New Jersey Office of Clean Energy Report – June 2015


NJ_Solar_Market_Update_06_30_2015-3-3 pdf


Posted in: Uncategorized

New Jersey SREC Prices Remain High on Lower Solar Installations


 
New Jersey SREC update August 2015:
 
The first of the energy year 2016 SRECs were minted on July 31st. Prices continue to remain strong in the mid $220s. It appears that there is still active buying by electric companies for their 2015 compliance which is due this fall.
 
Sellers continue to sell at these high prices and volume has been robust. Most sellers that have accumulated SRECs are selling which is why the exchange has seen selling activity in all energy years – 2013, 2014, 2015 and now 2016.
 
SREC Prices Remain High on Lower New Solar Installations
 
On July 23rd the NJ Office of Clean Energy released their NJ_Solar_Market_Update_06_30_2015-3 of how much solar was installed in June. There were 14.4 Mw installed bringing the statewide total capacity to 1,500.7 Mw. This is another relatively light month of new solar installations. The average amount of new solar installed during the last six months was only 11.5/Mw. These low monthly installation reports continue to have a bullish effect on the SREC prices. (We feel there is some type of disconnect and that a large amount of projects will hit at any month.)
 
BPU Auction Clears at $246.42
 
The BPU conducted an auction for 42,000 SRECs on July 14th and the clearing price was $246.42. This was more than $10 over the price traded in the market which may indicate that there were a few buyers that were being forced to pay up to make compliance for energy year 2015. Prices have been $15 to $20 below that level since the auction.
 

Where are prices going from here?

 
As long as buyers need SRECs for their ry 15 compliance due this fall the prices will remain strong. Once they are done we expect the market to pull back to $200 or less this fall. We also expect a very large new solar installation number to hit in the next few months. It just does not make sense that solar installations are so low on a monthly basis while the economics (low installation costs and high SREC prices) are so favorable. If new installations are being withheld they will have to hit the states reports at some time. In the meantime the current numbers from the state indicate a continually strong SREC market.
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Press Releases, Research, SREC

New Jersey SREC Prices Off From February Highs


 
SREC prices have risen 29% to $214.72 average in February 2015 compared to $166.30 in February 2014. Prices are currently trading $200 for new SRECs for immediate payment and delivery on the Flett Exchange trading platform. This is off from 3 year highs of $220 reached last month.
 
Prices rose in January and February due to the active hedging leading up to and after the BGS auction in which energy providers contract to sell electricity to New Jersey customers who do not choose a 3rd party supplier. The auction winners competitively manage their SREC obligations by buying spot and long term contracts from solar owners and shovel-ready solar projects. In another closely watched auction Electric Distribution companies of New Jersey sold 32,766 SRECs yesterday at a clearing price of $211.01. (Larger volumes tend to get a premium on the auctions)
 
The New Jersey Office of Clean Energy reported that 17.8 Mw of solar was installed in February bringing the total up to 1,456 Mw of operating solar. This amount of solar almost exactly matches the average amount of solar installed during the past 6, 12 and 24 months. It appears that the solar development in New Jersey is under control and is developing in line with state growth goals set out by legislation.
 
Prices for SRECs may drop in the future if the development exceeds the state mandates which is why we monitor the monthly build rates. We suggest to sell your SRECs on a consistent basis when prices are high like they are now.
 
The following is a chart showing SREC prices compared to monthly install rates.
 

New Jersey Solar - SREC Prices and Mw Installation Rates - February 2015


 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Press Releases, Research, SREC

New Jersey SREC Prices Reach 3 Year Highs!


 
New Jersey SREC Prices Reach 3 Year Highs!
 
New Jersey SREC prices have rallied to the highest level seen since January 2012! SRECs are trading above $200 for both 2014 and 2015 energy years.
 
Prices have rallied for a few reasons:
 
1. Legislation passed by the Democrats and signed into law by Governor Christie in the summer of 2012 to save the solar market is working.
 
2. The new solar installations have been very light on a monthly basis as reported by the New Jersey Board of Public Utilities. Only 7.7 Mw were installed in November.
 
3. Prices have rallied in prior years at this time of the year due to energy companies buying SRECs for hedging purposes.
 
4. There are not as many SRECs available for sale on the spot market the first half of the energy year because many of the large installations use their first SRECs to deliver against long term contracts.
 
