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US RECs see choppy moves to kick off May

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


US RECs see choppy moves to kick off May

Renewable energy credit markets, both solar and non-solar,kicked off May in choppy fashion at major centers around the United States.

Following losses the week prior, New Jersey energy year 2016solar RECs advanced, posting an index at $291.63/MWh during the week ended May 6,gaining $1.69 on the week. New Jersey vintage 2016 class I REC prices came inat an average of $13.56/MWh during the week under review, down 4 cents from theweek prior.

In Pennsylvania, vintage 2016 tier I REC prices climbedduring the week under review. Vintage 2016 tier I RECs saw an average at$13.13/MWh, losing 14 cents from the week before.

In Maryland, tier I REC prices were mixed during the firstweek of May. Maryland vintage 2015 tier I REC prices posted an index at$12.56/MWh, with vintage 2016 REC values coming in at $13.09/MWh, down 2 centsand 5 cents, respectively, on the week.

Maryland solar RECs for 2016 posted an index at $39.19/MWh,down 39 cents week over week.

Looking at the current supply situation in Maryland, 478 MWof solar installations in the state will generate an estimated 570,000 SRECsfor the 2016 calendar year. "Add in the unsold SRECs from 2014 and 2015(around 100,000 SRECs) and we are looking at an oversupply of 230,000 or moreSRECs after the buyers turn in their 2016 SREC purchases," according to anApril 27 analysis from the Flett Exchange.

"The 2017 vintage is oversupplied. The RPS requiresapproximately 615,000 SRECs to be turned in for 2017 compliance year. With the230,000 plus SREC carry over from 2016 plus the current 478 MW of solargenerating SRECs right now, that demand is met and oversupplied again byapproximately 115,000 SRECs. As the year goes along and more solar is installedthe market become more and more oversupplied," according to the FlettExchange analysis.

Over the course of this year, almost 100 MW of new solarcapacity has been installed in Maryland. If that rate of installation remainsat such a rapid clip or even ramps up, the analysts from Flett Exchange saidthe market could in fact be oversupplied by about 400,000 SRECs for 2017. Evenwith the new build rate pegged at roughly 10 MW per month, this could lead toan oversupply of more than 200,000 SRECs for 2017 in Maryland.

Legislation seeking to expand Maryland's renewableportfolio standard by mandating 25% of the state's electricity come fromrenewable energy sources by 2020 was passed recently by both legislative housesin the state.

"The bill does call to increase the solar carve out.For 2017 the RPS for solar will be increased from 0.95% to 1.15% or increasethe demand from 615,000 SREC to about 725,000 SRECs. This increase would soakup the oversupply of SRECs but not if the current build rate continues. Thedate in which the bill will reach the governor's desk has not been scheduledyet."

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CSAPR emissions firmto lower to open May

Price indications for NOx and SO2 emissions allowances underthe Cross-State Air Pollution Rule were firm to lower during the week ended May6. CSAPR 2016 annual NOx allowances held to a bid-and-offer spread of $20 to$50, while CSAPR 2016 seasonal NOx allowances were seen in a bid-and-ask rangeof $220 to $280 to start May, down from $390 the prior week on the offer side.

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In SO2 trading, CSAPR 2016 SO2 Group 1 allowances wereunchanged in a bid-and-offer spread of $1 to $5, while CSAPR 2016 SO2 Group 2allowances were pegged again at a level from $2 and $7.50 during the week underreview.

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Market prices andincluded industry data are current as of the time of publication and aresubject to change. For more detailed market data, including power,naturalgas, and coalindex prices, as well as forwardsand futures,visit our Commodities Pages.