According to the Pennsylvania state RPS, the SACP (Solar Alternative Compliance Payment) or fine paid by utilities that do not purchase enough SRECs to comply is set as:
200% of the “average market value for solar photovoltaic alternative energy credits sold during the reporting period in the RTO control area where the noncompliance occurred.”
The RTO control area referenced is the PJM region, so we were previously under the impression that the SACP is determined by the average SREC price in the region – which includes Delaware, Maryland and New Jersey among others. However, the interpretation used by the state when implementing this program is that the SACP could only be based on the average price of SRECs used to meet the Pennsylvania RPS. This is considered regional because residents in other PJM region states can register and sell their SRECs into the Pennsylvania market. Apparently that justifies the requirement that it is an average of the RTO region. Therefore, the Pennsylvania SACP is NOT impacted by the price of SRECs that are used to meet the RPS in New Jersey, Maryland, Delaware or any other states within the region.
In conclusion, the SACP in Pennsylvania for SRECs created through May 2009 will be posted in December of 2009 and will be double the average price of SRECs counted towards the Pennsylvania RPS. In 2008, the average price was around $264, resulting in a 2008 SACP of $528. Since this average price is taken from data provided by the utilities (end-buyers), it doesn’t reflect the actual price that generators recieved for their SRECs when markups and broker fees are taken into consideration. Therefore if generators are getting prices of $300+ in Pennsylvania for their SRECs, it’s possible that the average price paid by the end-buyers is much higher. On the flip-side, a good portion of what the end-buyer procures may also come from previously negotiated long-term contracts that have locked sellers in at low prices. So it could go either way. Sometimes rulemakers are experts at layering complexity upon complexity!
The silver lining in all this is that we hope that the monthly Pennsylvania SREC auctions hosted at SRECTrade will help bring stability and fairness to this market, making it easier for individuals to make the decision to go solar! We can’t tell you where the market is going, but soon enough, we’ll be able to tell you where it has been.
Pennsylvania SACP by energy year (June 1 – May 31):
2010 – TBD 12/10
2009 – TBD 12/09
2008 – $528