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On July 30th 2024, Flett Exchange became the first broker to launch the Maryland Certified SREC market. Currently, homeowners with systems installed after 07/01/24 will begin generating Certified SRECs on 01/01/2025, which are expected to be worth around 1.5x the current Legacy MD SRECs. Homeowners in Maryland who are interested in the possibility of installing solar will benefit massively from these higher priced SRECs, and can enjoy the benefit of incentives like the Federal Investment Tax Credit and the MD FY2025 Solar Access Program, which is designed to provide grant money for low to moderate income residents.
Flett Exchange has also released a free to use solar installation financial model. We suggest using this model to fully realize the advantages and long term cash flows of a solar investment before having a conversation with a solar installer. Flett Exchange is a neutral third party that does not profit off of the installation of a solar array; we simply broker SRECs produced by homeowners. This affords us the unique position to offer unbiased, informative, and realistic forecasts and consulting on solar investments. If you are interested in potentially going solar, contact Flett Exchange for a zero cost consultation service and we can help match you with a solar installation company. The goal of Flett Exchange, ultimately, is to broker more SREC deals; we are not involved in any capacity with the process of installing solar arrays. It is our hope that this complementary service will steer you in our direction to sell your SRECs post installation.
MD Solar PV Installation Cash Flow Model
Listed below are some key assumptions of the model:
The Maryland Energy Administration will provide grants of $750/kW with a $7,500 cap to low to middle income homeowners for installation of a residential solar system
The Maryland utility bill inflation rate is 2.83% annually. This number is derived from the average utility bill from 2014-2023 for five major state power companies: Delmarva Power, PEPCO, SMECO, BGE, and Potomac Edison.
A residential solar installation will yield positive cash flow from SREC income, as well as an implied positive cash flow from avoided utility costs
The SACP set by the Maryland RPS will decrease incrementally as expected, and this benchmark will serve as a proxy for yearly SREC prices throughout the life of the system
TAGS:
Federal GrantsPress ReleasesSRECResearchMaryland Certified
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Are you a Maryland resident interested in installing a cost effective solar array on your home or business? If so, this news is for you!
With the recent passage of SB0783, known as the Brighter Tomorrow Act, the Maryland Energy Administration has proposed funding a grant pool of $18 million for FY2025 in compliance with the aforementioned bill [9-2016] . This ACT is specifically designed to enable low to moderate income Marylanders gain access to affordable renewable energy systems. Qualifying homeowners may be entitled to up to $7,500 in reimbursement for their solar system installation cost. ($750 per Kw up to 10Kw)
Additionally, under the Inflation Reduction Act signed by President Biden in 2022, homeowners nationwide can take advantage of a tax credit to offset the cost of solar installation as defined in 26 U.S.C. § 25D. This covers 30% of your installation cost. If you don’t have the taxable appetite Flett Exchange can sell your tax credit for you.
Flett Exchange is the easiest one stop option to manage your personal solar project finance and subsequent account management for sale of Certified MD SRECs (for more information on the new Maryland SREC program for systems installed after 01/01/2025, see the Maryland Solar Bill.)
Once you have decided to install a cost-effective solar system on your home and want to begin selling your certified SRECs, Flett Exchange will:
Provide a no-cost estimate for your system installation, and
Submit your grant application to the state of Maryland
Connect you with a local installation company
Register your array with PJM GATS
Manage the sale of your Certified SRECs (estimated to be worth $75/KW in 2025)
Provide 5 day per week phone and email support for questions and concerns you may have along the way
TAGS:
MarylandFederal GrantsPress ReleasesSRECResearchMaryland Certified
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Solar installed in New Jersey prior to 2017 generate SRECs for 15 years. After that time they generate Class 1 RECs. SRECs are worth $200 or more. Class 1 RECs trade for $30 today and go only as high as $50.
It is confusing as to when your system is going to convert from SRECs to Class 1 RECs. Here is what you need to do to figure this out.
Here is a Key:
If your array went online from June 2008 and up to and including May 2009 the last SREC you will mint is May 2024. Your first Class 1 REC will be your June 2024 generation.
If your array went online from June 2009 and up to and including May 2010 the last SREC you will mint is May 2025. Your first Class 1 REC will be your June 2025 generation.
And so on…
When you produce Class 1 RECs you sell them the same way on Flett Exchange. You can either check the price on the Flett Exchange website https://www.flettexchange.com/ and transfer them on GATS to Flett Exchange, LLC or you can list them for sale on the Flett Exchange trading platform and transfer them on GATs to Flett Exchange,LLC. when you are filled.
Since Class 1 RECs are lower priced we suggest to wait 6 months to a year to sell them in bulk. Class 1 RECs are only good for 3 energy years so do not wait too long or they will go worthless. SRECs are good for up to 5 energy years.
It is very important to enter your meter readings within 30 days after your system gets converted to a class 1 facility. If you do not put in your meter readings within 30 days all of the months that you deserve to earn SRECs will be created as Class 1 recs. You may lose thousands of dollars!!!
