A Comprehensive Strategy for Selling Your Massachusetts SRECs

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Earlier this week, SRECTrade hosted a very informative webinar on the status of the Massachusetts SREC Program and an analysis of the SREC market moving forward.

Here’s a link to the webinar on SRECTrade’s website. Speakers included Sam Rust, Brad Bowery and Lisa Wadsworth of SRECTrade.

Some great questions were asked about the future of the SREC market and future pricing. In summary, the market is oversupplied for 2012 and 2013 already and will most likely be oversupplied in 2014 as well.  However, since the MA DOER compliance requirements are based on a multiple of the previous year’s production, it looks like there’s a chance that the market will be undersupplied in 2015.

Additionally, once the market cap of 400 MW is reached (most likely in 2015), the sunset period will start at which time SRECs should sell near their maximum value for the remainder of their lifetime, which is 10 years after the solar panel system was installed.

Here is the Schedule of the Solar Carve-Out Alternative Compliance Payment (ACP) Rate from the Mass DOER website for the next 10 years. These are the values near which SRECs should trade during the sunset period and they decrease 5% annually.

 

Compliance Year ACP Rate per MWh
2012 $550
2013 $550
2014 $523
2015 $496
2016 $472
2017 $448
2018 $426
2019 $404
2020 $384
2021 $365
2022 $347

Any SRECs minted in 2012 but not sold in the quarterly auctions will become eligible for the Last Chance auction in July.  Since there is an oversupply of SRECs, the utility companies don’t need to buy all available SRECs, but the ones they do purchase have to priced at exactly $285 each. It is unclear how it will be determined which SRECs will be purchased and from whom, but those that are not purchased get their lifetime extended by 3 years, until July 2016. 

Since we should reach the sunset period in 2015 (at which time SRECs should be selling near $496 each), my recommendation is to not be in any hurry to sell your SRECs at today’s $200 prices. If you can hold out another 3 years, we should be able to reap the most reward from our SRECs and receive the amount of money we were expecting when we signed up for our panels originally.

Gary

 

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2 thoughts on “A Comprehensive Strategy for Selling Your Massachusetts SRECs

  1. I enjoyed the webinar on the 5th also. Nice summary. Thanks.

    It sounds like I’m in a similar situation. My panels were installed in Nov-2011, and I haven’t sold any of my SRECs yet. I’ll put 2012 SRECs into the July “last-chance” auction, but I’m not sure if I want them to sell there or not. As you say, it depends on what we’d be able to get for them in the next 3 years (before they totally expire). If, sometime between 2013 and 2016, we’re able to sell them for something closer to $500, I’d gladly hold onto them. But it’s unclear to me what happens with this 2012 SRECs during this 2013-2016 time period, how we sell them, etc. Particulay concerning is trying to determine what the chance is that we might be unable to sell them (and thus have them worth $0). It is also unclear how it is determined which people’s SRECs will be sold in the “last-chance” auction if it is over-supplied.

    Any ideas on these additional questions?

  2. First off, congrads on your solar panels! What size array do you have and what kind of savings are you seeing?

    Regarding which SRECs will be sold in the Last Chance Auction, I am not sure if the Mass DOER even knows themselves how they are going to do it. If they do, it does not appear that they’ve told anyone.

    However, I personally am ambivalent how they decide and if my SRECs get sold or not. While it would be nice to get $285 apiece for my 6 SRECs now, I am perfectly happy to receive payments approaching $496 apiece in 2015 (meaning July 2016).

    My understanding is that an SREC can go through the Last Chance Auction and be guaranteed a chance to be sold at $285 only once. After that, it will get its lifetime extended by 3 years and can no longer participate in the Last Chance Auction.

    But they can participate in any of the other quarterly auctions without price constraints and be sold at any price that is acceptable to the buyer and seller. So if you wanted to sell them when the market is oversupplied for around $200 in 2013 or 2014 you could do that. Or if you wanted to wait until the market price for them is closer to the ACP in the hopefully undersupplied year in 2015 you could do that.

    Basically you could only sell them at market price going forward just as you could sell them now. And unless you refuse to sell them at the market price, they should never expire worthless. $200 apiece is better than $0 and I’m sure if it came down to it and they were close to expiring, you would take the former.

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