In 2009, the solar alternative compliance payment (SACP or ceiling price) was increased from $300 to $711 – leading to an immediate jump in market pricing. Over the past few years, the weighted average SREC price used by the author has been skewed downwards by contracts signed when the SACP was $300 (for example, a 5-year contract signed at $100 in 2008 is still transferring SRECs at $100 and being reflected in the data). As those contracts have rolled off, the weighted average price has gradually increased. Therefore, it is an inaccurate representation of what has happened in the market, where prices rose to $680 (spot) and $500 (forward) in 2009 and have since declined to $220 (spot) and $150 (forward).

Furthermore, NJ SREC prices over the past 3 years have not been set by the market, they have been set by the SACP. This is because in each of those years, New Jersey fell significantly short of the state’s RPS solar carve-out. In 2012 and 2013, there will be an oversupply of SRECs and pricing will be set by the market. We have already seen the beginning of a correction as prices have dropped from $640 to an extreme low of $140 in a short period of time. Since then, prices have risen back up to the low- to mid-$200s. We suspect that it may continue to correct upwards before settling into a true “market” price in the short-term. However, in the long-run, given the declining cost of installing solar, the SREC market will do what it is intended to do and phase out as SREC prices trend to zero. That long-term sustainability is precisely why SREC programs have proliferated while FiTs are going through a re-branding as “Clean Contracts”.