We expect the rate of solar installations to pick up in the coming months due to the favorable economics of solar investing in New Jersey – low panel prices coupled with higher SRECs and historically high electricity prices in New Jersey. If there are high installation rates on a continual basis it will lead to lower SREC prices in the future. In the meantime prices seem to be on an up-trend.
 

If you would like to take advantage of the higher prices and sell any of your SRECs you have a few options at Flett Exchange:
 
1. Log into your account on the Flett Exchange Trading Platform to list your SRECs for sale at any price you like.
 
2. Check our ” Sell Now Price” on our Website and transfer your SRECs to Flett Exchange LLC on GATs.
 
3. Call our trading desk at 201-209-0234 and speak to one of our brokers who can help you with GATs transfers.
 
4. Large volume sellers can call our brokerage desk (201-209-0234) for direct OTC spot and forward bilateral contracts.
 
As always, we remit payment within 24 hours for spot transactions.
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Press Releases, Research, SREC

New Jersey SREC Market Update – August 2014


The first of the new 2015 Energy Year SRECs were minted in GATS last Friday. Prices for spot SREC sales during the last year rallied in all of the major SREC markets covered by Flett Exchange. This was mostly due to new solar development being under control along with successful legislative action taking effect in New Jersey. Solar owners were able to sell their SRECs at higher prices in all markets compared to the previous year.
 
Here are some pricing highlights:
 

RY 2013 RY 2014
 
New Jersey: $100.70 $155.65
 
Pennsylvania: $14.05 $35.66
 
Maryland: $126.15 $131.56
 
DC: $433.22 $466.60
 

(These prices are the average daily Flett Exchange settlement prices for both energy years. A listing of settlement prices back to 2007 can be found at
 

http://markets.flettexchange.com/new-jersey-srec/
 
The market price for SRECs for the next 12 months will be determined by 3 major factors:

 
1. The rate and cost of new solar installed
 

2. The buying/hedging activity of the electric companies
 

3. Legislative changes or new government incentives/policies
 

We suggest to our customers to sell on a consistent basis – especially if prices are at the higher end of the range. The current prices in New Jersey, which are in the $155 to $165 range, represent a subsidy of 15 to 16 cents per kilowatt hour which is almost what you would pay without solar! Remember, the idea of an SREC market is to encourage new solar development while financing previous development. It is a delicate balance subject to open competition. If solar becomes less expensive, and it has, SREC prices over the long term will continue to drop. The open and competitive aspect of SRECs allows new entrants to invest and install new solar. If the cost of installing new solar becomes less expensive (this is the reason why SREC prices have dropped over the years) new solar investors will be willing to accept a lower SREC price – even if you do not.
 

Flett Exchange customers can log into their personal account to sell and see the following information:
 

• Historic SREC charts back to 2006
• Personal SREC sales and revenue charts for all Flett Exchange transactions (you can export to PDF or excel for your accountant or your own records)
• Live SREC prices
• Sell your SRECs like you would sell a stock on our market with over 6,500 other solar owners and dozens of electric company buyers
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Research, SREC, Uncategorized

New Jersey SREC Market Update – July 2014


New Jersey SREC prices have been strong this year and are currently at the $180 level for the 2014 vintage SRECs. Prices have been strong due to compliance buying by energy providers. After the buying for this years’ compliance is done we expect SREC prices to drop back down. Prices could drop to $120 or lower by this fall/winter. We suggest to our sellers that you sell any accumulated SRECs into this price rally.
 
There is a chance that prices could continue to move up a little more this summer however, we suggest to take advantage of these high prices in case they drop. In the past we have found that sellers that miss selling at the high prices tend to hold SRECs for over a year and resort to hoping and praying for prices to recover. If trends continue as they have during the past few years solar will continue to become cheaper and a lower SREC value will be needed to convince new investors to build more solar.
 
CHECK YOUR GATS ACCOUNT FOR OLDER SRECS BEFORE THEY EXPIRE!
 
Some solar generators hold SRECs for many years. If you have old Energy Year 2012 (generated from June 2011 to May 2012) solar credits sitting in your GATs account you must sell them because if you do not they will lose significant value soon! Energy companies cannot use these SRECs for solar compliance after this fall. Prices for these older SRECs trade at a slight discount at this time. Prices are listed in real time on our Flett Exchange trading platform and also on our website. If you have any of these older SRECs sell them on our platform or call us and we can walk you through the sales process. We have found energy companies willing to purchase these SRECs at this time.
 
