An Opportunity to Develop Renewable Generation in Connecticut Through the Low Emission Renewable Energy Credit (LREC) and Zero Emission Renewable Energy Credit (ZREC) Program
CL&P customers who install new, qualifying renewable energy projects -- ranging from rooftop solar panels to fuel cells -- now have an opportunity to sell the qualified Connecticut Class I renewable energy credits (RECs) created from their projects to CL&P under a long-term, 15-year contract.
As part of Public Act 11-80 signed into law by Gov. Malloy on July 1, 2011, the state of Connecticut directed CL&P and The United Illuminating Company (UI) to launch a 22-year program to promote, fund and expand “behind the meter” renewable generation. “Behind the meter” refers to projects that are located behind the utility’s customer revenue meter.
This LREC/ZREC program creates a market-driven bidding process for projects to compete to obtain a 15-year revenue stream from the sale of RECs to the electric utilities. The Public Utilities Regulatory Authority (PURA) approved CL&P and UI’s LREC/ZREC Program solicitation process, contracts and additional methods in Docket No. 11-12-06 on April 4, 2012.
What is an LREC?
An LREC is a Class I Renewable Energy Certificate from a low-emissions project as defined in Section 110 of Public Act 11-80. LREC-qualified projects are Connecticut generation projects that are located behind company customer meters, achieve commercial operation on or after July 1, 2011, and have emissions of no more than 0.07 pounds per megawatt-hour (MWh) of nitrogen oxides, 0.10 pounds per MWh of carbon monoxide, 0.02 pounds per MWh of volatile organic compounds, and one grain per 100 standard cubic feet. To qualify for the LREC/ZREC Program, LREC projects may not be larger than 2,000 kilowatts (kW).
What is a ZREC?
A ZREC is Class I Renewable Energy Certificate from a zero emissions project as defined in Section 107 of Public Act 11-80. ZREC-qualified projects are Connecticut generation projects that are located behind company customer meters, achieve commercial operation on or after July 1, 2011, and emit no pollutants. To qualify for the LREC/ZREC Program, ZREC projects may not be larger than 1,000 kW.
What Types of Projects Can Qualify for the LREC/ZREC Program?
The REC can be either zero emissions (ZREC) if it originates from a solar, wind, small hydro or other zero emissions generating source, or low emissions (LREC) if it meets certain measured emissions standards. Fuel cells are a good example of an LREC.
Here are a few key rules of the program:
Click here for general renewable energy credit information.
CL&P will select projects either through a competitive solicitation (Request for Proposals) or through a tariff.
For all LREC projects and large and medium ZREC projects (>100 kw), CL&P will request that the public respond to Requests for Proposals (RFPs) that CL&P will issue. CL&P will request a bidder to sell its renewable energy credits (RECs) to CL&P for a fixed price for 15 years. Bidders may respond to the RFP by submitting a Bid by clicking on the “Submit a LREC/ZREC Bid” button below.
Bidders may bid as high as $200 per REC from LREC Projects and up to $350 per REC from Medium and Large ZREC Projects. If CL&P selects a bid from a project, the bidder will have the opportunity to enter into a 15-year contract to sell its RECs to CL&P (the buyer) at the fixed price of their bid.
CL&P and UI will issue an RFP to solicit proposals from renewable generators for the purchase of the RECs produced from qualifying LREC projects up to 2,000 kW in size and for ZREC projects in the medium size category, which is >100 kW and <250 kW; and in the large ZREC category, which is for projects ≥250 kW and ≤1000 kW.
Click here to submit a LREC/ZREC bid.
CL&P and UI jointly issued the first RFP on May 1, 2012, and on October 10, 2012, CL&P filed the results of the RFP with PURA. Click here to view CL&P's Procurement Plan Filing.
