How the SRECTrade auction works
SRECTrade's monthly auction is designed and optimized to match buyers and sellers of Solar Renewable Energy Certificates (SRECs) in the most fair and efficient manner possible. In addition to the auction, SRECTrade has created EasyREC, a service dedicated to automating the bidding process and eliminating any work on the part of the seller. Find out more about on the EasyREC page. This page has detailed information regarding the mechanics of the SRECTrade auction.
Auctions close on the first Friday of each month. The best rule of thumb is to expect SRECs sold the first week of each month and payments received the last week of each month. Here is the timeline once an auction closes:
Week 2
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Week 3
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Week 4 |
| SRECs collected from sellers, payment requested from buyers |
Payments due from buyers, then payments submitted to sellers |
Payments received by sellers via direct deposit or mailed check |
| 3 business days |
5 business days |
3-5 business days |
At any time, users can log onto the SRECTrade website and indicate the number and price of SRECs they would like to buy or sell. Each of these indications is known as an "order." SRECTrade accumulates these orders over the course of the month. At the end of each month, there will be an auction in which as many orders as possible are executed.
To maximize the number of orders executed in each auction, SRECTrade determines a market clearing price at which all eligible SRECs will be traded. To determine the market clearing price, SRECTrade ranks the orders to buy SRECs ("bids") from highest price per SREC to lowest price per SREC and ranks the orders to sell SRECs ("offers") from lowest price per SREC to highest price per SREC. SRECTrade then starts a matching process, pairing the lowest offers with the highest bids. SRECTrade continues down the list of orders, matching higher bids with lower offers, until bid and offer values are equal; this point of equality is the auction's clearing price. It is at this clearing price that all the matched bids and offers are exchanged. Any bids to buy below the clearing price and any offers to sell above the clearing price will not be exchanged. This ensures that sellers never receive less than their offer price and buyers never pay more than their bid price.
The following example illustrates the auction process. At the end of the month, the bids and offers are ordered by price as shown in the table below. SRECTrade begins by matching the highest bids to buy ($630 per SREC) and the lowest offers to sell ($600 per SREC). In this scenario, 10 bids for $630 per SREC are matched with 10 offers for $600 per SREC. Then, moving down the list, 10 bids for $620 per SREC are matched with 10 offers for $610 per SREC. Lastly, 5 bids for $610 are matched with the remaining 5 offers for $610. Beyond this point, the remaining bids are lower than the remaining offers and thus, the market clearing price has been determined: $610/SREC. All 25 bids and 25 offers are executed at this market clearing price of $610/SREC. This method maximizes the number of SRECs sold in the most fair and efficient manner possible.
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