(As of this writing we believe GATS is fixing this issue but we cannot confirm. Best practice is to make sure the meter reading is entered in a timely fashion.)
GATS will send you an email that says the following:
“Your solar electric generation facility's NJ SREC eligibility period will reach the end of its qualification life within Energy Year ("EY") 2021 which ends on May 31, 202X. All generation should be entered prior to the last business day in June. Facility eligibility will be changed from Solar (SREC) to Class I (REC) on July 1, 202X. “
Flett Exchange is the largest exchange for New Jersey Solar Class 1 RECs. Many energy companies compete to purchase SRECs and Class 1 RECs on our exchange which ensures you get the going market price.
Edit: Updated GATS terminology.
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Flett Exchange operates a market for Maryland Geothermal RECs, or commonly called GRECs. Owners of certified geothermal facilities in Maryland – homes, businesses, schools, hospitals – sell their GRECs on Flett Exchange. Energy companies purchase GRECs on Flett Exchange to comply with Maryland’s Renewable Energy Portfolio. If energy companies do not purchase enough GRECs they have to submit a compliance payment to the state of Maryland. That compliance payment is $100 until 2025 and is reduced after that. See the compliance schedule decrease under “specifications”.
Owners of geothermal facilities can register and sell their GRECs directly on Flett Exchange. Flett Exchange also offers full-service GREC management. For full-service managed clients Flett Exchange will register your system with the state of Maryland, register with the database that creates GRECS, and sell your GRECs along with all of our other GREC clients. Sellers benefit from the increased prices due to the large volume Flett Exchange transacts.
The following are some of the main aspects of the MD GREC Market:
Installation date: January 2023 cut-off. Prior to January 2023 MD geothermal facilities produced Class 1 RECs. January 2023 or later installations produce GRECs.
MD Class 1 REC price cap: $30
MD GREC price cap: $100 -moving down to $65. See the schedule.
Residential and non-residential geothermal facilities in Maryland qualify for GRECs differently.
Residential:
installed in a residential home that is not owned by a business. The system must meet ENERGY STAR standards and not feed electricity back into the grid.
Non-residential:
At a commercial building; or
At multi-family housing units that qualified as low- or moderate-income housing on the date the system was installed on the property; or
At institutions that primarily serve low- or moderate-income individuals and families, including i) schools with a majority of students who are eligible for free and reduced prices meals; ii) hospitals with a majority of patients eligible for financial assistance or who are enrolled in Medicaid; and iii) other facilities that serve individuals and families where a majority of those is enrolled in Federal or State Safety Net Programs.
A system with a 360,000 BTU capacity is eligible for geothermal renewable energy credits only if the Company installing the system provides for its employees:
Family-sustaining wages;
Employer-provided health care with affordable deductibles and co-pays;
Career advancement training;
Fair scheduling;
Employer-paid workers’ compensation and unemployment insurance;
A retirement plan;
Paid time off; and
The right to bargain collectively for wages and benefits
Low income carve-out. Energy companies must procure 20% of the GREC obligation from low-income geothermal facilities. Low or Moderate Income (LMI) for GREC purposes is a household with an aggregate annual income that is below 120% of the area median income. The ability to qualify for the low-income tag on the GRECs may help in the future if the GREC market gets oversupplied because these may retain value longer.
New Geothermal facilities must register with the Maryland Public Service Commission and GATS. Flett Exchange will register for full-service GREC clients.
Register for either a do-it-yourself or a managed GREC account on Flett Exchange to take the first step to receive payments for your GRECs.
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All RECs registered in GATS from solar and wind facilities in PJM installed after January 1, 2003 can be used for New Jersey Class 1 compliance. Also, New Jersey Solar facilities that have outlived their SREC qualification of 15 years (or 10 years if the SRP registration for the solar project was filed on or before October 29, 2018) qualify as Class 1 RECs. These can be purchased by energy companies to satisfy their class 1 compliance. The life of the Class 1 rec is three energy years. Energy years run June to May. Compliance is done in the fall of each year.
How do I sell my Class 1 RECs?
If your New Jersey solar facility no longer qualifies for SRECs you can sell them as Class 1 RECs on Flett Exchange. It is the same process as you did with your SRECs except you sell them on the Class 1 market of Flett Exchange. If you have an account with Flett Exchange you can transfer them on GATS to the Flett Exchange account. Enter the Class 1 sell-now price published on the www.flettexchange.com homepage. We will process the trade, email you a confirmation and issue payment the next day.
New Jersey Class 1 REC Value
The range for Class 1 RECs in New Jersey is $0 to $50. $50 is the Alternative Compliance Payment (ACP), or fine, that energy companies in New Jersey have to pay if they do not procure enough Class 1 RECs. The value for Class 1 RECs is $30 at the beginning of 2024 and is expected to move up to the $40 to $45 levels during the 2025 to 2030 timeframe. This rise is expected because New Jersey law requires energy companies to either produce more renewable energy or buy more Class 1 RECs in the coming years.
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Washington D.C. has passed a law (B24-0950 / L24-0314) to change its renewable energy infrastructure requirements, making the District’s climate goals more aggressive than previously anticipated.
