Sky-high prices for New England renewable energy credits (RECs) could see significant fluctuations following recent passage of the Green Communities Act in Massachusetts. The RECs currently sell in the mid-$40 range and are bought and sold between utilities and generators so utilities can meet the requirement of a state law in Massachusetts to buy a proportion of their power from renewable energy plant. Although the act strengthens the Massachusetts mandate, uncertainty colours the new law's effect on REC prices because the state's energy department must complete a feasibility study on the effect of green energy imports on the market. The study, to be released by November 1, will be followed by a comment and discussion period, meaning that the full effect of the green mandate on New England RECs will not be known before late this year. The jury is still out on whether REC prices will go up or down, says Andrew Kolchins from Evolution Markets, a New York-based brokerage firm. "We just hope that the regulatory policy works itself out fairly quickly," he adds. "Regulatory uncertainty hurts REC markets." Massachusetts law requires 4% green energy by 2009 and now calls for 25% by 2030. Prices of New England's RECs submitted to demonstrate compliance with the law are notoriously high, driven up by strong demand. There are relatively few open spaces for wind farms to meet that demand. Voluntary REC markets, meanwhile, see limited trading in New England because the compliance RECs price them out of the market. Nationally, REC prices vary greatly from region to region and project to project, but frequently trade in the $5-8 range.
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