Price Interaction in State Level Renewable Energy Credit Trading Programs

Using a Vector Error Correction Model approach, relationships between REC, SREC, electricity, and natural gas prices in Massachusetts and Connecticut are estimated. Confirming previous studies, the results show that REC prices respond negatively to a shock in electricity prices. Additionally, SREC prices are determined mostly by forces outside of the estimated system. Preliminary evidence is found that REC markets across states are related, but that the markets are fragmented, possibly with high transaction costs. Further analysis is required to clarify some of the results which are currently difficult to understand.

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Paper 6820

 Record created 2017-04-01, last modified 2019-08-30

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