On May 22nd, 2019, Maryland Governor Larry Hogan announced his decision to let the Maryland Clean Energy Jobs Act pass without his signature. The Act increases Maryland’s Renewable Portfolio Standard to an aggressive 50% by 2030. Additionally, the solar carve out target increased to 14.5% by 2028 and the Solar Alternative Compliance Penalty (SACP) was adjusted to $100.00 in 2019 and 2020, and decreasing each year thereafter. In response to these anticipated, and now enacted, legislative changes, the SREC market in Maryland has experienced a significant upward swing from $11.00 to $65.00 since the beginning of 2019.

Electricity load that was signed under contract prior to the bill’s effective date of October 1, 2019, is not subject to the new compliance obligations. Our calculations assume that approximately 80% of the 2019 electricity load is under prior contract and therefore exempt, with 25% of that exempt load rolling into the new compliance obligations each year moving forward.

Solar build rates have been trending downwards over the last six months in comparison to the last twelve months. Assuming no drastic decrease in build rate, we expect the market to be oversupplied in 2019, and undersupplied each year thereafter. The enclosed analysis further details the implications of the Maryland Clean Energy Jobs Act and the potential responses from the MD SREC market.

On Friday, May 22nd, Governor Larry Hogan announced that he would let the Maryland Clean Energy Jobs Act (SB-516) pass without his signature. The Governor’s decision to let the bill pass puts Maryland at the forefront of a growing list of states with aggressive renewable targets. This legislation requires 50% of Maryland’s energy to come from renewable sources and 14.5% from in-state solar, by 2030. In addition to the 2030 targets, the bill mandates that the state conduct research on strategies to reach 100% renewable energy sources by 2040, among other initiatives.

The Governor supplemented his decision to let the bill pass unsigned with a letter to Maryland Senate President, Thomas V. Miller, expressing his concerns with the bill and affirming his promise to continue pushing for a cleaner portfolio of energy resources in Maryland. SRECTrade will conduct further analysis on the impacts of this legislation and publish a comprehensive SREC market analysis in the coming weeks.

Last week, on Tuesday, March 19, 2019, the Maryland Senate passed the Clean Energy Jobs Act (CEJA) 33-13. Senate Bill 516 most notably increases the Maryland Renewable Portfolio Standard (RPS) to 50% renewable energy by 2030. The bill also substantially increases the state’s Solar REC program bumping the 2019 solar requirement to 5.5% and increasing until it reaches 14.5% in 2028 and onward.

For the legislation to progress, the Maryland House Economics Matters Committee would need to bring it forward and be voted on favorably on the floor of the House. The bill would then ultimately be sent onward to Governor Larry Hogan’s desk. Governor Hogan will then need to sign the bill or let it pass without his signature to put the bill into law. While uncertainty remains on Governor Hogan’s view on the legislation, some believe his recently shared perspective demonstrates positive support.

Since the Senate voted in favor of the bill, the House hasn’t taken action on the matter yet. On Monday, March 25, U.S. Senator Chris Van Hollen (D-Md.) put his support behind the bill. Senator Van Hollen sent a letter to House Economic Matters Chair Dereck Davis explaining why time is of the essence. Specifically Van Hollen noted that delaying the legislation until next year could result in the loss of nearly $250 million in federal investment tax credit (ITC) dollars. Additionally, further delay could continue to hurt the solar jobs market in the state. Maryland lost 800 solar industry jobs in 2018, ranking it 47th in solar growth in the U.S.

As of now, the bill awaits action in the House. Not much time remains in the current general session, which is scheduled to adjourn on Monday, April 8. SRECTrade will continue to monitor these proceedings closely and update our partners and clients with any new information.

With the close of the Maryland 2017 compliance year approaching, we thought it would be relevant to provide an update on where the current market stands, including recent happenings that could impact the future Renewable Portfolio Standard (RPS) requirements. Click here for our full presentation.

This year started off slightly more positive as the market moved up off its early Q4 2017 lows of about $5.00-6.00/SREC. Recent spot transactions have been ranging between $7.00-7.50/SREC. Additionally, the MD2018 and MD2019 forward markets have trended up into the $8.50-$10.50/SREC range depending on vintage and transaction size. It is likely that a combination of the 2017 compliance year coming to a close as well as standard offer service electricity load auctions taking place in late January had a positive price impact through increasing buy side demand.

Under the current RPS requirements, the MD SREC market is fundamentally oversupplied. Solar build rates remained strong through the end of 2017 and the 100 megawatt (MW) Great Bay project is now registered in PJM GATS. Excluding the Great Bay project, however, the market experienced a 15.7% decline in average MW build per month in the last 6 months versus the last 12 months (through November). Even though the rates per month are declining, the market saw a push of project registrations heading in to the close of 2017, which is typically normal at year end (i.e. excluding Great Bay, 33.9 MW were registered in GATS through November 2017 vs. 26.7 MW through August 2017).

The most meaningful news for the Maryland RPS is the introduction of Senate Bill 732. The bill aims to increase the overall RPS requirements to 50% by 2030 and increase the solar carve out requirements to 14.5% by 2028, with a large step up to 5.5% in 2019. In addition to increasing the MD RPS, the bill also reduces the Alternative Compliance Payment (ACP) for both the Tier I and solar carve out requirements. Summary charts below outline the proposed changes to the solar carve out portion of the RPS, including both RPS % increases and ACP decreases.

The bill had its first reading in the Senate Finance Committee in early February. It is scheduled to be heard in the house (HB1453) on March 5th and then in the Senate on March 6th. As demonstrated in the Maryland SREC Update presentation above, the increase in the RPS % under SB732 would allow for Maryland’s solar market to continue to build at rates in excess of current last 12 month averages (i.e. 20.3 MW/month). This would allow the market to develop a variety of project types including larger, utility scale projects that the state has seen over the past few years. While the step up to a 5.5% solar requirement in 2019 is substantial, our presentation does not take into consideration the impact of exempt electric load that would only be eligible under the old RPS schedule given already signed electricity supply agreements. Exempt load would reduce estimated demand in the earlier years of the RPS increase under SB732, but nonetheless the RPS increase would have a substantial effect on increasing the demand for SRECs and solar supply in the state of Maryland.

SRECTrade will continue to track the status of this legislation. In the meantime, please feel free to contact us with any questions.