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Price Convergence of 2017 and 2018 SRECs
July 27, 2017
As expected, the prices of the 2017 vintage New Jersey SRECs are starting to converge with the prices of the 2018 vintages. Prices for 2017 were trading in the $220 to $230 range in recent weeks and have moved down to the $170 level this week. After some up and down movement in the next few months they will be trading at a $5 discount to the 2018s which are now at $168.
The sudden move happened because there was an orderly expiration of the July delivery of the 2017 vintage SREC futures contract on Intercontinental Exchange. There was over 230,000 contracts in open interest in the July 2017 contract which is close to 10% of the whole years SREC obligation by all energy suppliers. Futures contracts can exhibit volatility in the last few trading days going into expiration if there is an imbalance of physical (SRECs) to deliver against the futures contract. For this reason the prices were held up for a longer period of time until the contract expired. The lack of volatility in this expiration means that all sellers had procured enough SRECs to satisfy delivery in the GATs by Monday, July, 31st.
The 2017 energy year is expected to be oversupplied by 7%. In the 2018 energy year it is expected that the installed solar in the whole state will oversupply the energy companies mandated compliance by about 14%. This is the reason why the 2018 vintage is trading at a discount to the 2017 prices last year. Of course the prices will move during the year as we see how much new solar is installed.
As always, we stress to our solar owners to sell consistently during the year to get an average price and not hold.
The Flett Exchange SREC team,
Mike, Shean, Kevin Brian and Joe
P.S. We have a new website, we hope you like it! Please, send us any feedback on the new site.
If you would like to sell your SRECs you can do the following:
1. Check our Sell-Now price on www.flettexchange.com and transfer them in GATS to "Flett Exchange,LLC" on GATS.
2. If you would like to try to get a higher price log into your Flett Exchange account and list your SRECs on our competitive marketplace. Buyers compete for your SRECs.
3. If you are old-fashioned and like to speak to a person feel free to give us a call at 201-209-0234.
If you still receive your payment by check you can switch to electronic payment. All you need is your Bank Name, routing # and Account #. This information is on the bottom of any of your checks.
1. Log into your Flett Exchange account and select "facility" and change your payment from check to EFT (electronic funds transfer).
2. Call us at 201-209-0234 and we will switch it for you.
Remember – transparency not only helps us make better investment decisions in solar but it also helps legislators and regulators make adjustments BEFORE it is too late! Suppport price transparancy by selling your SRECs on Flett Exchange.
If you would like to get daily SREC settlement prices (daily volume weighed average prices of actual trades on the Flett Exchange SREC trading platform) and other information such as monthly build rates as reported by the BPU follow us on Twitter.
GATS Transfer Walkthrough
Large volume sellers can call our brokerage desk (201-209-0234) for direct OTC spot and forward bilateral contracts. If you have more than 25 SRECs to sell call the trading desk and we can negotiate with the buyers to get you a higher price.
You can always ask us a question at
info@flettexchange.com
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