The California Low Carbon Fuel Standard (CA LCFS) market exhibited steady credit prices in the third quarter of 2020. Throughout the quarter, credit prices remained steady around ~$195 per credit. On October 31 the California Air Resources Board (CARB) released the Q2 2020 credit and deficit report. There was an overall drop in deficits and credits generated in Q2 2020 as well as a smaller draw upon the cumulative bank most likely due to impacts of COVID-19. The enclosed update provides highlights on news impacting the market, a recent price trend overview, and a closer look at the Q2 2020 credit and deficit report.
SRECTrade offers LCFS credit management and brokerage services to electric vehicle (EV) fleet operators, OEMs, EV charging station owners, and other clean fuel asset owners. We help our clients navigate the entire LCFS process including asset registration, ongoing reporting requirements, transacting, settlement, and remittance of funds. Our domain expertise in environmental commodity markets allows us to provide our clients with industry leading regulatory and market knowledge. Please reach out to cleanfuels@srectrade.com or (415) 763-7732 x 4 for more information.
The SREC market in Washington D.C. has seen a change in trends due to changing market conditions associated with COVID-19. Our enclosed analysis provides an update on these market conditions and evaluates future market dynamics.
Compared to our last market update – posted on May 22, 2020, we project a greater oversupply in 2020 & 2021 and our new analysis shows 2022 now slightly oversupplied in high build rate scenarios. Despite this, we expect the market to flip to undersupplied in 2023, or sooner in low build rate scenarios.
This change in dynamic can be attributed to several factors
including:
COVID related decline in electricity sales resulting in lower SREC demand
Higher build rates resulting in higher forecasted SREC production
1.65 Last Twelve Month Avg. (MW/mo) (May Analysis) vs.
2.49 Last Twelve Month Avg. (MW/mo) (Current Analysis)
In this time of uncertainty, there are several fundamental considerations that could impact the final supply and demand figures over the next coming months. Final 2020 DC SREC production, Q4 build rates, and actual grandfathered load will need to be analyzed to determine the degree of oversupply and more accurately project future market conditions.
Should you have any questions regarding the enclosed analysis or need transaction and management services, please contact us.
Pursuant to Section 6.9.1 of the Revised Long-Term Plan, Illinois Adjustable Block Program (ABP) Approved Vendor Designees are now required to register in a new portal with the Approved Vendors with which they are partnered. This new requirement was established to help increase transparency for consumers, since they will now be able to verify the legitimacy and affiliations of an entity contacting them by reviewing the public-facing Designee database on both the ABP and Illinois Shines websites.
On Monday, October 26th, the Designee Registration Portal opened. On Friday, October 23rd, the ABP Administrator hosted a webinar to review the portal and onboarding process. SRECTrade encourages all stakeholders to review this informative resource regarding the process. For access to the presentation slides, please click HERE. To view a recording of the webinar, please click HERE.
Importantly, new Designees must register in the portal prior to working with any Approved Vendor. Existing Designees must register by Thursday, December 10, 2020to remain in compliance with ABP requirements (45 calendar days from the October 26, 2020 release of the Designee Registration functionality). Once registered, Designees should indicate all applicable roles from the following list in the portal:
Disclosure Form Designee – An entity that is permitted to generate Disclosure Forms on behalf of an Approved Vendor.
Community Solar Subscriber Agent Designee – An entity that is permitted to manage the community solar subscription information for an Approved Vendor’s community solar projects.
Marketing or Sales Designee – An entity that is designated to act as a marketing agent and/or customer acquisition agent on behalf of an Approved Vendor or Designee. This includes, among others, entities that engage in solicitations through any channel (in-person, telephone, etc.), as well as entities that perform online lead generation services.
Installer Designee – An entity that has been designated to install systems on behalf of an Approved Vendor or Designee.
October 28, 2020 Edit: To view FAQs following the October 23rd webinar and the ABP Administrator’s responses, please click HERE.
Current and interested SRECTrade Designees can email installers@srectrade.com with questions about this new requirement and onboarding process.
On April 12, 2020, Governor Ralph Northam signed the Virginia Clean Economy Act (VCEA). This Act was passed as House Bill 1526 and Senate Bill 851. Dominion and Appalachian Power Company (APCo) now have a mandatory Renewable Portfolio Standard (RPS) in their service territories. The goals of the VCEA are to establish renewable portfolio and energy efficiency standards, advance offshore wind, and advance solar and distributed generation.
