Industry Updates

Industry Update: Basics

May 21, 2018

As we near the end of the Q4, 2017 trading period, April 15-June 15, we are seeing the market move closer to a more manageable level. At the beginning of the Q4 trading period on April 15th, 2018, 412,331 Alternative Energy Credits (AEC's) from liquid biofuels were minted and flooded the market. This caused the previous levels of $20-$22 an AEC to fall.  This large of a supply of AEC's has never and will never enter the market in one trading period again. This large flooding of AEC's was due to the minting of retroactive AEC's generated from biofuel distributors from 2015-2017 and a full 20% of the AEC market was supplied by liquid biofuels in one quarter. Moving forward, liquid biofuel AEC's will be minted on July 15th and January 15th and only 10% of the market will be minted each trading period. Therefore, in the Q2 trading period, we will see a maximum of 205,000 AEC's enter the market from liquid biofuels, and the Q4 trading period will see the same. As the Q4, 2017 trading period ends, we are starting to see prices slightly rise again, although staying far below the previous quarters trading prices. As we move into the 2018, I anticipate that prices will start to move into the $15-$18 range and remain steady there. The Alternative Compliance Payment (ACP), which is the fine that electric retailers must pay unless they purchase AEC's to fill their obligations, is set at $22.66 for 2018. AEC's will always stay below that level but going into the 2018 trading period the prices will continue to rise. For biofuel distributors, Q1 & Q2 sales will be reported through your aggregation on July 15th, 2018. If you do not have an aggregator that you are working with, please reach out to us and we would be happy to work with you and report your Q1 & Q2 biofuel sales.