Now that APX has been selected as the platform for the NC-RETS registry to track the creation and transfer of SRECs in the state, we are gearing up for the implementation of the SREC auctions in North Carolina later this year. The registry should be implemented by July 1, meaning that systems can then begin registering and generating SRECs soon thereafter. We expect to have our first auction for NC SRECs when the market has had enough time to develop the appropriate supply of SRECs. Specific details on the rules governing the market are still to be finalized. We anticipate that the market will allow for exporting of SRECs out of NC-RETS and into other trading platforms for compliance outside of North Carolina. In addition, since NC LSEs will be allowed to count a percentage of their SRECs from out-of-state generators, we expect that there will be an option to import your SRECs from other platforms such as GATS for compliance in the NC-RETS platform. However, in-state SRECs will likely trade at a premium to out-of-state SRECs.
Many customers will ask us about registering in DC or PA first and selling there for now and then selling into NC. Our only point of caution is that your facility may be treated as an out-of-state facility if the SRECs are imported from another platform. In addition, it is unclear if you will be able to rescind registration in another registry at a later date and then re-register in NC. For this reason, we recommend that NC facilities wait to register in-state this summer before exploring opportunities out of state. This recommendation is based on there not being a dependable market in DC or NC to warrant the risk of being excluded from the NC in-state market.
Finally it is still unclear what the value of SRECs will be in NC since the NCUC has not and may not announce any penalty for non-compliance. Until clarity is reached on how the RPS will be enforced, the range of SREC values is undefined. Currently, we have heard values as low as $70/SREC and in the high $100s on the upper range. Given uncertainty in pricing, it may make sense to enter into a long-term contract at a price in this range, however, that same uncertainty drives the argument behind not entering into a long-term contract, especially if the price is below $100. Given trends we have seen in other emerging SREC markets, prices are more likely to rise above these values than drop lower than some of the prices we hear in North Carolina. The bottom line is that if you are getting $70 an SREC, it is unlikely that you will see the market trade lower than that, especially as more states come online. Whoever is buying your SRECs at that price will also stand to make a lot of money in the long run. Our advice would be to hold off if you can until there is a stronger indication in this market of what the pricing will be in the next few years. You want to avoid what happened 3 years ago in New Jersey when solar owners entered into long-term contracts at $150/SREC only to see the price go up as high as $680 in the spot market!
P.S. We have already begun signing up our first North Carolina EasyREC customers!