posted on Tuesday, January 16, 2007 10:26 AM by Gunnar Birgisson

Massachusetts REC Prices Remain High Following First Forward Auction

Massachusett’s first-ever forward auction of renewable energy credits (RECs) held on January 10 did little to decrease the price of RECs in the state.  The auction was held on behalf of the Massachusetts Technology Collaborative (MTC), a quasi-public economic development agency responsible for administering the state’s Renewable Energy Trust.  The Trust promotes clean energy technologies. 

The auction dispensed 24,000 RECs for 2007, representing the output of a 50-MW generator recently converted to burn biomass instead of coal.  The MTC previously had contracted with the facility’s owner, Public Service of New Hampshire, for a portion of the RECs expected to be produced.  The forward auction — even if just for one year at a time — should help bring a more predictable revenue stream to renewable energy projects. 

The highest bids in the auction reached $54.50/MWh, which comes close to the penalty payment that utilities and retail suppliers incur for failing to comply with state-imposed obligations to procure specified amounts of renewable energy.  With a greater supply of RECs, prices are expected to fall below the level of the penalty.  The current prices demonstrate that while interest in and demand for renewable energy is strong in the region, limited siting opportunities for renewable generation has constrained supply and kept prices higher than expected.