with an Emergency Regulation to allow the current 400 MW cap program to expand, accommodating small projects and those projects which are demonstrably well invested in the development cycle. 15

16 QUALIFICATION OF PROJECTS All Units greater than 100 kw that have received a Statement of Qualification or have applications deemed administratively complete by DOER and are within the 400 MW cap must meet prescribed project construction timelines or their SQs will be revoked. All Units that are now above the 400 MW cap and greater than 100 kw that have an executed Interconnection Service Agreement dated on or before June 7, 2013 shall be provided an SQ if they meet prescribed project construction timelines. Applicants will be given one week from the effective date of the emergency regulation to provide DOER their executed ISA, or their application will be rejected. All Units equal or less than 100 kw which have an Authorization to Interconnect and have submitted an SQA prior to the effective date of the post-400 MW solar carve-out program regulation shall be provided an SQ. 16

17 PRESCRIBED PROJECT CONSTRUCTION TIMELINES (PROJECTS >100 KW) A Unit must receive its authorization to interconnect from its local distribution company on or before December 31, Units that have not received an authorization to interconnect on or before December 31, 2013 will be provided an extension to March 31, 2014 only if it can demonstrate to the satisfaction of Department that the project has expended at least 50% of its total construction costs by December 31, If the Unit provided such an extension receives its Authorization to Interconnect on or before March 31, 2014, the Unit will be provided a Statement of Qualification. If a Unit can demonstrate to the Department s satisfaction that either of these two timelines have been met, but that interconnection depends only upon receipt of notice of authorization to interconnect from the distribution company, and such receipt is delayed only by cause of the utility company, the SQ shall be extended indefinitely until such notice is received or denied. 17

18 RECALIBRATION OF COMPLIANCE OBLIGATION All references in the current regulation (in and around 225 CMR 14.07(2)(e)) to the program capacity cap of 400 MW will be modified to read the total capacity of all Qualified Units as of April 1, Thereby, the steady state market compliance obligation (MWh) will be adjusted towards the extended program cap (MW), times the hours in a year, times the Capacity Factor as calculated per the revised regulation. DOER expects reaching this new Cap will not fundamentally change the market balance or the anticipated timeframe for reaching the steady state market. 18

19 RPS SOLAR CARVE-OUT II - OBJECTIVES Provide economic support and market conditions to maintain and expand PV installations in MA. If possible, establish a program now that will drive the market towards and until the technology reaches cost parity with RPS Class I. Provide clear policy mechanisms that control ratepayers costs and exposures. Heading well beyond 400 MW is only practical at costs to ratepayers (per MW) less than today. Ratepayer costs should better reflect marginal cost of solar installations over time. Maintain robust growth across installation sectors residential, small commercial, roof mounted, ground mounted, etc. Maintain competitive market of diverse PV developers, without undue burdens of entry. Address financing barriers limiting direct ownership, without compromising thirdparty ownership model. 19

20 Questions & More Information More information and DOER s full presentation on the Emergency Regulation and SREC II program design can be found on the Regulatory Proceedings page at: DOER is currently accepting public comments on the proposed SREC II program design through June 21, Comments and questions regarding the program should be directed to DOER.SREC@state.ma.us 20

21 Installed Solar Capacity in Massachusetts (as of 6/1/13) Annual Installed Capacity (MW) Cumulative Installed Capacity (MW) MW