MODELING SREC MARKETSWill Harrel

MA SYSTEM OVERVIEWFor 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

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

GOAL: FIND THE FORWARD PRICE CURVEThe 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

HOW DO WE ACCOMPLISH THIS?Multi-agent stochastic simulationSimulation run 100’s of times

◦Agents “learn” from outcomes in previous runs

Find averages and spreads◦Price and Capacity

≥50% at ACP,≥25% at price floor

≥50% at price floor

RESULTS—LOTS OF UNCERTAINTY

TRADITIONAL ACP

VARIABLE ACP

TRADITIONAL ACP

≥50% at ACP,≥25% at price floor

≥50% at price floor

VARIABLE ACP