California REC prices continue to fall as data centers scale

California Renewable Energy Certificate prices have continued to soften, even as artificial intelligence and the rapid expansion of large-scale data centers drive clean energy procurement and might increase demand for renewable attributes in the state, market participants said, as occurred in other major US power markets such as the Electric Reliability Council of Texas and PJM.

The intensifying pressure on California's power system is raising new questions about how the state plans for load growth, secures a reliable supply, and manages costs while staying aligned with clean energy goals, sources said during the Infocast's Clean Energy Summit in San Diego.

Speakers described data centers as a distinct category of demand, large, concentrated, and "day and night" in their electricity needs, arriving at a moment when California's interconnection and transmission timelines remain a bottleneck.

"By 2030, California's data centers could consume the equivalent of adding another city the size of Los Angeles to the grid," said Seth Hilton, partner at Stoel Rives, framing the issue as a test of whether California can build the infrastructure required for a digitizing and electrifying economy.

As hyperscalers expand in California, REC prices in the state continue a declining trend observed throughout 2025 and Q1 2026. Even when a data center can secure interconnection and physical supply, it still needs credible clean energy attributes to meet 24/7 clean-energy targets, emissions reporting requirements, and customer expectations.

A California-based source told Platts that hyperscalers might be the primary drivers behind the rising demand: "We have been seeing an increase in energy procurement driven by data centers in the San Jose area," they said. "This is also a topic in PJM and ERCOT," they added, pointing out an ongoing situation expected to evolve over the next five years, as developers and corporate buyers are also tracking large-load expansion and associated grid constraints.

Even with the procurement interest, California REC prices remain soft. Platts, part of S&P Global Energy, last assessed the Bundled REC Bucket 1 contracts at $9.95/MWh for the 2026 vintage on April 16, down from $11/MWh on Jan. 29 -- shortly after assessments for the current year vintage began after rolling dates -- and $14.95/MWh for the 2027 vintage, down from $16.05/MWh over the same period. Similarly, Bucket 2 RECs were priced at $6.45/MWh for 2026, down from $11.95/MWh, and at $10.00/MWh for 2027, down from $12.20/MWh on Jan. 29. Bucket 3 RECs were assessed at $2.09/MWh and $2.45/MWh for the 2025 and 2026 vintages, respectively, reflecting declines from $3.20/MWh and $4.05/MWh on Jan. 29.

These price decreases highlight a persistent softening in REC markets during the first quarter of 2026, even as procurement activity linked to data center growth remains elevated, underscoring the evolving dynamics between renewable attribute markets and infrastructure constraints.

"REC [prices] continue to be lower since 2025, now I am seeing levels under $2 for PCC3 vintage 2025, similar lowering trend for PCC1 and PCC2, across vintages," a trader said.

Panelists addressed the pricing dynamic as a reminder that, for many large loads, the required constraint in California is often the pace of physical interconnection and transmission buildout, rather than the availability of clean energy "attributes" alone, meaning falling REC prices may reduce the cost of claims, but do not solve delivery and infrastructure timelines.

Where demand is landing

San José Clean Energy (SJCE) Assistant Director Zach Struyk described Silicon Valley's draw for digital infrastructure and said the region is seeing greater alignment between demand and planned grid upgrades.

Struyk said SJCE serves a large residential base and also has a data center load in its territory. Also pointed to major transmission additions anticipated in the area, referencing two lines and multi-gigawatt-scale capacity, as development interest grows.

Panelists said local posture also matters. Struyk and others described the value of jurisdictions that are "open for business," while mentioning that California must balance growth with affordability concerns and community impacts.

Earlier engagement

Gayle Miller, Head of Strategic Investor Engagement, Senior Advisor, Renewable Power & Transition at Brookfield, said investors are in frequent discussions with hyperscalers and other market participants about where load will show up and how infrastructure can be built to meet it, but panelists stressed that financing depends on credible commitments and clearer timelines.

Speakers suggested that planning would improve if large loads provided stronger information upfront, such as phased load schedules rather than "all at once" assumptions, and if permitting and interconnection processes encouraged earlier coordination among load, generation and wires planning.

Also, earlier engagement could improve community outcomes, as it is easier to reach agreement on siting and mitigation when market participants are brought in at the front end rather than after decisions are effectively locked in.

Policy direction

In the panel "AI, Data Centers, and the Grid: Powering California's Growing Energy Challenge," participants discussed ideas for reducing timeline risk, including fast-track pathways for certain projects, earlier interconnection studies before queues open, and clearer standards for load forecasting and commitments, though speakers also acknowledged that accelerating timelines does not eliminate the need for community engagement and cost allocation decisions.

Panelists emphasized that the state's challenge is not whether load growth is "real," but how it is absorbed and governed, where it is located, what infrastructure is required, and how costs and impacts are managed.