Nodal Exchange and IncubEx on Friday will launch a suite of Renewable Energy Certificate (REC) futures contracts, including several never-before-listed markets, including Washington, D.C., and Ohio Solar.
"Several of the contracts are first of their kind REC futures, meaning they have not been listed on any exchange before, so we're excited to build new markets there," IncubEx President and Chief Operating Officer Daniel Scarbrough told OPIS.
The "pioneering" RECs contracts also include Washington, D.C., Tier I, Ohio Non-Solar and several others in the New England Power Pool Generation (NEPOOL) association. The NEPOOL RECs contracts include Connecticut Class II and III, Massachusetts Class II, New Hampshire Class I and III, Rhode Island New RECs and Maine Class I, Scarbrough said.
"We believe this is a good time to be launching new contracts in the REC space," Scarbrough said, noting that there are 29 states, Washington, D.C., and three U.S. territories with Renewable Portfolio Standards, and many have active REC markets.
"More states are setting aggressive new renewable targets, so we see some exciting potential in these markets and are aiming for a full menu of REC futures," he said.
Customer feedback sparked the creation of the new contracts, and key customers include compliance entities and opportunistic players, Scarbrough said.
"We have not set market share targets, but rather are focused on adding more participants to our markets, helping them with whatever their needs are and assisting with any improvements in the trading cycle," he said. "As we do that, we believe the volume and market share will progress."
Nodal platform competitor Intercontinental Exchange (ICE) holds a futures contracts share for several environmental markets, such as California Carbon Allowances (CCA), and offers several RECs contracts.
The first suite of environmental product futures and options launched on Nodal in November 2018 and included CCA, Regional Greenhouse Gas Initiative Allowances (RGGI), New Jersey Solar RECs, PJM Tri-Qualified Renewable Energy Certificates and 11 other emissions and renewable contracts.
Looking forward, Nodal and IncubEx are definitely looking at other environmental markets in the U.S. and Europe, Scarbrough said, and noted a plan to announce details in coming months. "This is an exciting time to be developing new products in this space because there is a growing interest, need and demand for trading and hedging costs."
The Friday launch pends "relevant regulatory review periods," according to a Nodal and IncubEx statement.
--Bridget Hunsucker, bhunsucker@opisnet.com
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