Flett Exchange customers can sell their SRECs in a variety of ways.
 
1. You can call us in the office at 201-209-0234
 
2. Check the Sell Now Price (for the correct SREC year) on our website and send the SRECs to us on GATS
 
3. Do it all on-line by accessing our trading platform.
 
We will process your payment the same day. Customers can also place orders to sell SRECs at higher prices by either calling our trading desk at 201 209 0234 or by logging on to their Flett Exchange account and placing their orders themselves. Checks go out the same day. Established customers can request EFT.
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Press Releases, SREC, Uncategorized

New Jersey SREC Market Update – March 2014


It has been 3 months since our last New Jersey SREC market update. During that time SREC prices moved up from the $145 area in December 2013 to a high of $185 in February 2014 and have moved back down to the mid to high $150s. $185 was the highest price for New Jersey SRECs since May 2012. Many of our customers who have been holding off for higher pricing participated on this move and sold many banked SRECs.
 
Upward price movement and market firmness can be attributed to the compliance requirement of close to 1,600,000 SRECs due this fall. This requirement is significantly higher than last year’s requirement of 596,000. It is the first compliance year covered under the solar legislation passed in 2012.
 
There will be more than enough SRECs minted and available in GATS to satisfy this fall’s requirement. Here are the existing and expected SRECs:
 
2012 in GATS= 45,860
2013 in GATS = 763,487
2014 in GATS = 790,029 (June 2013 to Jan 2014 production)
 
Balance of 2014= 450,000 (estimate of Feb to May 2014 production with Feb light due to snow)
 
SREC supply for 2014 compliance= 2,049,376 (Estimated available)
 
Estimated ry 2014 SREC demand= 1,600,000 (based on 78 Gigawatt hours of NJ electric consumption)
 
Estimated ry 2014 oversupply= 449,376
 
Based solely on the estimated available SRECs above, it would appear that the market should remain stable to weak as the spring and summer arrive and buyers finish their SREC purchases. However, there are a host of other factors that can have market-moving effects. The following is a list of bullish and bearish factors that may have an impact on pricing in the next 6 to 7 months as we approach compliance:
 
BULLISH FACTORS:
 
1. It is hard to buy SRECs in bulk in a short amount of time. If some buyers wait until the end of the year to finish buying for their 2014 compliance they may push the market higher in search of SRECs.
 
2. Buyers hedging for future years purchase SRECs in the spot market and hold them for future compliance years. This reduces the pool of available SRECs for buyers that need them for the October 2014 deadline.
 
3. 100% of the SRECs are never sold each year. There are a variety of reasons why. Some buyers feel they are worth more so they don’t sell, some don’t enter meter readings in time and some altogether forget about them (it is hard to believe but some people or businesses don’t need the money right away- must be nice!)
 
4. Speculative buyers may purchase SRECs from solar owners and force compliance buyers to pay higher prices as the compliance deadline approaches.
 
BEARISH FACTORS:
 
1. If prices go up too much compliance buyers who have bought spot SRECs for future compliance years may choose to use those SRECs for this compliance year or sell them to other compliance buyers to do the same.
 
2. SREC markets are based on law and confidence in the law. If there is any potential change in law that may possibly reduce the need to purchase SRECs in future years then buyers will not buy any more SRECs from solar owners other than what they need immediately.
 
3. If it appears that a dramatic increase in solar installations may happen like it has in the past, (due to overdevelopment) then buyers will back off of the spot market once they have procured their 2014 compliance needs. (no risk EDC contracts, large grid connect permissions from the BPU and a steady increase in lease installations have a good chance of oversupplying the market)
 
As you can see, there are many factors that can come into play in the pricing of SRECs going into compliance. We try to give our customers, both buyers and sellers, as much information as possible. You can always see our live pricing on our website along with historical pricing going back to 2007. If you log into your Flett Exchange account you can transact SRECs 24 hours a day, see all of your sales history along with historical graphs. Also, feel free to call us directly with any questions or if you need help transferring SRECs on GATS. As always our sellers are paid the same day via check or EFT – your choice!
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.
 


