Selling SRECs is not a game you can win. You can only try not to lose too much.Tweet
Many of you recently got a very interesting email from SRECTrade in which a third party, SkyView Ventures, has offered to buy not only all 2013 SRECs for the full $285 but also the next 5 years worth of SRECs at $245, paid quarterly. At first glance, this opportunity seems too good to pass up, especially considering that a little over a year ago, SRECs were still trading close to $200.
However, as we know now, that $200 price was clearly an over-correction as the DOER paid a full $285 for those that kept their SRECs until the Last Chance Auction. These days, the market price is hovering around $250.
So what about SRECTrade’s offer?
My thoughts are that if someone is willing to guarantee me $245 up front, then my SRECs must be worth at least that much. If they were going to pay me for the entire 5 years up front, I probably would do it. But since I have to wait to get paid quarterly, I don’t see any great incentive. I am already trading my own SRECs now – I just recently needed some cash for my daughter’s camp so sold 4 2013 SRECs for $255 each (afterwards, I changed my sell price to $270). So the only difference I see is that I will get less money but I will get it quarterly instead of when the market is ready to pay my price. To me, that little bit of regularity is not worth the lost income. To others, it may be worth it.
Let’s check out the math. In my case, producing 6 SRECs annually, the most I could receive is $285 apiece. $245 represents a difference of $40, so if I were to accept their offer, in the worst case I would lose $240 annually. But let’s be realistic and assume I could get $265 on the open market instead. Is it worth it to me to receive quarterly payments for the next 5 years at a cost of roughly 6 x $20 or $120/yr?
And what’s the worst case if I don’t sell? That SRECs will trade below $245 on the open market. I really don’t see that happening, especially now. One company holding onto a block of SRECs that they bought at $245 can only put upward pressure on the market price as they try to eek out every ounce of profit from their investment. Clearly they’re not going to be selling any of their purchased SRECs for $240.
Bottom line, if the peace of mind of quarterly payments is worth $20/SREC annually to you, then I would suggest you accept their offer. Personally, I’m going to continue to “let it ride” and hope that I lose less than you.