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Maryland Renewable Energy Legislation Will Impact Energy Costs

April 17, 2019
Publications

by Amy York

On April 8, 2019, the Maryland General Assembly passed Senate Bill 516 (SB 516), which has been entitled the Clean Energy Jobs Act.  This legislation now moves on to Governor Hogan’s desk for review.  The Governor may support the bill, but also has the option to allow it to go into effect on October 1, 2019 without his signature or to veto the legislation.  This Bill has the support of both the Senate and the House.  If the Governor vetoes the Bill, the Bill will likely reappear in the next legislative session and the veto will be overridden.

Once in effect, it will increase the Renewable Portfolio Standard (RPS) in Maryland from 25% in 2030 to 50% in 2030.  A key component of this Bill is the increase in the Tier I solar carve out beginning in 2019 but a decrease in the Alternative Compliance Penalty (ACP).  The changes in the solar carve out from SB 516, as well as the change in the ACP, are detailed below:

Year Current Solar Carve Out SB 516 Solar Carve Out Current Solar ACP

(per SREC)

SB 516 Solar ACP

(per SREC)

2019 1.95% 5.5% $150.00 $100.00
2020 2.5% 6.0% $125.00 $100.00
2021 2.5% 7.5% $100.00 $80.00
2022 2.5% 8.5% $75.00 $60.00
2023 2.5% 9.5% $60.00 $45.00
2024 2.5% 10.5% $50.00 $40.00
2025 2.5% 11.5% $50.00 $35.00
2026 2.5% 12.5% $50.00 $30.00
2027 2.5% 13.5% $50.00 $25.00
2028 2.5% 14.5% $50.00 $25.00
2029 2.5% 14.5% $50.00 $22.50
2030 2.5% 14.5% $50.00 $22.35

 

The solar renewable energy credit (SREC) market was trading around $22-$25 for each SREC before the announcement of this legislation.  After the announcement of SB 516’s passing by the General Assembly, the SREC market has been trading around $50-$70/SREC.  The SREC market is not particularly liquid, and SB 516 could have a significant impact on clearing prices and price volatility.  The ACP, which is the theoretical “ceiling” on the SREC cost in 2019, will be $100/SREC upon this Bill going into effect.  The bottom-line is that SB 516 will impact Maryland customers’ retail electricity costs for procurement and budgeting.

For assistance with your energy procurement and budgeting issues, please contact Amy York, a Technical Specialist with McNees, at ayork@mcneeslaw.com or 410-365-2940.

A link to SB 516 is provided here for reference: http://mgaleg.maryland.gov/2019RS/bills/sb/sb0516e.pdf


© 2019 McNees Wallace & Nurick LLC
McNees Energy & Environmental Client Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.

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Amy York