How can you make well-founded business decisions based on the future value of New England’s Class I RECs? (Hey solar – we’re talking to you – but not just you)

If you are a New England solar developer, investor, or owner, or are looking to sell or buy solar assets, in many market niches you will be faced with a critical question: what are your renewable energy certificates (RECs) going to be worth?

This was not always the case – first generation solar incentives and programs monetized REC values directly.  And today, some programs still do – see Massachusetts’s SMART program, Rhode Island’s REGrowth program, or Connecticut’s NRES and RRES programs.  However, an increasing number of solar incentive programs in New England leave solar project developers and owners relying on uncontracted Class I REC revenue.  Maine Net Energy Billing (NEB), Massachusetts and Rhode Island net metering (NM), Rhode Island Virtual Net Metering (VNM), and perhaps largest of all, Massachusetts SREC I and SREC II (MA SREC, the last of which roll out of SREC eligibility by 2027) all leave the REC in the hands of the project proponent.  In addition, recent Maine Tranche 1 and Tranche 2 RFP winners have received energy-only contracts, and this approach could be repeated in upcoming procurements.  For these projects, key questions include:

• New / early development projects: Does my project pencil out?
• Contracted projects: What can I get from RECs to make projects financeable?
• Merchant NEB, NM, VNM, Tranche 1/2, and MA SREC: How can I maximize my revenues? Am I leaving money on the table?
• Sellers of projects or project portfolios: What should I assume for REC revenue, what can I get, how will buyers value projects?
• Buyers of projects or project portfolios, and their financiers: What can I count on for REC revenue? Is there a floor price? What is the potential upside? What can an investment or lending committee rely on?

These questions aren’t easy to answer, and most available data sources are lacking in one way or another:

• REC broker quotes and over the counter or exchange traded values are short-term, reactive, illiquid, and fail to capture unfolding uncertainties.
• Typical market forecasts offer a curve that usually ignores price-driving market dynamics and lacks the context necessary to understand the cause-effect relationship of unfolding uncertainties. They also regularly ignore critical differences between state policies and resulting arbitrage that drives market REC prices.

Market dynamics are evolving constantly — market supply delays, reduced load forecasts, new legislation and policy.

We’ve got you covered: Since 2005, SEA’s New England Renewable Energy Market Outlook (NE REMO) has provided market participants with deep analysis and nuanced insight to help them develop a well-founded market view and make good decisions in the face of uncertainty.  NE REMO assesses the probability and magnitude of market shifts over time, updated regularly to capture resolution of prior uncertainties and the emergence of new ones. The chart below illustrates market movements over time. Can you explain and defend your current Base Case? Do you fully understand what could cause it to change, by how much, and in each year? Do you know which ‘path’ you are on?

NE REMO is the gold standard in REC market analysis and forecasting. But don’t take our word for it, ask around and odds are good that your counterparties have shaped their market views using REMO.NE-REMO provides detailed insights on Class I REC price dynamics over time, by market

Whether you are a REC-sensitive solar player, RPS-obligated load-serving entity, developer assessing whether a new project will pencil out, or an owner of merchant RECs, how do you quantify what changes in REC markets mean for your business?  SEA’s latest NE REMO Market Fundamentals Briefing and Outlook (2024#2) was released in late September and captures the latest drivers: supply delays, end-of-session legislative surprises, the latest OSW procurement announcements (and non-announcements), long-awaited refinement of major DER programs.  Our latest briefing provides forecasts of supply, demand, REC prices under several scenarios bounding the potential futures and illuminating the signposts for what could cause prices to change, when, and how. Contact Jason Gifford for more information and to purchase this valuable briefing.

Do we have your attention? See what you’ve been missing and feel empowered to make critical commercial decisions with confidence. 

REMO 2024#2 is available now. 

Contact us to arrange a demo and receive a price quote.