The first round of Connecticut’s competitive Zero Emission Renewable Energy Credit (ZREC) Program was completed last month, and although there has only been limited public information disclosed to date, it is apparent that the ZREC program was significantly oversubscribed.
According to Connecticut Light & Power (“CL&P”) and United Illuminating (“UI”), a total of 368 individual bids were received for their Large & Medium sized system tiers, with only 104 winning bids selected – only 28% of bidders were successful with 2.5 losing projects for every winning project.
The ZREC Auction was intensely competitive, and although the actual ZREC bid price averages have yet to be announced, we estimate that the market clearing ZREC price was in the low $100 range for Large tier projects, and the $150 range for Medium tier projects (with UI territory receiving a slightly lower average ZREC price versus CL&P, due primarily to the smaller ZREC capacity allocated to UI).
These estimated ZREC prices are a far cry from the ZREC program’s statutory “cap” price of $350 per ZREC, reflecting the highly competitive nature of the Auction process. This is terrific news for Connecticut’s rate-payers and will result in significantly more solar projects being installed in Connecticut than many analysts had expected (at no incremental cost). We estimate that this initial ZREC Auction will facilitate over 52 megawatts (MW) of new solar capacity, as compared with only 20 MW of new solar projects had the average ZREC bid prices been closer to the “cap” price of $350.
This is only the first year in what is expected to be a 5+ year ZREC program for Connecticut. To learn more about the attractive economics of the Connecticut ZREC program, and how your CT business can go solar with no capital outlay, please contact the EnterSolar team.