Modeling SREC Markets

1. Modeling SREC Markets Will Harrel

2. MA System Overview • For every MWh of solar photovoltaic (PV) energy produced, 1 Solar Renewable Energy Credit (SREC) is created • These SRECs are sold from the solar generators to load-serving entities (LSEs), who must purchase a certain number of SRECs • If an LSE does not meet its requirement, it must pay the ACP • The ACP is currently $600 per SREC • This acts as a price ceiling for SRECs • Excess unsold SRECs can be sold to MA government • $300 per SREC with a 5% fee • This acts as a price floor

3. MA System Overview (continued) • The total requirement for the next year is set using a formula • Initially 30 MW ≈ 34,000 SRECs • The requirement for an individual LSE is proportional to its market share

4. Goal: Find the Forward Price Curve • The forward price curve is based on two categories • Decisions made by agents • LSEs • Generators • Randomness in the system • Decision profiles of other generators • Costs, electricity price, future ACP, and more

5. How Do We Accomplish This? • Multi-agent stochastic simulation • Simulation run 100’s of times • Agents “learn” from outcomes in previous runs • Find averages and spreads • Price and Capacity

6. Results—Lots of Uncertainty ≥50% at ACP, ≥25% at price floor ≥50% at price floor

7. Traditional ACP

8. Variable ACP

9. Traditional ACP ≥50% at ACP, ≥25% at price floor ≥50% at price floor

10. Variable ACP