DRAFT Review of EDC Solar Long- term Financing Program Analysis Updated – February 16, 2012 Center for Energy, Economic, and Environmental Policy
Summary of Changes & Additions • Solicitation manager costs, auction manager costs, and internal utility administration costs were recalculated. • Auction manager costs were updated from actual PSE&G invoices from NERA. • Total outstanding obligations were calculated for PSE&G Solar Loan programs. • Solar For All draft analysis added. DRAFT 2
Review Assumptions and Caveats • Center for Energy, Economic and Environmental Policy (CEEEP) asked to review the EDC Solar Long term Financing Programs. • Current analysis includes ACE, JCP&L, RE, and PSE&G’s Solar Loan programs. • This analysis: – Is NOT answering the question of whether the programs should be continued in the future. – Is NOT a review of New Jersey solar programs, the New Jersey SREC program, or the SREC short term market. – Does not include the environmental benefits of solar, the impacts on the transmission and distribution system, or any other costs or benefits of solar other than those directly related to the EDC Solar Long term Financing Program. • Assumed Capacity Factor from 2010 to 2012 is 14% ac (1,226 MWh/yr for a 1 MW facility) - the program caps SRECs at 1300 per MW per year. • Assumes that the capacity contracted in any given year is installed in that same year and 100% of the SRECs are 3 created. DRAFT
Goals of EDC Solar Financing Program • On December 6, 2007 (I/M/O the Renewable Energy Portfolio Standards, Alternative Compliance Payments and Solar Alternative Compliance Payments, Docket No. E006100744), the Board also directed the OCE to “initiate a proceeding to explore whether additional mechanisms could be established to support the financing of solar generation projects by providing greater assurances about the cash flow to be expected from such projects, noting that such financing depends not only upon certainty about long-term maximum prices for SRECs, as provided by the established rolling eight-year SACP schedule, but also requires greater certainty about the minimum cash flow from such projects” DRAFT 4
DRAFT Data Collection Issues • CEEEP staff reviewed a “Solar Review Matrix” (matrix) developed by the BPU and completed by the EDC’s. • Matrix included program goals, number of megawatts solicited, awarded, contracted and installed, the number of SRECs produced and auctioned and the revenues generated by that auction, as well as the various costs of each utility’s program – only through June 2011. • CEEEP met individually with staff from each utility and received more detailed information about each solicitation and auction from NERA Economic Consulting (NERA), the solicitation and auction manager. • Due to significant differences in how each utility completed the matrix and additional data needs, CEEEP drafted an updated matrix for the utilities to complete. • Updated matrices were completed by utilities in late November/early December, with data through October 2011. 5
Solicitation Program Approximate Timeline (ACE, JCP&L, RE) ~ July 2011 Sept 2011 Nov 2011 Nov 2012 45 days Approximately 1 year Last Loan Application Approximate Timeline (PSE&G Solar Loan I and II) Dec 2011 Feb 2012 Oct 2012 30-45 days Approximately 8 months Timelines not drawn to scale DRAFT 6
ACE, JCP&L, and RECO Awarded, Contracted, and Installed Capacity (MW) ACE JCP&L RE Solicitation Date Awarded Contracted Installed Awarded Contracted Installed Awarded Contracted Installed August #1 2009 0.00 0.00 0.00 1.59 1.59 1.14 0.00 0.00 0.00 December #2 2009 2.20 2.00 1.74 4.18 2.87 2.86 0.15 0.09 0.09 March #3 2010 0.11 0.11 0.11 9.22 6.49 5.33 0.00 0.00 0.00 #4 June 2010 0.39 0.39 0.39 3.54 3.44 2.34 0.00 0.00 0.00 October #5 2010 0.36 0.35 0.35 8.61 8.13 2.06 0.54 0.54 0.17 February #6 2011 10.50 7.64 0.00 6.76 4.63 1.20 0.80 0.80 0.30 #7 June 2011 3.92 3.03 0.00 6.02 6.02 0.05 2.34 2.18 0.00 September #8 2011 5.98 6.00 0.00 10.96 0.00 0.00 0.28 0.00 0.00 Total 23.47 19.52 2.60 50.86 33.17 14.98 4.11 3.61 0.56 Awarded is capacity selected at solicitations, contracted is capacity that signs contract and pays deposit, and installed is capacity that is installed. DRAFT 7
