The Electric Distribution Companies (EDCs) sold 26,480 New Jersey Solar Renewable Energy Certificates (SRECs) yesterday. The clearing price for the auction was $171.63. The SRECs were auctioned off by NERA Economic Consulting, a consultant to the Board of Public Utilities. This was the lowest price for a spot sale of SRECs since the $180.00 settlement price on September 7, 2011 on the Flett Exchange.
The auctions are conducted quarterly. Due to the large volume of SRECs in these auctions, the clearing price is significant to the marketplace. Prior to the auction the settlement prices on Flett Exchange have been consistently trading at $195 for the past 30 days.
The SRECs in this auction are from solar installations that were given 10 year fixed price contracts by the local distribution companies JCP&L, Atlantic City Electric, Rockland Electric Company. Some of the SRECs are from the facilities that borrowed under the PSE&G Solar Loan Program and PSE&G investment under Solar for All. The Board of Public Utilities ordered the EDC’s to enter into long term fixed rate contracts 3 years ago to spur solar development in New Jersey. The majority of the SRECs from the JCP&L, ACE and RECO long term contracts were in excess of $400 per SREC. The ratepayer will have to make up the difference of the long term purchase price and the auction sales price achieved yesterday. Most ratepayer losses will be in excess of $230 per SREC. Solar developers are paid their contract price of $400 or more for most of the SRECs. The PSE&G loan program had a sliding fixed price scale that has lower SREC prices and the 11% interest paid by solar developers is credited back to ratepayers, less costs incurred by PSE&G.
The prices for New Jersey SRECs have been under pressure during the last year due to overbuilding by solar developers. Developers have continued to install solar even though the installed capacity is in excess of the mandated SREC purchase requirements set forth in law. At the current time there is 649 mw of installed solar capacity installed in the State of New Jersey. This installed capacity, along with future installs, (estimating that installations will drop off significantly) will produce in excess of 200,000 SRECs in addition to next years 596,000 purchase requirements for electric providers. This year there is also expected to be over 200,000 extra SRECs compared to the purchase requirement of 442,000 SRECs. Even though the requirement increases significantly every year, the SREC market in New Jersey is expected to be oversupplied possibly to 2017. There has been a political push in the last 8 months to increase the amount of SRECs the electric companies have to purchase.
The majority of investors in solar in New Jersey did not get the long term ratepayer fixed price SREC contracts. Those investors rate of return have dropped significantly due to the overbuilding of solar and subsequent SREC price drop. The ratepayers in New Jersey are benefitting directly by the lower SREC prices (except for those facilities that were covered by EDC long term contracts). Some homeowners, businesses, and municipalities who installed solar in the last year at high install rates and expected to sell SRECs at $600 or more are having a hard time making loan payments. New solar facilites are much cheaper today compared to previous years. This is due to the low prices of solar panels along with the mature installation infrastructure in New Jersey that has increased competition. These new facilites will only need an SREC value of $200 to $300 to reach the same rate of return more expensive facilities needed.
Flett Exchange is a leading environmental exchange and brokerage firm. Our online trading platform brings transparency, price discovery, and liquidity to Solar Renewable Energy Certificates (SRECs). Our knowledgeable staff is also available to assist you in selling your SRECs for you. Over 4,000 active clients utilize Flett Exchange to negotiate the price, quantity, and details of SRECs through our brokers or on our online trading platform. Upon each SREC transaction Flett Exchange remits immediate payment to our sellers. Flett Exchange operates SREC markets in NJ, PA, DE, MD, OH, CT, MA, and DC and supported by trained solar professionals with specialized knowledge and proven experience.
Flett Exchange also brokers bilateral long-term SREC contracts between qualified counterparties. Flett Exchange buyers and sellers can secure price, quantity, and terms of SREC contracts 1-5 years in duration. Our stringent vetting process ensures that quality solar projects are presented to the market in a skillful manner. Buyers and sellers utilize Flett Exchange for long-term SREC contracts gain direct access to large pools of SRECs, while mitigating risk and locking-in profits. Please visit www.flettexchange.com to learn more about our services. 201-209-0234