Participants in the Massachusetts SREC market waited with bated breath today for the third and final round results of the first MA Solar Credit Clearinghouse Auction (SCCA). The SCCA is the hallmark price support mechanism of the Massachusetts SREC market. In over-supplied compliance years, the SCCA is meant to act as a potential last chance for excess SRECs to transact. For more information on the SCCA please see the official DOER page here and previous SRECTrade posts here.
Today, we learned that only 3 out of 38,866 available SRECs were sold. However, the DOER immediately sent an email following the news that they are offering to purchase all remaining 38,863 SRECs for a fixed price of $285 per SREC. The DOER explained its ability to purchase these SRECs on a compliance exemption it provided power suppliers on electricity load already under contract. The adjustment, implemented on June 7, 2013, revised the 2013 compliance requirement upward from 135,495 SRECs to 189,297. The DOER estimates that the incremental compliance obligation exempt from the 2013 adjustment to be approximately 40,000 SRECs.
Effectively the DOER increased the 2013 SREC requirement, but allowed power suppliers the equivalent of a 40,000 SREC exemption from the increase. This exemption is due to the fact that the compliance requirement increase was made retroactively after some power suppliers had already entered into 2013 electricity contracts. Instead of buying the 40,000 exempt SRECs in the open market, the DOER is purchasing SRECs available from the SCCA auction pool. From its email the DOER states that, “World Energy, on behalf of DOER, will directly contact early next week all depositors or their aggregators of this “after-auction” purchase option by DOER, and provide complete instructions on how to opt-in to this opportunity and execute the financial transaction.” Also of note, the DOER is using alternative compliance funds from previous years to cover the cost of purchasing these SRECs. The notice sent to stakeholders did state that that market should not expect the DOER to take this action in any future auction.
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