Dominion and APCo may use RECs from any renewable energy facility within Virginia or the PJM territory from the years 2021-2024. Beginning in 2025, 75% of all RECs used by Dominion must come from RPS resources within Virginia. All RECs are eligible to be sold for 5 years. Dominion must be 100% carbon-free by 2045 and APCo must be 100% carbon-free by 2050.
An additional component of the VCEA is that 1% of Dominion’s RPS compliance obligation must come from in-state distributed generation solar resources (DG) smaller than 3 MW in nameplate capacity. This requirement will represent approximately 90 MW in 2021 and increase to approximately 250 MW by 2030, thus supporting the development of about 160 MW of DG solar over the next nine years. At this point in the RPS’s development, it is not clear if the carve-out will result in an openly traded SREC market or if a central procurement program will be established.
Regarding the market’s potential SREC value, the solar alternative compliance penalty (SACP) has been set at $75 in 2021 for the DG solar carve-out portion of the market and will increase by 1% annually thereafter. The SACP is the value the utilities must pay per MWh if the appropriate number of RECs are not purchased, thus acting as a soft price ceiling for the market. With an SACP of $75, SRECs in Virginia have the potential to trade at a significant premium to the Pennsylvania Tier I REC market, which is currently the only REC market that Virginia-sited solar systems can sell into. This increase in value should spur additional development and make distributed generation solar more affordable in Virginia.
It is anticipated that the certification process for solar systems will begin in 2021, but a clear process has not been established at this point. We will continue to monitor the RPS’s implementation and update our partners and stakeholders accordingly.
Earlier today, SRECTrade hosted a webinar for New Jersey Transition Incentive (TI) Program stakeholders. The webinar presented an overview of the TI Program, which features fixed-price, factorized Transition Renewable Energy Credits (TRECs), and also outlined SRECTrade’s services and onboarding process.
For access to the presentation slides, please click HERE. To view a recording of the webinar, please click the image below.
SRECTrade, Inc. is hosting a webinar to review the New Jersey Transition Incentive (TI) Program and SRECTrade onboarding process on Thursday, October 1st, at 2:00pm ET. The new program features fixed-price, factorized Transition Renewable Energy Credits (TRECs). SRECTrade is currently accepting NJ TREC facility applications, which can be submitted from your account on the SRECTrade online platform.
As part of the California Global Warming Solutions Act (AB32), which aims to drastically reduce greenhouse gas emissions in the state, the California Air Resources Board (CARB) established the Low Carbon Fuel Standard (LCFS) program in 2009. The current goal of the program is to reduce the carbon intensity of transportation fuels in the state of California by 20% by 2030. Let’s take a closer look at the nuances of the program:
With most low carbon liquid fuels, LCFS credits accrue to the fuel producer. However, for electricity and gaseous fuels, such as hydrogen, the LCFS credits accrue to the charging or fueling station owner. Fuel producers and fleet owners utilizing fuel that falls below the carbon intensity benchmark in that year generate LCFS credits. The volume of credits issued is based on the quantity of fuel produced or consumed and its carbon intensity. Conversely, participants that produce or import fuel above the carbon intensity standard are required to purchase LCFS credits to make up for their deficit.
1 LCFS Credit = 1 MT (metric ton) of CO2 equivalent reduced
Eligible Vehicle Types
California vehicles that run on clean fuel (electricity, hydrogen, CNG) are eligible. This includes cars, buses, trucks, forklifts, rail, and more. For electricity as a fuel, in order to generate credits, fleet owners must own the charging infrastructurefor their electric vehicles.
Reporting Requirements – Electricity
For electricity as a fuel, fleet owners must have one of the following* to report energy consumption to CARB:
Dedicated meters (separate utility bill)
Submeters (with kWh readout)
EV charger data monitoring
*Electric forklifts utilize a different methodology for reporting, and are able to utilize kWh calculations based on certain parameters.
Estimated Values per Vehicle Type
* Gross value before costs and fees. Assumes annual consumption of 50 MWh for Class 4-8 EVs and Buses and 10 MWh for Light Duty EVs and Forklifts. Also assumes Zero-CI electricity and a $200 LCFS credit price.
