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New Jersey SREC prices slide, class I RECs advance again

NewJersey solar renewable energy credit markets slipped to kick off July. NewJersey energy year 2016 solar RECs notched an index at $272.75/MWh, down about$4 on the week, while energy year 2017 SRECs saw an average at $267.50/MWh,stumbling $2.50 from the week prior.

Inearly June, the New Jersey Senate Committee on Environment and Energy passedS.B. 2276, which would adjust the state's solar target to hit 4.1% of powersales by 2021 instead of 2028. Co-sponsored by State Sen. Bob Smith, S.B. 2276shifts the solar targets earlier to align with the timing of federal investmenttax incentives which, for residential solar projects, expire in 2022. Thestate requires a certain percentage of its power to come from renewablesources, including solar, with a 3% solar mandate in 2018, rising to about 3.5%in 2021. The bill would hike the mandates between 2018 and 2021 to about 3.3%in 2018 and 4.1% in 2021.

NewJersey class I REC prices continued to advance in value during the week underreview. New Jersey vintage 2016 class I RECs notched an average at $13.00/MWh,rising 5 cents on the week. New Jersey vintage 2017 class I RECs posted anaverage at $13.58/MWh, up 28 cents from the week before.

Tothe north, in Massachusetts, SREC I prices for 2015 came in at $442.50/MWh, up$2.50 on the week, with 2016 seen at $435.00/MWh, unchanged. Massachusetts SRECII prices for 2015 posted an average at $279.38/MWh, down 54 cents from theweek prior, while 2016 notched an index again at $278.75/MWh.

Thefirst round of the 2016 Massachusetts Solar Credit Clearinghouse Auction willbegin July 29. This year, the Massachusetts Department of Energy Resources willconduct auctions for both the SREC I and SREC II markets. The volumes ofcredits that will be offered at each auction will include: 1,898 vintage 2015credits under Massachusetts SREC I and 66,440 vintage 2015 credits underMassachusetts SREC-11.

Theauction will be divided into two tiers of bidders. The Tier I bidders willconsist of retail electric suppliers with renewable portfolio standardcompliance obligations. Up to 50% of the total auction volume will be reservedfor Tier I bidders. If bid demand exceeds 50% of the total auction quantity,awards will be made on a pro-rata basis. If there is insufficient demand, eachbid received will be awarded and the remaining quantity of SRECs and SREC IIswill be made available to Tier II bidders. Tier II bidders consist of allentities, including any Tier I bidders with unfulfilled bids from Tier I. Theremaining auction quantity after the Tier I awards have been made will beallocated on a pro rata basis to all Tier II bidders.

TheMassachusetts clearinghouse auction is designed as a price support mechanismfor the market in years when more SRECs are produced than compliance buyersneed to purchase. In Massachusetts, the SREC compliance obligation, the amountof SRECs suppliers are required to purchase in any given year, is determined bya formula that takes into account the amount of SRECs to be generated, SRECsbanked from previous periods, and the number of SRECs deposited and purchasedin the clearinghouse auction.

US CSAPR emissions marketsremain unchanged week over week

Priceindications for emissions markets under the Cross-State Air Pollution Rule werefirm to softer to kick off July.

CSAPR2016 annual NOx allowances were assessed in a bid-and-ask range of $5 to $30.CSAPR 2016 seasonal NOx allowances were discussed in a bid-and-offer spread of$190 to $240, easing on the offer side from $250 the week prior.

Duringthe week ended July 8, CSAPR 2016 SO2 Group 1 allowances were pegged at a levelfrom 50 cents to $5 again. CSAPR 2016 SO2 Group 2 allowances held to a range of$1 to $6.

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