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Why the drop in NH REC price?

24 May 2017
Knollwood Energy

To our NH customers,

We and our installer partners have been receiving a lot of questions regarding the recent REC payment.  I hope this brings some clarity as to why the sudden drop in the REC price.

The significant drop in the per REC price is due to a reduction in the demand for RECs.  New Hampshire’s Renewable Portfolio Standard (RPS) statute, RSA 362-F that created the demand for solar RECs, requires each electricity provider (utility company) to meet customer load by Purchasing or Acquiring certificates that represent generation from renewable energy sources based on total megawatt-hours supplied.  The RPS for a Class II solar facility is set at a very small .3% of the electricity sold each year.  Without an increase in this percentage rate, the supply has already and will continue to far exceed the demand.

As stated above, there are two ways the electricity provider can satisfy their RPS obligation They can either Purchase RECs or Acquire them.

Purchase – Renewable Energy Credits (RECs) from facilities registered to create RECs can be sold to the electricity provider.  All Knollwood Energy customers are in this category.  The price the utility pays for a REC is based on supply and demand.

Acquire – The electricity providers are allowed by state law to subtract a percentage of all net metered systems that DO NOT REGISTER TO CREATE RECs from their RPS obligations.  By subtracting this percentage, the electricity provider is able to take a percentage of these facilities and satisfy some of  their requirement for FREE.  It is impossible to be able to predict how much the utility will be able to acquire from unregistered systems.  Basically, using a set formula, the state determined that there was about 18MW of solar installed but not registered for RECs.  Again, according to the formula established by the legislature, this reduced the demand from .3% to .06%, or dropping the requirement to purchase by about 80%.  As soon as this information became public, demand for the RECs plummeted and prices fell.

As shown above, there is a growing problem in the class II solar REC market.  Since the RPS requirement is very small,  1)  The utilities are able to satisfy a significant amount of their RPS requirement without the need to purchase RECs because many new and older arrays are not register for RECs.  2)  As more systems are being installed, the supply exceeds the demand.

Legislation to increase the demand for SRECs, SB129 is going to be voted on June 1, 2017.  It is imperative that this bill is passed.  It does not address that the utilities can satisfy some of their requirement for free but it does increase the base level of demand.

http://gencourt.state.nh.us/bill_Status/billText.aspx?sy=2017&id=957&txtFormat=html

What you can do to increase the demand for solar in NH:

Contact your legislature and encourage them to vote for SB129.

All solar arrays regardless of how old must be registered for RECs.  Please have everyone you know with a solar array contact Knollwood Energy asap.

Thanks,

Alane Lakritz

President

Knollwood Energy of MA LLC

862-432-0259

www.KnollwoodEnergy.com

Your best resource for selling and buying Renewable Energy Credits!

About the Author
Knollwood Energy is focused on the renewable energy markets. Our goal is the expansion of renewable energy across the United States. Our many years of expertise in trading and finance will help all of our clients in either the compliance or voluntary markets.

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