What’s going to happen to REC prices now that Solar Credits has passed?

14 Sep 2009

Over the last couple of months we have seen REC prices fall over $10 to reach the lowest level in more than 18 months. Now, with the introduction of the Solar Credits and the 5 x multiplier, many of us are wondering what this will mean for REC prices.

Like other commodities, REC prices are largely determined by the expected supply and demand of certificates.

PV currently accounts for around 7% of the REC market. The surge in applications for the governments $8000 rebate before the cut off in July, as well as the introduction of Solar Credits, will produce an increased number of RECs coming from PV. This will further contribute to the oversupply of RECs coming from Solar Water Heater and Heat Pump installations.

It is expected that while the levels of SWH and solar PV RECs continue to rise the REC price will remain under pressure. With the reduction in REC prices we may see some slowing in the growth of solar installations, however this is unlikely to impact much on solar PV installations until 2010, as the majority of systems being installed are supported by the $8000 rebate under the Solar Homes and Community Plan.