Price interaction in state-level renewable energy credit trading programs

Interstate protectionism: the case of solar renewable energy credits

“…In contrast, the state solar requirement, a strong driver of the demand for SRECs, is only shown to have a statistically significant effect on SREC prices in the Tobit model specification of table 3, which might suggest that out‐of‐state supply of SRECs are a stronger driver of SREC price than in‐state demand. This result upholds the finding in Binder et al (2016) that SREC market prices are largely determined by supply‐side factors.…”

“…The results of a difference in differences model provided in the online appendix S1 also show a negative effect of the Maryland SREC market closure on electricity prices. Similar results in this context have been reported elsewhere (Binder et al 2016) and examinations of the effects of broader RPS requirements on electricity prices have produced both positive (Tra 2016; Woo et al 2011) and null effects (Maguire and Munasib 2018).…”

“…The monthly average SREC price in each state is modeled as a function of the state solar carve‐out requirement given as a percentage of retail electricity supply, year and state fixed effects, and an indicator variable that takes a value of one if the state SREC market is closed. Binder et al (2016) show that SREC prices are determined exogenously to the larger electricity price and REC price system. The authors suggest that the largest factor driving SREC prices is the variation in solar installation costs over time (Binder et al 2016).…”

“…Binder et al (2016) show that SREC prices are determined exogenously to the larger electricity price and REC price system. The authors suggest that the largest factor driving SREC prices is the variation in solar installation costs over time (Binder et al 2016). These changes are captured by the year fixed effects.…”