Thursday, May 10, 2012

Just Came Across a Cut-rate SREC Deal

I just came across a deal out there in Solar Land.  If a solar energy producer is willing to lock into a contract for the next three energy years at $120 per SREC, somebody might buy them.

Please excuse my flippancy (I made that word up, I think).  Perhaps if I inquired further, I'd learn that in return for the commitment there'd be some guarantee that all SRECS generated would be purchased at this price.  

For me, it's a moot point because I wouldn't make that deal anyway.  This offer -- agreeing to buy SRECS for a very low price (the lowest it's been in years!) -- well, just doesn't appeal to me, to say it as politely as possible.  I don't think I need a long-term contract to sell SRECs at a price like that.  Even if I did, there's not much to lose by not selling them, if that's the going rate. 

I'd rather take my chances that there will be some legislative modifications at some point over the next three years to artificially boost the price (after all, the SREC market is artificial anyway -- customers buy them because they are required to by law).  I don't think changes are imminent, but it seems unwise  to gamble that nothing will change all the way through energy year 2015.  I don't see this as a mutually-beneficial arrangement.

I've already been contacted by some mavericks who are interested in a grass-roots movement to institute a voluntary price floor, in order to drive up the price.  The point the mavericks make is that if we didn't panic and sell them at these fast-dropping prices, we could push the price back up.  Now, I don't understand the market well enough to say whether or not this is possible, but my gut feeling is that we couldn't pull it off.  On the other hand, even though I'm not signing on with said mavericks, I'm also not going to wave the white flag and lock in at the lowest price the market has seen in years.

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