On November 21, 2012, PURA approved, in part, CL&P’s Procurement Plan. Specifically, the 76 selected LREC and ZREC contracts that were submitted in the Procurement Plan were approved. In an effort to utilize the remaining LREC budget that was not committed prior to the initial filing of the Procurement Plan, CL&P selected four additional bids from the queue of remaining LREC bids that had chosen to honor their bids, and filed an Updated LREC/ZREC Procurement Plan with PURA on January 18, 2013. PURA approved the Updated Procurement Plan on February 1, 2013, which brings a close to the first year of the LREC Procurement Process.
Click here for a summary of CL&P’s Year 1 LREC and Medium and Large ZREC RFP results.
Click here for the specific Year 1 LREC and Medium and Large ZREC bid price information.
On April 25, 2013, CL&P and UI jointly issued the Year 2 LREC/ZREC RFP. CL&P and UI will accept bids until the close of the bidding window, which closes at 1 pm on June 13, 2013. The Companies will rank eligible bids by evaluated bid price, up to the maximum bid price of $200/LREC and $325.50 for Medium and Large ZRECs in this RFP. See the RFP schedule below:
|Release of RFP||April 25, 2013|
|Bidders Conference||May 10, 2013|
|Deadline for Submission of Questions||May 30, 2013|
|Bid Forms Due||June 13, 2013 by 1:00 p.m. (Eastern Prevailing Time "EPT"), at which time the Pricing shall become firm, irrevocable and binding.|
|Selection and Notification of Winning Bidders||On or about July 18, 2013|
|Standard Contracts Execution||After Selection and Notification of Winning Bidders. Bidders will have to return partially executed contracts by the date established by the Companies which is expected to be approximately 15 business days.|
|Standard Contract(s) Filed with PURA||Following selection of winning Bidder(s) and execution of Standard Contracts during each Round.|
|Commencement of Service||In accordance with Standard Contracts|
On July 18, 2013, in accordance with the schedule set forth in the Request for Proposal for LRECs and Medium and Large ZRECs issued on April 25, 2013 (“RFP”), CL&P notified winning Bidders whose Bids were initially selected as winning Bids pursuant to the RFP process, and also notified other Bidders that their Bids have been designated as "standby" Bids pursuant to Section 3.1.3 of the RFP. At that time, CL&P emphasized that the initial numbers were preliminary, and were subject to change if Bidders chose not to accept the offer or execute contracts, or do not provide Performance Assurance. CL&P also stated that if a Bidder did not accept the offer, execute the contract or provide Performance Assurance as required, CL&P would move to the next lowest priced project on the standby list in the appropriate project category, until the available budget has been committed.
In September 2013, CL&P communicated that sixteen (16) of the initially selected Bids did not accept the offer, execute the contract, or provide Performance Assurance. Therefore, CL&P moved to the next lowest priced projects on the standby list in the appropriate project category and selected additional projects to receive contracts (Phase 2 and 3 Selection).
At this point, some of the projects selected in the Phase 2 and 3 Selections did not accept the offer, execute the contract, or provide Performance Assurance. Therefore, CL&P again moved to the next lowest priced projects on the standby list in the appropriate category and selected additional projects to receive contracts (Phase 4 Selection).
If a selected Bidder does not accept the offer, execute the contract or provide Performance Assurance as required, CL&P will again move to the next lowest priced project on the standby list in the appropriate project category, until the available budget has been committed.
See the chart below for a limited summary of the project selection, including (i) the number of projects initially selected, (ii) the number of projects with fully executed contracts that have provided performance assurance from the initial selection, and (iii) the number of projects selected in each additional Phase. CL&P continues to emphasize that these numbers are preliminary, and are subject to change if Bidders choose not to accept the offer or execute contracts, or do not provide Performance Assurance.
On September 24, 2013, CL&P filed an Interim Year 2 LREC ZREC Procurement Plan, which included the 90 Contracts that were initially selected that fully executed the contract and provided Performance Assurance. On October 22, 2013 PURA approved these 90 Contracts. The Interim Year 2 LREC ZREC Procurement Plan did not include detailed summary bid information or contract prices per bid category. Additionally, since the Small ZREC price is established based on the average of the final Medium ZREC selected projects plus 10%, and because CL&P has not yet completed the selection of the Medium ZREC category, CL&P does not have a Year 2 Small ZREC price or a definitive date for the release of the Year 2 Small ZREC Program.
