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Modeling SREC Markets

Modeling SREC Markets. Will Harrel. 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

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Modeling SREC Markets

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  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

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