New Jersey Schools Must Incorporate Solar Power

Contact Bob C. srecgc@comcast.net

SOLAR SREC MARKET CRASHES

NJ SOLAR SREC VALUES MANIPULATED BY SPECULATORS

SREC GENERATORS SELL LOW DUE TO RUMOR AND HYSTERIA

A few months ago Flett Exchange LLC, who is one of the larger SREC traders in New Jersey, began predicting a solar crises in their newsletters suggesting that the SREC values were going to crash at the end of the energy year in May of 2011. They claimed that this was due to a projected over abundance of SRECs.

Suppliers/Providers of Electricity have a Solar Alternative Compliance Payment, (SACP), for the Energy year 2011-2012 of $658 for each credit they are short, of their Renewables Portfolio Standard (RPS). The RPS (SREC) requirement for the 2011-2012 Energy Year is 442,000 “credits”. For every credit (SREC) the Suppliers/Providers are short of the 442,000 at the end of the year, they will have to pay $658. If they can buy a credit from you or us for lets say $600, thats a great savings times 442,000!

Now if thats the case, why are SRECs selling right now for $176, and who is buying them? A few months ago when we began to recieve “newsletters” from the SREC “brokerage” houses predicting a “Glut” of SRECs in the 2011-2012 Energy Year. Flett Exchange LLC predicted as many as a possible 150,000 SRECs in excess of the 442,000 RPS Requirement, (SRECs). But just recently an article from SREC Trade, another “Brokerage” group, predicted a shortfall of SREC production this Energy Year of approximately 100,000. Who do you believe?

We made a call to Flett Exchange LLC and asked them if they had made their predictions based on Registered Solar projects that are on line and currently reporting generation, (this information would be hard facts), or applications for proposed projects to come on line this Energy Year, that are in the “que”, waiting approvals, pending financing, or any other “process” issues that may result in the project never being built? A sizeable number of projects that are applied for are cancelled for a myriad of reasons. Flett’s response was “both” which suggests to us that numbers in the predictions have no basis for SREC values to plummet to $150 from $600 the month before. The only up side to all of these predictions will be for the early broker/traders who are currently buying low and will be selling high later on in the year when the “generators” wake up and realize they may have been “duped”, and it will be too late by then.

These overproduction predictions have obviously caused a panic with the early 2012 SREC sellers. We’re not sure why? Are the sellers afraid they won’t be able to sell them later on in the year? You can hold your SRECs for 3 years. Our best guess is, the installers used the high-value SRECs as a sales tool which served as an incentive to Solar buyers to make the investment, claiming the value was in direct corellation with the compliance penalty payment. This made sense to the buyers, who based their financial planning on that premise. The crash in the SREC values has created a financial crises for a lot of the Solar customers who don’t have the resources to hold out for higher prices and are forced to sell at any price to maintain some type of cash flow to service their “solar investment debt”. We also believe there may be public entities, and the like, that aren’t relying on the SREC sales to pay a debt service on the installation.

The sellers have to understand that they are reacting to a prediction that may or may not come to fruition. Instead of selling off our SRECs for $150 at the beginning of the energy year, BASED ON HYSTERIA, when no one knows whether or not there really is going to be over production, it would make sense to all of us to maintain our price based on the compliance penalty payments and let the value of the SRECs decline at the end of the energy year when there may or may not be a true overabundance of SRECs, based on true supply and demand.

The trade speculators, are going to make a killing later on in the year when there may not be over production and the value of SRECs returns to a number that is in a closer relationship to the compliance penalty rate. All of these SRECs that are being purchased at this time for $150 and less will be back up in the $590 or better range.

It’s time for we the generators to take control of our SREC values, instead of the speculators. We need to set a “floor”, that is a bottom price, that we will offer our SRECs for sale. We suggest a floor of 10% below the SACP, which for this Energy Year is $658, that will set our “floor” price at $592! There are rumors that there are Legislators considering this approach to stabilize the market, but we believe the generators out there can’t wait for the Legislators and we can do this on our own! When you list to sell your SRECs, list no lower than $592, if you have already listed 2012 SRECs for sale, go back and change your price to no lower than $592! If there is an over production this energy year, let the prices adjust themselves at the end of the year when we know what the true numbers are, not the speculation numbers. Every generator needs to do this…..the holdouts can only hurt all of us…….!!!!

So spread the word, tell your friends, blog, tweet, and get the word out. The SREC generators are taking back control!

SREC Generators Coalition, you can e-mail us with questions or comments at srecgc@comcast.net