INTERVIEW: DC SREC prices fall as oversupply, lower ACPs weigh on forward market

Washington, DC, solar renewable energy certificate prices have fallen as stronger eligible solar supply, declining alternative compliance payment levels, and weaker renewable policy sentiment have weighed on forward market expectations, Parag Nathaney, quantitative engineer at a major electric utility, said Aug. 10.

In an interview with Platts, Nathaney said the primary driver appears to have an improved supply balance. According to the 2026 DC RPS report, eligible solar capacity at the end of 2025 reached 373.7 megawatts, above the target level of 293 MW.

"This indicates oversupply, which should lead to a decline in SREC prices," Nathaney said. "Previously, DC SRECs traded close to alternative compliance payments due to scarcity. As the supply has improved, the SREC levels have fallen."

Platts, part of S&P Global Energy, assessed DC SRECs for the 2025, 2026, and 2027 vintages at about $358-$360/megawatt-hour as of Aug. 6, reflecting a decline from levels previously supported by scarcity in the district's solar carve-out market.

The recent decline has been concentrated across forward vintages, with 2025-2027 SRECs trading in a narrow range near $360/MWh per solar REC. The pricing suggests the market is reassessing whether DC SRECs should continue to carry the scarcity premium that previously kept values closer to the alternative compliance payment, or ACP.

Nathaney said market participants may also be anticipating continued supply growth, especially through community solar. Additional solar buildout could keep SREC prices lower than previously expected unless compliance demand rises faster or policy requirements become more stringent.

A scheduled decline in the DC solar ACP is also limiting upside for later vintages. The ACP is expected to fall from $460/MWh for the 2025 compliance year to $360/MWh by 2030.

Policy sentiment

Because SRECs are often valued relative to the cost of making an alternative compliance payment, a lower ACP can reduce the maximum price buyers are willing to pay for certificates. That is particularly relevant for forward vintages, where buyers may be less willing to pay a premium if future compliance costs are expected to decline.

"A falling ACP should also lower SREC value as market views SREC as an option on the ACP," Nathaney said. "A declining ACP should limit upside on future SREC vintages."

Broader policy sentiment may also be contributing to the softer tone. Nathaney said there is no active proposal in DC to change the solar requirement, but affordability concerns and policy moves in other states have likely affected market psychology.

Several states have recently considered or enacted changes aimed at slowing the growth of renewable portfolio standards or reducing ratepayer cost pressures. Nathaney pointed to New Jersey and Massachusetts as examples of states where affordability concerns have led to a reassessment of renewable policy trajectories.

"That has likely weakened the policy premium that DC SRECs previously commanded," Nathaney said.

For now, the DC SREC market is watching whether the recent move lower is a short-term adjustment to improved supply conditions or the beginning of a broader repricing as declining ACP levels, community solar growth, and softer policy sentiment become more fully reflected in forward vintages.