SREC Market Stability Anticipated
The 2012 SREC price slump was caused by a glut of large solar projects being built in the past year. The solar installation rate tripled between 2011 and 2012. On one hand that’s great, but it flooded the SREC market. The recent success of the Clearinghouse Auction has restored confidence in the regulation of the SREC market. Many industry experts now anticipate the return to a balanced market—one where SRECs can be easily sold quarterly, as they are produced and at respectable prices, as opposed to waiting until the Clearinghouse Auction every year.
SREC market stability is being fashioned by a series of actions by the Massachusetts Department of Energy Resources. First, they recently increased the 2013 and 2014 demand for SRECs to help close the gap caused by the dramatic growth in SRECs generation capacity. Second, they excluded any new large projects from applying for this program, curbing the recent flood of generation capacity. Large solar projects in the planning stages will be able to enter a future and separate “SREC II” program, but this one is closed to them. Matching the anticipated capacity with demand will bring stability and certainty to those this SREC program. Finally, the DOER showed that they will do what is necessary to restore confidence in the program. That confidence itself will go a long way toward keeping a reasonable market dynamic.