Generate Additional Value with RECs
The overall California energy mix has some carbon intensity associated with it, as the electricity is generated from a variety of resources. By virtually pairing your LCFS credits with Renewable Energy Credits (RECs), participants can demonstrate to CARB that the energy utilized to power their electric fleet is renewable. This mechanism can be utilized even if the owner of the charging equipment does not have renewable energy on-site.
This sounds too good to be true. What’s the catch?
The program is intended to act as an ongoing revenue stream that helps offset fueling costs and encourage further investment in clean fuel vehicles. For electricity, certain vehicle types have general spending requirements.
How much are the credits worth?
The LCFS market is robust and growing, with plans to continue beyond 2030. Since the program is a market-based mechanism, LCFS credit prices fluctuate, but due to CARB’s compliance requirements and strong regulatory oversight, recent prices have remained relatively stable. Over the past year, LCFS credits have been valued between $190 – $200. There is a price cap set for LCFS credits and it is set at $200 (in 2016 dollars) and adjusted annually for inflation. The 2020 cap is $217.97 per credit.
How can SRECTrade help my business?
No matter your fleet size, we can help you generate additional value from your clean fleet. SRECTrade manages the entire administrative process on your behalf, from asset registration and reporting, to credit issuance and sales. We also provide an easy-to-use technology platform for you to easily view and keep track of your assets, credits, and transactions. Our strong understanding of the complexities of the market and ability to leverage our experience in the clean commodities space help you maximize your credit volume and price
Ready to start generating credits? Reach out to us at cleanfuels@srectrade.com or call us at (415) 763-7732 Ext 4.
The second quarter of 2020 was characterized by a steady rebound from the March COVID-19 slump in the California Low Carbon Fuel Standard (CA LCFS) market. Credit pricing remained strong throughout June 2020, with spot pricing sustaining levels over ~$200 per credit. On July 1, the California Air Resources Board (CARB) imposed a maximum cap on LCFS credit prices for 2020 at $217.97 per credit. The enclosed update provides highlights on news impacting the market, a recent price trend overview, and a closer look at the Q1 2020 credit and deficit report released by CARB at the end of July.
SRECTrade offers LCFS credit management and brokerage services to electric vehicle (EV) fleet operators, OEMs, EV charging station owners, and other clean fuel asset owners. We help our clients navigate the entire LCFS process including asset registration, ongoing reporting requirements, transacting, settlement, and remittance of funds. Our domain expertise in environmental commodity markets allows us to provide our clients with industry leading regulatory and market knowledge. Please reach out to cleanfuels@srectrade.com for more information.
On July 13, 2020, the Massachusetts Department of Energy Resources (DOER) announced final SRECs available for auction in this year’s Annual Solar Credit Clearinghouse Auction (SCCA) I and II, as well as the preliminary 2021 Minimum Standards for the SREC I and II programs.
The DOER confirmed that 103 certificates have been deposited for the SREC I auction, and 85 certificates have been deposited for the SREC II auction.
The DOER estimates a 2021 SREC I Minimum Standard of 1.6744% (748,584 MWh) for load executed under contract on or after June 28, 2013. This Minimum Standard applies regardless of which round the auction clears. Load served under contracts executed prior to June 28, 2013 will follow a Minimum Standard of 1.0252%.
The DOER estimates a 2021 SREC II Minimum Standard of 2.2828% (1,020,544 MWh) for load served under contracts executed between April 25, 2014 and May 8, 2016, and 3.8584% (1,724,956 MWh) for load served under contracts executed on or after May 8, 2016. This will only apply if the auction clears in the first two rounds. If the auction clears in the third round, the Minimum Standard will be 2.2830% for load served under contracts executed between April 25, 2014 and May 8, 2016 and 3.8586% for load served under contracts executed on or after May 8, 2016.
We are happy to announce the launch of the SRECTrade LCFS Credit Calculator app to model your clean fuel vehicle’s annual credit allowance and projected value in the Low Carbon Fuel Standard (LCFS) program.
Once downloaded, follow three simple steps to build a model of your estimated annual gross value from LCFS credit sales.
The app allows you to share your model results via automated email and easily connect with SRECTrade directly from within the app if you have further questions or want to find out more about our management and software services.
