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The majority of SREC generators hold on to the view that New Jersey Solar Renewable Energy Certificates SREC prices will rise towards the $300 SCAP if there is a shortage of 2008 vintage SRECs. This view leads the sellers to command higher prices then the current market feeling that the prices will squeeze at the end. This is a very risky approach. If the sellers do not achieve their price they may in fact get nothing for their SRECs. This happened last year and there was not even a shortage of SRECs like there is this year. Hundreds of 2007 SRECs went worthless because sellers forgot to sell or got greedy and did not pull the trigger to hit a bid.
We would like to point out that buyers need to either buy SRECs or pay the $300 cap. The buyers have been paying the highest prices ever for the 2008 vintage NJ SRECs compared with any other year. Prices on Flett Exchange have not dipped below $250 for the past 3 months. Buyers have been aggressive all year long accumulating their SRECs and if there is in fact a shortfall then the buyers will be forced to pay the cap regardless because there are not enough SRECs. This shortfall may in fact cause the price for SRECs to drop in the last month instead of rise as most SREC producers expect.
The reason for a fall in SREC prices is based upon the pure math that if a buyer needs to buy, and some will have to be at the cap limit of $300, then to achieve a lower average price any SRECs bought on the open market will have to be at lower levels. Sellers have 3 choices at this time. One, sell at the current market of $255, two, attempt to sell at higher prices that have yet to trade, three, if you cannot achieve a higher price participate quickly as the market bids drop off to avoid your SRECs from expiring worthless. We feel from a risk/reward approach it is not worth holding out to sell for an extra $15 and risk the market dropping off and having your SRECs going worthless. We saw people get stubborn last year and get nothing for their SRECs.
Whatever your approach to selling SRECs, an account with Flett Exchange will enable you to obtain more pricing information and expand your ability to sell your SRECs.
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