The trading statistics for NJ SRECs reported by the New Jersey Office of Clean Energy are misleading. They reported that the cumulative weighted average trading price ($/MWh) for SRECs in Energy Year 2009 is $331.62 for transactions to the end of September. Prices on the Flett Exchange, which represents a competitive and transparent marketplace, during the same period averaged $513.09. Flett Exchange cumulative weighted FY2009 SREC prices are $181.47 which is 64% higher.
This difference in price is because the New Jersey Office of Clean Energy uses the prices attached to every transfer going through its tracking system run by Clean Power Markets. Flett Exchange only uses the prices and quantities established by its transparent marketplace. The Flett Exchange is used by over 400 solar owners and more than 5 of the LSEs and a number of other buyers. Flett Exchange is policed by its customers along with staff who determines if trades are done in a competitive manner. If a trade is done in error off of the market Flett Exchange will break the trade and not allow the data to go in. If participants bid too high or offer too low the buyers and sellers quickly correct and bring the market back to equilibrium. We do only spot transactions, not long term contracts.
Flett Exchange prices reflect the true value of NJ SRECs on the spot market. Prices reported by the New Jersey Office of Clean Energy reflect a large number of long term contracts. The prices of these long term contracts further distort the price due to double counting. This double counting is attributed to aggregators taking delivery of NJ SRECs and reselling at the same low long term contract prices. This dilutes the lesser quantity that are transacted at current spot prices.
Entities looking to install solar in New Jersey should not rely on the New Jersey Office of Clean Energy data because it does not represent the current market conditions. At this point the prices are skewed to the downside.
The State of New Jersey is doing its best to get investment into renewable energy. Investment is only possible if there is an accurate reporting of prices of SRECs since these are the instruments used to pay back loans backing the renewable energy projects.
Most of the turmoil on Wall Street can be directly linked to lack of transparency. This lack has been to the detriment of investors. The State of New Jersey can say it is green and build a green future but it will not last if the underlying prices of its SRECs are mispriced. An SREC program built on the laws of supply and demand should have its published prices reflect just that.