CL&P's filing of the Year 2 LREC/ZREC Final Procurement Plan will include more detailed summary bid information, including average bid and contract prices per bid category of the additional executed contracts. However, at this time there is no definitive date for when CL&P will make that filing.
Bids Phase 2
|LRECs||Up to 2 MW||$3.36*||$50||16||15||1||0||1||0||1|
|Medium ZRECs||100 – 250 kW||$2.13||$32||71||60||10||8||2||2||0|
|Large ZRECs||250 – 1,000 kW||$2.13||$32||19||15||3||3||0||0||1|
* Note that CL&P’s LREC budget includes $162,438 of carry-over of uncommitted funds from the Year 1 LREC/ZREC RFP from 2012.
Further information regarding the RFP results is subject to the disclosure and confidentiality rulings issued by the Public Utilities Regulatory Authority, and the Company will release such information accordingly.
Key Documents for Year 2 LREC/ZREC RFP:
Those with small ZREC projects (less than or equal to 100 kW) will be eligible to enroll in a tariff, and are not included as part of the competitive solicitation’s RFP process. The Small ZREC Project tariff will not be available until PURA approves the selected medium ZREC projects through the RFP, and will be available on a first-come, first-served basis. Those with projects can apply for participation in the Small ZREC Project tariff once the Small ZREC tariff program sign-up is opened by the companies.
The CL&P Year 1 Small ZREC Tariff Rate was $164.22/REC
The Year 1 Small ZREC Tariff Program opened at 12:00 pm (noon), on January 8, 2013. The two-week window (as described in the posted Rules and Process for Submitting Applications for the Small ZREC Tariff) ended as of 12:00 PM Eastern Prevailing Time (EPT) (noon) on Tuesday, January 22, 2013.
At the close of the Year 1 Small ZREC 2-week window on January 22, 2013, CL&P received 479 completed Year 1 Small ZREC Applications, which totaled over $5.6M in requested Year 1 Small ZREC funding - more than 138% above CL&P’s available Year 1 Small ZREC budget of $2.36M. Therefore, based on the volume of applications received during the two-week window, CL&P conducted a random selection process of completed Applications submitted during the 2-week window, which was observed by a representative of the State of Connecticut Office of Consumer Counsel (OCC). The random selection process resulted in a numerical rank of all completed Applications received during the two-week window.
Click here to view the results of the random selection process listed by Application ID number. (PDF)
To determine your completed Year 1 Small ZREC Application's position in the numerical rank, Applicants should look for their project’s “queue” position by Application ID number. Applicants received their Application ID number in the confirmation email that was sent upon successful submittal of a Small ZREC Application. For example, confirmation numbers used the following format - User Name - Applicant ID - Application ID. (PDF)
At the close of the Year 1 Small ZREC, on December 4, 2013, CL&P selected 253 Applications, of which 210 have active service agreements. The Small ZREC Budget of $2.36M was committed with only $10,778 remaining. The remaining $10,778 will be rolled over to the Year 2 Small ZREC Program.
Pursuant to Section 1.8 of the Rules and Process for Submitting Applications for Small ZREC Tariff, the Applications that were in the standby queue expired on December 4, 2013. All non-selected Applicants will need to apply to the Year 2 Small ZREC program to be considered for a Year 2 Small ZREC Service Agreement. There is no preference or advantage offered to non-selected applications from the Year 1 Small ZREC queue.
CL&P has proposed a price of $103.01/REC for the Year 2 Small ZREC Tariff and is awaiting PURA approval. CL&P has no specific schedule for the release of the Year 2 Small ZREC Program at this time.
Key Documents for the Small ZREC Program
Click here to submit a Small ZREC Project Application
The following list links to websites and documents related to the LREC/ZREC Program: