Once a year it happens in the NJ SREC market, the energy year switch. Sellers of SRECs are confused every year. This year can cost sellers LOTS of money if they don’t sell in time. Let’s go over the basics and why this year is different from years past:
The Energy Year Basics:
The energy year runs from June to May (example: energy year 2011 SRECs represent power produced from the beginning of June 2010 to the end of May 2011.
Power providers in NJ must produce a compliance report on October 1st and at that time they must retire SRECs and/or make Solar Alternative Compliance Payments (SACP).
The time between June and October is called the true-up period. The true-up period gives the buyers enough time to get their count of SREC needs and either buy more or dispose of extra SRECs.
Sellers who have accumulated SRECs and not sold them during the year have a short amount of time to sell their SRECs.
Why are things different this year?
SREC markets are based on supply and demand. In all of the previous years in NJ the amount of solar installed was far short of the State mandates. The result was high and stable SREC prices. This is about to change.
These high prices attract investment. Last year (energy year 2011) there was potentially enough investment in NJ solar to meet mandates. The next year (energy year 2012) appears to have enough and maybe even too much solar investment.
Prices for SRECs for future years have dropped 38% in the last few months.
What should I do if I have SRECs?
If you have SRECs in your GATS account you need to sell them now and sell them again at the end of this month when the last ones are posted in GATS. Don’t try for higher prices. In the past, sellers have been able to get a few extra dollars by holding out until the end. We don’t think the risk/reward is there this year. Trying to get $650 when the best bid is $645 is not wise. If prices start to drop just accept the bid and go on.
The last SRECs that can be used by the buyers for October’s compliance will be May 2011 generation. These SRECs will be available for transfer in GATS at the end of June.
Flett Exchange customers can log onto the Flett Exchange trading platform to lock in their prices 24 hours a day 7 days a week. You can also call our trading desk and we will lock in the price for you. Don’t just transfer SRECs to “Flett Exchange llc” on GATS without first locking in your price! Call us or trade them on our trading platform.
What is going to happen to prices in the future?
Prices for energy year 2012 SRECs are trading in the high $300s for future delivery. These prices are expected to go up and down based on the level of future solar installations. If homeowners, businesses, schools, municipalities and PPA firms continue to develop solar in excess of the State mandates then the SREC prices will continue to go down in price. If solar development throttles back the prices will stabilize. Prices can also stabilize based on Board of Public Utility rulemakings and future legislation changes.
More on Flett Exchange:
Flett Exchange is largest volume SREC exchange and brokerage firm. Our online trading platform brings transparency, price discovery, and liquidity to Solar Renewable Energy Certificates (SRECs). Over 2,800 active clients utilize Flett Exchange to negotiate the price, quantity, and details of SRECs in a secure and seamless online trading platform. Upon each SREC transaction Flett Exchange remits immediate payment to our sellers (its simple sell a SREC and receive a check!) 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 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.