On July 12th, SRECDelaware released the auction results for the 2017 Delaware Procurement Program. The procurement program, created in 2011, attempts to provide price stability for both new and existing solar customers through long-term 20-year fixed price SREC contracts with Delmarva Power. With this year’s procurement, Delmarva Power purchased a total of 20,000 SRECs, 4,000 more than 2016, from customers. The first 10 years of these contracts are at the winning bid price, while the last 10 years are contracted at $35 per SREC. The exception to this is systems larger than 2MW who will be contracted at their bid price for the entire 20 years if it is below $35.
The SRECs potentially available for the 2017 procurement by tier are shown in Figure 1 (below).
| Generating Unit Tier Designations | ||
| New Systems (interconnection after June 10th, 2016) | ||
| Tier | Nameplate Rating (DC at STC) | SRECs in Tier |
| N-1 | Less than or equal to 25kW | 4,400* |
| N-2 | Greater than 25kW but less than or equal to 200kW | 2,300 |
| N-3 | Greater than 200kW but less than or equal to 2MW | 2,300 |
| N-4 | Greater than 2MW | 0-10,000 |
| Existing Systems (interconnection before June 10th, 2016) | ||
| Tier | Nameplate Rating (DC at STC) | SRECs in Tier |
| E-1 | Less than or equal to 25kW | 4,400 Pool* |
| E-2 | Greater than 25kW but less than or equal to 2MW | 4,400 Pool* |
| E-3 | Greater than 2MW | 0-10,000 |
The Results
The 2017 bid pricing results are shown in Figure 2 (below).
| Tiers | N1/E1/E2 | N2 | N3 | N4 | Overall Solicitation |
| High | $35.00 | $89.00 | $35.00 | $9.00 | $89.00 |
| Low | $15.00 | $9.00 | $9.00 | $9.00 | $9.00 |
| Weighted Average | $29.41 | $61.14 | $19.73 | $9.00 | $21.26 |
As in 2016, new and existing systems in tiers N1, E1, and E2, were pooled together in the auction. These pooled tiers were oversubscribed and had a bid tie. To resolve the tie, bidders had the opportunity to lower their initial bid, and then from there, a random lottery selection selected the winners.
Losing N1 and N2 bids that were priced lower than N3 winning bids spilled over into N3 and took those spots, as per program rules. This lowered the weighted average price for N3 bids, and is the result mainly of low-priced N1 bids. Overall, the weighted average bid price dropped from $66.56 in 2016 to $21.26 in 2017, representing a 68% decrease. Aside from low-priced N1 and N2 spillover, the allowance of >2MW systems into the program also affected bid pricing.
This was the first year that systems larger than 2MW could bid into the program, through Tiers N4 and E3. This provided a great opportunity for long-term SREC procurement for utility-scale solar projects. However, it did further decrease the average as low priced $9, N-4 bids filled the undersubscribed N-2 and N-3 tiers.
However, despite the lower prices of this year’s winning bids, the Procurement Program provides long-term SREC certainty to winning bidders. This certainty is something that isn’t currently available on the Delaware spot market which has continuously seen an SREC price decline, with SRECs currently only trading at around $10, and low liquidity on top of low prices. So, the average of $21.26 with the upside of $35 per SREC for systems under 2MW on the last 10 years is double to triple current market rate.
The Procurement Program is an annual event subject to approval by the Delaware Public Service Commission each year. Stay posted for more updates by Sol Systems on Delaware’s SREC market.
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 more than 600MW 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.