Posted in: New Jersey SRECs, Press Releases, SREC, Uncategorized

New Jersey Low Solar Installation Rate Lends Support to the SREC Market


The rate of new solar installations in New Jersey has been dropping for over a year. This low build rate coupled with the increasing SREC demand put in place by legislation over a year ago is why SREC prices are up 100% from a year ago. Prices for new SRECs are currently in the $140s.
 
There were only 13 Mw of new solar installed in New Jersey for the month of November. This marks 6 months in a row of low installations. As we have mentioned before, a monthly build rate of 15 to 17Mw a month over the next few years will keep the New Jersey SREC market “balanced”. The average build rate for the last 6 months was only 11.6 Mw.
 
Why is there less new solar being built in NJ now?
 
The low build rates today can be attributed to the low SREC prices last year. The projects being turned on now were in the planning phases about a year ago. Since SREC prices were under $100 very few projects were financeable. We can expect the build rate to increase in the next 6 to 12 months because of the higher SREC prices that we are seeing now.
 
The amount of new solar is likely to increase next year.
 
There will be an increase of installations due to another round of EDC (Electric Distribution Company) fixed rate SREC solicitations next year. These solicitations shift SREC risk away from solar developers and onto the ratepayers. Since there is no financial risk these programs are guaranteed to be oversubscribed.
 
Over the next 3 years there will also be a number of large grid connect projects installed. These projects are typically 7Mw each and will produce thousands of SRECs a year. The solar legislation that passed in the summer of 2012 allowed for a limited amount of grid connect solar to be installed. A limit was passed on new grid connect solar to help prevent a quick oversupply like the one that led to a collapse 2 years ago.
 

Where are Prices going?
 
New Jersey SREC prices should stay stable going into the New Year. Many sellers have been attempting to sell at $150 and it appears that it may happen again soon. The trend is slightly higher; however, it will be limited as buyers are offered multi-year contracts by new solar installations. Most new solar can be installed with a 3 to 5 years price in the $140 range. This shift from spot markets to multi-year contracts should limit the ultimate upside of the spot SREC market.
 
The SREC market is still oversupplied for the current year; however, the new SREC requirements put into place by legislation are just starting to kick in. Electricity companies in New Jersey will need to procure over 1,400,000 SRECs going forward each year compared to only 770,000 last year.
We recommend to sell SRECs on a continual basis, especially as prices move up. If you have a large facility (250kw or larger) we recommend that you lock into a long term contract as the prices rise. Flett Exchange brokers long term contracts for its customers directly with energy companies.
 
If you would like to sell any SRECs before the end of the year feel free to log on and sell or give us a call.
 
DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.


Posted in: New Jersey SRECs, Press Releases, Research, SREC

New Jersey SREC Prices Make New Highs – October 2013 Solar Capacity Update


Prices for New Jersey solar renewable energy certificates (SRECs) have risen in the past few months. On October 4th the 2014 energy year SRECs settled at $149.63 on the Flett Exchange Trading Platform. This is the highest price yet for the 2014 SRECs on the spot market, 30% higher than the low price of $115 on July 16th and significantly higher than the $60 all-time low SREC price last October. The Electric Distribution Companies (PSE&G, Atlantic City Electric, Jersey Central Power & Light and Rockland Electric) conducted a large SREC auction on October 17th for 76,417 energy year 2014 SRECs. It cleared at $147.00 per SREC. Prices as of this publication are slightly lower.

 

SREC prices are steady now because of 2 factors:

 

1. Legislation passed in July of 2012 dramatically increased the amount of SRECs that the energy companies need to procure on a yearly basis. Demand for SRECs this energy year will be close to 1.5 million SRECs which is up from the previous legislation which required 772,000.

 

2. The pace of solar development was slow in the past year due to the lower SREC prices. There were only 8 Mw of new solar activated per month in August and September. The average amount of solar in the last 6 months was only 14.9 Mw per month compared to 28.5 Mw a month at this time last year. It is estimated that 15-17 Mw is needed per month to achieve a perfectly “balanced” market.

 

 

The stable and upward pricing should be tempered eventually by the following:

 

1. It is expected that the monthly install rate should increase next year due to the rising SREC prices.

 

2. The New Jersey Board of Public Utilities approved another round of Solar Loans and fixed rate Electric Distribution Company SREC contracts for the next year. These contracts shift all risk away from solar developers and onto the rate-payers so it is virtually guaranteed that the build-rate will increase during the next year.

