Clean Energy Standards 101

Justin Barnes, Senior AnalystNorth Carolina Solar Center

January 26, 2012

State of the Union: RPS

State of the Union: Solar

SRECs

• In general, SRECs are a form of Renewable Energy Certificate or "Green tag" o SREC sale opportunities exist in states that have

RPS legislation with specific requirements for solar energy, usually referred to as a "solar carve-out"

• States define SRECs differently• State policy variations ultimately determine what an

SREC is worth and how the generator is able to receive value from its sale

Major State Policy Variations

• Regulated vs. Restructured Electricity Marketso Determines the obligated entity: Utilities vs. Energy Suppliers (may include

IOUs)o Often determines the transaction type: standard offer incentive programs

(CO) vs. open trading markets (PA) vs. open trading with regulation (NJ, MA)o Penalty/compliance provisions: administrative penalties vs. SACPs (vary by

state)

• Resource eligibilityo Geographic/electricity delivery restrictions (e.g., in-state, in-region)o Resource definitions (PV only, all DG, solar water heating)o Specific size limits or other effective limitations

• Targets and Timelineso Modest targets (e.g., NC 0.2% by 2018) vs. ambitious targets (e.g., DE 3.5%

PV by 2026)o Target formulation: MW (MA), MWh (NJ), % (most others)o Increase schedule: annual forward (most states), plateau (NM, NV), variable

(MA)

Basic Market Demand Equation

SREC demand = (% standard) X (forecast retail sales)

MW demand = (SREC Demand)/(Annual production (est.) per MW)

Complicating Factors• Establishing accurate long-term retail sales forecasts• Estimating solar % for DG carve-outs (or solar thermal

electric vs. PV)• Accounting for multi-year SREC lifetimes/carryovers• Accounting for multipliers if they exist now or in the past• Relevance of cost containment provisions • Prospects of policy change

The Other Side: Supply• SREC

demand is state specific, but supply may not be

• Broader eligibility typically equals lower SREC values

Map Source: FERC (eligibility arrows added)

Ongoing Implementation Issues• Reliance on market forces vs.

more “bankable” mechanisms• Role of different sectors

(residential, commercial, utility-scale)

• Balancing cost and ratepayer impacts vs. ratepayer benefits

Contact:Justin Barnes

justin_barnes@ncsu.eduwww.dsireusa.org

www.ncsc.ncsu.edu