On April 15, 2016 the last SRECs of Calendar Year 2015 will be issued for Massachusetts. With the policy climate in flux, it’s important to recall where the market stands for 2015. In short: SREC-I may be slightly oversupplied at ~4.4% to under supplied by ~24.9%. SREC-II is oversupplied by ~65.8%.
Oversupplied or under supplied for MA15 SREC-I?
It is possible the market could be slightly oversupplied. This would be the case if all 2015 issued, 2014 banked, 2014 Solar Credit Clearinghouse Auction (SCCA) re-minted, and 2013 SCCA re-minted SRECs were used towards 2015 compliance. Additionally, compliance entities would have to forgo banking any 2015 vintage SRECs for use in 2016 (i.e. up to 10% of the compliance obligation can be banked for future use).
It is possible the market could be under supplied. This would be the case if not all of the 2014 banked, 2014 SCCA re-minted, and 2013 SCCA re-minted SRECs were used towards 2015 compliance, but some were carried forward for 2016 compliance. This is certainly a possibility as many compliance entities may have purchased 2013 and/or 2014 SCCA SRECs with the intention of using them towards compliance in 2015 and/or 2016. Since the SCCA SRECs could be purchased at a fixed priced of $300, it would have been advantageous for a compliance buyer to buy the less expensive SRECs in the SCCA versus paying 2015 or 2016 market prices.
Why is MA15 SREC-II more straightforward?
The last compliance year, 2014, for MA SREC-II was the first year of the SREC-II program. The compliance period was under supplied and as a result no SRECs were deposited into the SCCA. This is why no volumes from prior periods are impacting the SREC-II estimated oversupply.
Current Pricing
As of late, the MA SREC market has experienced less demand for MA2015 SREC-Is and IIs as many compliance buyers have finalized their needs for the year. Note, all SREC retirements need to be made by June 15, 2016. As a result, bid activity has been less frequent and pricing has fallen with MA15 SREC-Is most recently bid $460 and MA15 SREC-IIs most recently bid $262.50.
*Source: NEPOOL GIS. Q4 2015 SRECs issued based on MA DOER installed capacity information and SRECTrade estimates.
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