Along with our economic downturn and troubles on Wall Street, the market price for Massachusetts Renewable Energy Credits (RECs) has fallen 50% from its highs last spring.
Renewable energy goals for Massachusetts are mainly established through its Renewable Portfolio Standard (RPS), a legislated program that requires total sales of Retail electricity meet a minimum percentage of new renewable generation each year.
The Massachusetts Technology Collaborative (MTC), a quasi-public agency responsible for promoting renewable generation in the State, actively provides public financing for renewable energy projects as one way to meet the State's clean energy goals. In return, MTC receives a portion of the RECs generated by these projects on a long term basis, and sells them.
On October 8, the MTC held an auction of its current year (2008) RECs and a forward sale of 2009 RECs. In total, MTC auctioned 7,683 Massachusetts and Connecticut renewable certificates from 2008 and 26,000 Massachusetts renewable certificates to be generated in 2009.
The results of the auction were mixed depending on your perspective. Wind projects in New York and Canada, racing to participate in the Massachusetts RPS market, have helped the state meet its goals, suggesting the RPS is working. With the minimum percentages met, prices dropped. The 2008 RECs sold at half of their value from a few months ago, and MTC was unable to secure an acceptable bid for its 2009 RECs, as the market anticipates further declines.
However, if wind and other renewable developers were anticipating high REC values, the economics of the RPS are no longer as attractive and could well slow or even stop development. The question becomes what will the State do in this situation?
Windaction.org warns we're in an unsustainable boom and bust scenario, that rewards speculators for playing the REC market rather than effectively producing useful reliable electricity.