The New Jersey SREC market has just reached a five month high of $275.00! The market has moved up because of the release of the final version of the New Jersey Energy Master Plan and the anticipation of introduction and possible passing of solar legislation. We think there is a very high chance for market volatility in the next few weeks. I just wish I could tell you which way it will go!

The energy master plan, released last week, suggested increasing the amount of SRECs purchased by electricity providers to correct the recent overbuild and subsequent dropping SREC values. The solar legislation that is expected to be introduced this month will most likely mandate an increase in SRECs purchased.The state legislature and Governor will have to approve it first. It is expected that if the legislation increases costs too much it will not be signed by the Governor.

We see three potential scenarios:

1. No Legislation: The SREC market will most likely drop under $150 and stay low for years unless there are new laws in the future.
2. Legislation with slight increase in RPS: SREC prices may stabilize between $250 and $350 with potential spikes higher
3. Legislation with large increase in RPS: SREC prices will most likely rise to $400+ for current year

What you may want to do if you have SRECs to sell: 

1. If you don’t want to take the risk of the market dropping, sell now and take advantage of the $125 rise over August lows.
2. Place orders above the market to sell at levels $20 to $70 above the market to take advantage of a “pop” in the market that does not maintain momentum and later drop off.
3. If you think the legislation is going to be strong, wait for it to come out and try to maximize your profits if the market continues to rally.