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NJ solar renewable energy credit prices rebound after recent plunge

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Essential Energy Insights - October 2021


NJ solar renewable energy credit prices rebound after recent plunge

During the week ended Aug. 11, renewable energy credit prices were mixed across the United States markets.

After falling massively during the first week of August, New Jersey solar REC prices rebounded during the week ended Aug. 11. New Jersey energy year 2017 SRECs saw an index at $200.75/MWh, up $12 on the week, with energy year 2018 SRECs coming in at $175.00/MWh, increasing almost $8.75 on the week.

In early August, prices for energy year 2017 New Jersey SRECs had begun to converge with values for 2018 but have since widened out as market sources anticipate additional volatility over the next few months.

"The sudden move [convergence] happened because there was an orderly expiration of the July delivery of the 2017 vintage SREC futures contract on Intercontinental Exchange. There was over 230,000 contracts in open interest in the July 2017 contract which is close to 10% of the whole years SREC obligation by all energy suppliers," according to a recent post from Flett Exchange. "Futures contracts can exhibit volatility in the last few trading days going into expiration if there is an imbalance of physical to deliver against the futures contract. For this reason the prices were held up for a longer period of time until the contract expired. The lack of volatility in this expiration means that all sellers had procured enough SRECs to satisfy delivery in the [Generation Attribute Tracking System] by July 31st."

"The 2017 energy year is expected to be oversupplied by 7%. In the 2018 energy year it is expected that the installed solar in the whole state will oversupply the energy companies' mandated compliance by about 14%. This is the reason why the 2018 vintage is trading at a discount to the 2017 prices. Of course the prices will move during the year as we see how much new solar is installed," Fleet Exchange added.

New Jersey class I REC markets slipped during the week under review. Garden State vintage 2017 class I RECs eased 5 cents from the week prior to an average at $2.93/MWh. New Jersey vintage 2018 class I RECs notched an index at $3.38/MWh, losing 16 cents on the week.

In Connecticut, class I REC prices retreated during the period under review. Vintage 2017 class I REC values in the state posted an index at $19.29/MWh, slipping $1.42 week over week. Connecticut vintage 2018 class I REC prices notched an average at $18.50/MWh during the week ended Aug. 11.

In Massachusetts, following recent softness, solar prices were mixed during the week under review. Massachusetts 2017 solar I RECs saw an index at $305.00/MWh, down more than $6 on the week, while 2017 solar II RECs came in at an index at $270.63/MWh, up 63 cents.

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CSAPR seasonal NOx price indications slip again

Price indications for emissions allowances under the Cross-State Air Pollution Rule again firm to weaker during the week ended Aug. 11.

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CSAPR 2017 seasonal nitrogen oxide allowances were pegged in a bid-and-ask range of $575 to $630 during the week under review, down from $575 to $650 a week earlier.

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CSAPR 2018 seasonal NOx allowances remained assessed in a bid-and-ask range of $225 to $275.

During the week ended Aug. 11, CSAPR 2017 annual NOx allowances held to a level of $2.00 to $4.00 once again.

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CSAPR 2017 Group 1 and Group 2 sulfur dioxide, or SO2, allowance price indications were also unchanged, pegged in bid-and-offer spreads of 50 cents to $5 and 50 cents to $6, respectively.

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