Start a discussion on why REC prices are falling? Feel free to comment on the post.

At around $28 dollars, the answer is that it’s extremely difficult for us to tell, as the price is likely to remain under pressure until we see a better balance between the demand and supply for RECs. This means a probable reduction in the number of renewable projects reaching financial close and construction stages.

The REC requirement with the RET scheme does increase sharply from 2014 onwards (see graph below), so we should see stronger commitment for new renewable generation investment before then in order to meet the increasing targets. In the mean time we have market tension between a short term over supply and a longer term deficit.

However as the REC price falls we can expect large electricity companies and traders to come into the market and buy cheap RECs to meet future requirements, which potentially puts a floor on the REC price.

New RET Scheme Targets.