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2017 seasonal nitrogen oxide prices retreat after recent rally

Following a recent rally, seasonal nitrogen oxide emissions allowances under the Cross-State Air Pollution Rule tumbled heading into the end of May. As of the week ended May 26, vintage 2017 CSAPR seasonal NOx allowances were seen in a bid-and-offer spread of $650 to $750, down from a level of $700 to $800 the week prior.

Prices for 2017 seasonal NOx allowances had swung sharply higher, peaking at about $750 at midmonth amid increased demand, as buyers began to hedge their ozone season emissions against a backdrop of tighter supply.

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In September 2016, the U.S. Environmental Protection Agency finalized an update to the CSAPR Seasonal NOx program, which trimmed the seasonal NOx allocations by more than 40% starting this May.

CSAPR vintage 2018 seasonal NOx allowances also rolled lower, pegged in a bid-and-ask range of $225 to $275, down on the offer side from $300 the week before.

CSAPR vintage 2017 annual NOx allowances were assessed again in a bid-and-offer level of $2.50 to $4.00, unchanged on the week.

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CSAPR vintage 2017 Group 1 and Group 2 SO2 allowances were seen again in bid-and-ask spreads of 50 cents to $5 and 50 cents to $6, respectively, flat week over week.

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NJ solar RECs flat to higher; decline in demand pressing on NH market

New Jersey solar renewable energy credit prices were firm to higher during the final week of May. Energy year 2017 SRECs in the Garden State came in at $223.38/MWh, up 38 cents week over week. New Jersey energy year 2018 SRECs posed an average again at $178.75/MWh

New Jersey class I REC prices were mixed heading into the end of May. New Jersey vintage 2017 class I RECs notched an index at $5.72/MWh, down more than 20 cents on the week. New Jersey vintage 2018 class I RECs came in at $6.22/MWh, up 1 cent week over week.

To the north, class I REC prices in New Hampshire continued to slump. As of the week ended May 26, New Hampshire class I RECs for 2017 saw an index at $16.00/MWh, down 50 cents on the week and off sharply from an index of $27.00/MWh in early February.

Meanwhile, 2016 New Hampshire class II RECS, which include solar generation, were stable at an average of $38.00/MWh during the week under review, but are down from an index of about $51.00/MWh in early February.

Analysts from Knollwood Energy attributed the sharp drop in New Hampshire REC prices in recent months to ample supply and a decline in demand. "The [renewable portfolio standard] for a class II solar facility is set at a very small 0.3% of the electricity sold each year. Without an increase in this percentage rate, the supply has already and will continue to far exceed the demand," Knollwood Energy wrote.

"The electricity providers are allowed by state law to subtract a percentage of all net metered systems that do not register to create RECs from their RPS obligations. By subtracting this percentage, the electricity provider is able to take a percentage of these facilities and satisfy some of their requirement for free. It is impossible to be able to predict how much the utility will be able to acquire from unregistered systems," Knollwood Energy added. "Basically, using a set formula, the state determined that there was about 18 MW of solar installed but not registered for RECs. Again, according to the formula established by the legislature, this reduced the demand from 0.3% to 0.06%, or dropping the requirement to purchase by about 80%. As soon as this information became public, demand for the RECs plummeted and prices fell."

Legislation, SB129, is on the table in New Hampshire that would increase the state's solar RPS to 0.5% in 2018, 0.6% in 2019 and 0.7% in 2020.

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