The Sol SOURCE is a monthly journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains trends and observations gained through monthly interviews with our team, and it incorporates news from a variety of industry resources.
Below, we have included excerpts from the June 2018 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.
STATE MARKETS
Illinois – After years in the making, the Illinois solar program for rooftop solar, community solar, and other distributed generation projects under 2MW is nearly here. Earlier this month, the Illinois Power Agency (IPA) published final renewable energy credit (REC) pricing for both the Adjustable Block and Solar for All low income solar programs. The pricing fell where the industry was expecting, and showed the benefit of post-tariff implementation, as it gave the IPA ample time to set values that reflect it. Community solar looks best poised to succeed, given the adders on community solar RECs that are based on the percentages of small subscribers. This should provide a push for community solar developers to include more residential or small commercial subscribers, meaning the industry can look forward to a more equitable distribution of solar energy access in the state.
While the Illinois Power Agency (IPA) has already conducted three utility-scale solar forward procurements, awarding contracts for one million RECs, with another 2.08 million slated for December 2018, the development of the distributed generation program has taken longer given its inherent complexities and broader stakeholder base. With final REC prices published, we're one step closer to the opening of the adjustable block program. However, the IPA must first select a program administrator and then conduct a vendor qualification process. We expect it to open in late 2018, beginning a 666MW program that will drive commercial, industrial and municipal solar development in the Prairie State for years to come.
In other Illinois solar news, the state legislature passed official guidelines for pollinator-friendly solar arrays, a favorite topic of ours, in late May. The guidelines cover sites of 40kW or more, and qualifying sites can claim officially that their site is “pollinator-friendly”, so long as they fill out the official scorecard for the guidelines and make it public.
Rhode Island – The country’s smallest state continues to set big clean energy goals. After recently extending its Renewable Energy Growth (RE Growth) Program for another 10 years, the program completed its first open enrollment for 2018, the results of which were filed with the RI PUC for approval on June 13, 2018 (Sol Systems was awarded a 1MW project). This feed-in-tariff (FiT) program gives companies and municipalities with unused rooftop, land or parking lot space opportunities to lease out that unused property for renewable energy development.
On the horizon, the Rhode Island Energy Resources Act, which goes into effect on July 1st, will require municipalities to establish renewable energy siting ordinances. These guidelines will make siting standards more uniform, while in parallel, municipalities are encouraged to provide a long-term roadmap for renewable energy development in their area. The act should further streamline the permitting and siting process for solar projects in the state.
A separate siting bill is aimed at prohibiting the development of renewables on forested land. Other states, like Massachusetts, have established more creative solutions, such as higher for structures with “smart” land use development like carports and rooftop and the discouragement of greenfield development in program design. Rhode Island, however, would outright prohibit renewable energy development in forested areas. Developers of ground mount projects should keep their ear to the ground in RI in the coming weeks and months.
Current and potential commercial/municipal customers in Rhode Island that want to learn more about solar in the Ocean State should contact our team at energy@solsystems.com.
New Jersey - The Garden State’s newly-elected Governor Murphy has wasted no time in passing clean energy legislation. On May 23, he signed into effect two bills striving to promote cleaner energy sources. With A-3723 the state increased its renewable portfolio standard (RPS) to 50 percent by 2030, along with a solar carve expansion of 5.1 percent by 2021, increased from the previous goal of 20.38 percent by 2020. With this new law, New Jersey, which has long been a leader in solar energy deployment, currently ranking #5 in the country, will join other leaders such as California, New York, D.C. and Hawaii with a renewable energy goal of 50 percent or more. Will nearby Maryland, Delaware, and Pennsylvania soon follow? We sure hope so. The bill also laid the ground work for a burgeoning community solar program along with energy efficiency goals, aiming for a cleaner, leaner, and more equitable grid.
While the first bill has already added value to solar renewable energy credits (SRECs) traded in the state, the second bill signed into law on May 23, S-2313, created a zero emissions certificate (ZEC) program to incentivize nuclear power plants, which provide large-scale, dispatchable electricity with no emissions. Similar ZEC programs have been passed in New York and Illinois; however, controversy has ensued that has led to full implementation being held up in court in both states. The New Jersey law has already stirred up dissent among environmental groups who don’t want to further support nuclear power plants due to the fact that despite their clean production of energy, the fuel source is still not a renewable. Still, others argue that nuclear is necessary to meet carbon reduction goals. At this point, time will tell how ZEC program unfolds in New Jersey.
SOLAR CHATTER
- The IRS released new guidelines on "commence construction" language regarding the Investment Tax Credit (ITC) for solar, stating that projects are eligible for the full 30 percent ITC, set to begin its step down in 2020, until 2024 so long as they begin construction before the end of 2019. This important ruling should provide an avenue for projects to qualify for the full ITC and avoid tariffs if modules are secured late into construction.
- Massachusetts customers of the SREC II program should note the important detail in state regulations that specifies that though systems are eligible for 40 quarters of SRECs, they can't be generated after compliance year 2027. This effectively limits any systems interconnected after March 31, 2018 to less than 40 quarters of SREC eligibility. Time is of the essence for SREC II customers to interconnect.
- As we continue to stress to customers in states like Massachusetts and Illinois, time is, quite literally, money! Incentive programs become less valuable throughout their life and a six-month wait on the decision to go solar could cost customers valuable savings on their PPA prices or lease payments. This is because incentive programs are structured so that early adopters receive higher payments. If you’re sure solar is the right decision for you, now will always be a better time to move forward than tomorrow. You can reach out to the team at Energy@Solsystems.com for more info on your state’s program.
- Raise (the solar on) the roof! Large corporates Amazon and The Home Depot both announced the completion of large rooftop solar arrays, one of which is a 554kW solar array in our hometown of Washington, D.C., an impressive size for a system in the real estate constrained, dense District. Corporates increasingly continue to adopt onsite solar to meet their energy needs and sustainability goals.
- As more data emerges from lab testing and projects in service, confidence in the durability of PV systems continues to grow. Investors are beginning to underwrite new systems for lifetimes of up to 40 years, but only with appropriate design choices and O&M strategies. How times have changed! It’s official: solar is a mainstream, long-term asset investment.
- With more and more capital entering the market, we expect to see a growing trend of buyers targeting operational assets, and not just projects under development. In addition to removing construction risk, buying operational assets may also present opportunities to do limited repowerings of systems to see additional upside. Be cautious, though; this requires a strong engineering competency in addition to careful legal consideration to avoid triggering ITC recaptures on projects still within the five-year vesting period.
- Golden age? Panel manufacturer JinkoSolar revealed the new 410 “Cheetah” solar panel that sports an impressive 20 percent conversion efficiency. The reveal occurred alongside their new gold-framed panel that looks to offer a “luxurious” solution to homeowners looking to match their array’s aesthetic with their lifestyle.
ABOUT SOL SYSTEMS
Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.
Over the last eight years, Sol Systems has delivered 700 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.
Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.