PSE&G Awarded, Contracted, and Installed Capacity (MW) Solar Loan I (SL I) Solar Loan II (SL II) Solar for All Energy Year Awarded Contracted Installed Awarded Contracted Installed Awarded Contracted Installed 2008 3.87 2009 13.38 2.77 2.77 2010 4.90 11.24 11.24 1.42 0.01 0.01 29.90 5.60 5.60 2011 6.05 6.05 27.98 4.63 4.63 16.90 35.30 35.30 2012 1.32 1.32 2.58 3.64 3.64 4.00 5.10 5.10 Total 22.15 21.38 21.38 31.98 8.28 8.28 50.80 46.00 46.00 Awarded is capacity approved for loan, contracted is capacity that signs contract, and installed is capacity that is installed . DRAFT 8
Pipeline Success Rates • There are still projects moving through the pipeline. • Project contract to install takes about one year. • The overall pipeline success rate is difficult to ascertain until all of data for the program is available. • Because projects are still in the pipeline, ongoing project data will be needed from the EDCs to complete the analysis. • Data is through October 2011, and will be revised as additional project data is received from the EDCs. DRAFT 9
DRAFT Pipeline Success Rates Contracted/Awarded Installed/Contracted Installed/Awarded Solicitation Date ACE JCP&L RE Total ACE JCP&L RE Total ACE JCP&L RE Total #1 Aug 2009 100% 100% 72% 72% 72% 72% #2 Dec 2009 91% 69% 60% 76% 87% 100% 100% 95% 79% 68% 60% 72% #3 March 2010 100% 70% 71% 99% 82% 82% 99% 58% 58% #4 June 2010 100% 97% 98% 100% 68% 71% 100% 66% 69% #5 Oct 2010 97% 94% 100% 95% 100% 25% 32% 29% 97% 24% 32% 27% #6 Feb 2011 73% 69% 100% 72% 0% 26% 37% 11% 0% 18% 37% 8% #7 June 2011 77% 100% 93% 92% 0% 1% 0% 0% 0% 1% 0% 0% #8 Sep 2011 100% 0% 0% 35% 0% 0% 0% 0% 0% 0% Total 83% 65% 88% 72% 13% 45% 16% 32% 11% 29% 14% 23% Total (#1-#4) 93% 78% 60% 79% 90% 81% 100% 82% 83% 63% 60% 66% Contracted/Awarded Installed/Contracted Installed/Awarded Energy Year SLI SLII S4A Total SLI SLII S4A Total SLI SLII S4A Total 2008 0% 0% 0% 0% 2009 21% 21% 100% 100% 21% 21% 2010 229% 1% 19% 47% 100% 100% 100% 100% 229% 1% 19% 47% 2011 17% 209% 102% 100% 100% 100% 17% 209% 102% 2012 141% 128% 153% 100% 100% 100% 141% 128% 153% Total 97% 26% 91% 72% 100% 100% 100% 100% 97% 26% 91% 72% 10
Solicitation Results Number of Projects MW Solicited Number of Bids Received Awarded Solicitation ACE JCP&L RE ACE JCP&L RE ACE JCP&L RE #1 (August 2009) 5.0 11.0 0 0 8 0 0 7 0 #2 (December 2009) 5.0 12.0 2.3 11 31 2 10 27 2 #3 (March 2010) 7.8 17.2 2.1 1 62 0 1 58 0 #4 (June 2010) 6.8 9.3 1.5 7 16 0 5 15 0 #5 (October 2010) 5.8 8.7 1.5 2 51 4 2 49 4 #6 (February 2011) 11.9 5.9 2.4 67 119 5 60 41 5 #7 (June 2011) 3.5 5.5 2.3 60 152 15 17 35 11 #8 (September 2011) 3.4 10.0 0.2 101 185 2 19 60 1 Total 49.3 79.6 12.1 249 624 28 114 292 23 DRAFT 11
DRAFT Solicitation Results Weighted Average Awarded MW Awarded MW Contracted Bid Price ($/SREC) Solicitation ACE JCP&L RE ACE JCP&L RE ACE JCP&L RE #1 (August 2009) 0.0 1.6 0.0 0.0 1.6 0.0 N/A $384 N/A #2 (December 2009) 2.2 4.2 0.1 2.0 2.9 0.1 $372 $382 $460 #3 (March 2010) 0.1 9.2 0.0 0.1 6.5 0.0 $422 N/A #4 (June 2010) 0.4 3.5 0.0 0.4 3.4 0.0 $431 $449 N/A #5 (October 2010) 0.4 8.6 0.5 0.4 8.1 0.5 $463 $452 $456 #6 (February 2011) 10.5 6.8 0.8 7.6 4.6 0.8 $424 $379 $454 #7 (June 2011) 3.5 6.0 2.3 3.0 6.0 2.2 $322 $264 $335 #8 (September 2011) 6.0 11.0 0.3 6.0 0.0 0.3 $213 $215 Total 23.1 50.9 4.1 19.5 33.1 3.6 $372 $368 $382 The ACE reported awarded capacity was 3.916 MW for solicitation #7 (June 2011), but NERA records show the capacity as 3.516 MW. The NERA value is used. As of the date the data was requested, the 45-day waiting period for the September 2011 solicitation had not expired yet. CEEEP has requested updated data from the utilities. 12 The total weighted average awarded bid price is the weighted average of all awarded projects The weighted average awarded bid price has been redacted when there is only one project due to confidentiality concerns.
Weighted Average Awarded Bid Price $500 $450 $400 $/SREC $350 $300 $250 ACE $200 JCP&L RE Solicitation Vertical axis of graph does not start at zero. Some data has been redacted due to confidentiality concerns. DRAFT 13
EDC Weighted Average Awarded Bid Price vs PSE&G Floor Price SLI $500 $450 SLII - Residential $400 $/MWh SLII - Small Non-Res $350 SLII - Large Non-Res $300 $250 SLII - 500kW-2000 kW $200 Avg Solicitation Weighted 2010 2011 2012 Awarded Bid Price Small Non-Res <=150 kW, Large Non-Res = 150 -500 kW DRAFT 14
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