With the number of installs in Washington DC doubling in the past few years, The Local Solar Expansion Act aims to re-balance the supply-demand fundamentals for the market. The bill will change the current solar carve-out from 10% of all delivered electricity to 15% by the year 2041. Additionally, the SACP (Solar Alternative Compliance Payment, or “penalty price”) is being reduced from $500.00 to $480.00 starting in 2024, and then gradually coming off $20.00 each year. This penalty price provides a theoretical ceiling for the cost of Solar Renewable Energy Credits (SRECs) in any given year. With that price being altered to a more conservative ramp-down, investor confidence will remain high and allow for further investment in the district. Although it is one of the smallest SREC markets in the country, the law’s passing allows Washington D.C.to remain one of the most premium.
|
Year |
Previous RPS |
New RPS |
Previous ACP |
New ACP |
|
2023 |
2.85% |
3.00% |
$500 |
$500 |
|
2024 |
3.15% |
3.65% |
$400 |
$480 |
|
2025 |
3.45% |
4.30% |
$400 |
$460 |
|
2026 |
3.75% |
5.00% |
$400 |
$440 |
|
2027 |
4.10% |
5.65% |
$400 |
$420 |
|
2028 |
4.50% |
6.30% |
$400 |
$400 |
|
2029 |
4.75% |
7.00% |
$300 |
$380 |
|
2030 |
5.00% |
7.65% |
$300 |
$360 |
|
2031 |
5.25% |
8.30% |
$300 |
$340 |
|
2032 |
5.50% |
9.00% |
$300 |
$320 |
|
2033 |
6.00% |
9.65% |
$300 |
$300 |
|
2034 |
6.50% |
10.30% |
$300 |
$300 |
|
2035 |
7.00% |
11.00% |
$300 |
$300 |
|
2036 |
7.50% |
11.65% |
$300 |
$300 |
|
2037 |
8.00% |
12.30% |
$300 |
$300 |
|
2038 |
8.50% |
13.00% |
$300 |
$300 |
|
2039 |
9.00% |
13.65% |
$300 |
$300 |
|
2040 |
9.50% |
14.30% |
$300 |
$300 |
|
2041 |
10.00% |
15.00% |
$300 |
$300 |
Flett Exchange will continue monitoring Washington, D.C. SREC markets and provide any additional updates as they are released.
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DISCLAIMER: New Jersey SREC prices are volatile. Buyers and sellers of SRECs must do their own research. The above projections are subject to change as market dynamics change.
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September 2018
In May 2018 New Jersey AB 3723 was passed which instituted major changes to the New Jersey solar incentive market revolving around SRECs.
History:
New Jersey was one of the early leaders in providing ratepayer incentives through SRECs to solar owners. Flett Exchange launched its’ New Jersey SREC market in June of 2007 to help facilitate an open and competitive market. The SREC program was created to provide a long-term 15 year pay-back as opposed to the large up-front incentive program that existed in New Jersey. Solar installation costs dropped quicker than expected during the last decade. As of the fall of 2018 New Jersey has close to 100,000 solar installations and produces over 3% of its electricity from solar. A major market reform was instituted in 2012 which increased demand for solar. This increase in demand averted a collapse in in SREC prices which kept solar investors whole and provided demand for a few more years of new solar development which satisfied solar developers. This same change slashed the cost cap by more than 50% to protect ratepayers. By 2016 it was apparent that once again costs to install new solar dropped quicker than expected. AB 3723 was passed in May 2018.
AB 3723 major changes:
Closes the current SREC program to new applicants by June 2021
Mathematically attempts to close the SREC program by timing the curtailment of supply of new solar while increasing demand at the same time thus “pinning” high SREC prices for the next 10 – 15 years.
Adds a 7% cost cap by 2022 that is complicated/impossible to model and relies on BPU action and will most likely not kick in for years. The cost cap favors the wind development portion of the RPS by protecting it from this cap. The solar portion will be most likely be ratcheted down through reduced solar compliance costs.
(Plain English: Bail-out legislation for current solar owners (Attempts to keep SREC prices above $200 for years) that at the same time gives solar developers 2 to 3 years to cash in on projects before a new incentive program is created. Ratepayers who pay for it will never understand it which limits/reduces political risk for passing it. Provides for costs shifting 5+ years out from solar compliance to wind compliance thus potentially reducing SREC prices at that time)
Price Projection and Risks for Sellers of New Jersey SRECs:
AB 3723 prevented the New Jersey SREC market from a collapse which was inevitable by 2019-2021 due to the pace of solar development in New Jersey which was significantly more than what the legislation called for. In all SREC markets that experienced similar events – PA, MD, OH, SREC prices dropped to $10 or less for years. It appears that SREC prices will remain at the $180 to $250 range for the next 3 to 5 years (2018 to 2020/22) Analysis for prices and hedging strategies going out 3+ years are available to our registered and active customers.
DISCLAIMER: New Jersey SREC prices are volatile. Buyers and sellers of SRECs must do their own research. The above projections are subject to change as market dynamics change.