 

We don’t expect spot SREC prices to experience a new downtrend much at all during the next 8 to 10 months. SREC demand should remain strong due to hedging activity on the part of the energy companies.

 

We expect there to be periodic, short-lived rallies during the year. With that in mind, we suggest that SREC producers sell every time the market moves up. In the past, rallies in the SREC market only last a few days because it is usually a result of a buyer procuring large volumes. We suggest that if you have a price that you would like to sell your SRECs you should list them for sale on the Flett Exchange trading platform or call us 201-209-0234 to list them for you. This will ensure that you do not miss the selling opportunities.

 

The stable SREC prices right now will invoke developers to install solar at an increasing rate so it is highly unlikely for the SREC market to stay at high prices for a prolonged period of time. If the spot SREC prices get too high energy companies will contract directly with new solar developers for their next few years of SRECs. The cost to install solar is very low and new solar can be installed with SREC prices in the mid $100s on reasonably priced projects if the developer can get a 3-5 year contract. If prices move too high in the spot market buyers will hedge in the 3- 5 year market as they have in the past. We highly doubt we will see another 80 mw installed in one month like we did in February of 2012 due to the constraints put on large solar farms but it is relatively easy to maintain 20 to 25 Mw per month. That level of new solar installations on a monthly basis should appear again in about eight months to a year and may reverse this stable SREC market.

 

DISCLAIMER: This article contains forward looking statements. Actual market action could differ materially from those anticipated. Sellers of SRECs should do their own research. Actual SREC production may differ significantly from those estimates. The company assumes no obligation to update any forward-looking statement.


Posted in: New Jersey SRECs, Research, SREC

New Jersey Solar Capacity Upadate: August 2013


The New Jersey Office of Clean Energy released the July solar installations last week. There are now 23,076 solar installations in the state with a total capacity of 1,106 Mw. There were only 11.5 Mw installed in July. This is the lowest amount of solar installed in one month since May of 2011. A continued trend of low installation months such as this should support the SREC market.

 

 

The amount of solar installed on a monthly basis is one of the most important tools used by market observers to determine if the New Jersey solar market will be overdeveloped compared to goals set by solar legislation. In previous years development outpaced sate goals. It is estimated that an average of 15 to 17 Mw a month is the pace of development needed. If more solar is installed than needed the SREC market can crash as it has in the past. If the pace of installation declines the SREC market will increase to encourage more solar development.

 

As shown by the chart above, the monthly rate of installations has been steadily decreasing.  The 6 and 12 month moving averages are close at 21.5 mw per month. In early 2012 the 6 month average was as high as 47Mw per month!

 

SREC pricing has been steady this year. We attribute this to 2 main factors. The first is the controlled pace of development and the second is electric suppliers hedging activities in preparation for the increase of SRECs required for energy year 2014. SREC demand increases over 140% from 596,000 in energy year 2013 to approximately 1,440,000 in energy year 2014. Energy year 2014 just started in June.

 

Legislation signed into law last year
rescued the New Jersey solar market from collapse in both solar jobs and values of SRECs used by investors in solar projects. Those investors are homeowners, businesses and schools in New Jersey with solar. Ratepayers without solar who are obligated to buy SRECs due to previous commitments set forth by the BPU also benefitted from the legislation.

 

In previous years the fall has been a time of light SREC volume due to weak SREC prices. We do not expect the market to drop this fall anywhere close to the $60 level that it had last year due to the above factors. Electric suppliers have been active in the spot market hedging forward production due to the fact that SRECs now have a 5 year life. They will most likely continue to procure SRECs at a steady pace in the spot market. We expect there to be an increased interest in buyers procuring 2 and 3 year contracts from large solar facility owners. (Flett Exchange is active in brokering both spot and forward contracts directly between electric companies and solar owners)

 

As always, we encourage solar owners to sell consistently during the year. If prices increase you should sell your production forward for 2 to 3 years.

 

If you have a large volume (100, 500, 1,000) of spot SRECs to sell call us directly on the trading desk. For large volume the prices are typically a few dollars over our spot price on the screen, we do not charge you commission, you get paid the same day and you do not have to execute pages of contracts.

 

We would like to thank all of our customers for your business. Use of our exchange helps us bring market transparency to the New Jersey SREC market. This helps both buyers and sellers make the market more efficient thus bringing more solar to New Jersey!


Posted in: New Jersey SRECs, Research, SREC


 



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