Brokerage Reports New Jersey SREC Prices Recovering

Posted by SI Staff on October 31, 2013 No Comments
Categories : New & Noteworthy

The Flett Exchange reports that prices for New Jersey solar renewable energy credits (SRECs) have risen in the past few months, with the 2014 energy year hitting at $149.63 on the company's trading platform on Oct. 4. The spot market price is 30% higher than the low price of $115 on July 16th and significantly higher than the $60 all-time low SREC price last October, the report says.

The electric distribution companies conducted a large SREC auction on Oct. 17. Prices for the 76,417 energy year 2014 SRECs cleared $147.00, the Flett Exchange says, although prices have since gone slightly lower.

In August, the Flett Exchange forecasted SREC prices to stabilize due to falling installation rates after the market crashed in 2012.

The latest report says SREC prices are steady now because of two factors:

1. Legislation passed in July 2012 dramatically increased the number of SRECs that the energy companies need to procure on a yearly basis. Demand for SRECs this energy year will be close to 1.5 million SRECs, which is up from the previous legislation that required 772,000.

2. The pace of solar development was slow in the past year due to the lower SREC prices. There were only 8 MW of new solar activated per month in August and September. The average amount of solar in the last six months was only 14.9 MW per month compared to 28.5 MW a month at this time last year. The Flett Exchange estimates that 15-17 MW are needed per month to achieve a balanced market.

The stable and upward pricing will be tempered eventually, the report says, because the the monthly install rate should increase next year due to the rising SREC prices. Also, the New Jersey Board of Public Utilities approved another round of solar loans and fixed-rate electric distribution company SREC contracts for the next year. The report says these contracts shift risk away from solar developers and onto the ratepayers, so it is virtually guaranteed that the build-rate will increase during the next year.

The Flett Exchange says it does not expect spot SREC prices to experience a new downtrend much at all during the next eight to 10 months. The stable SREC prices should encourage developers to install solar at an increasing rate, the company says, so it is highly unlikely for the SREC market to stay at high prices for a prolonged period of time.

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