Solar Renewable Energy Credits

 

What Are Solar Renewable Energy Credits?

Solar Renewable Energy Credits (SRECs), also known as Solar Renewable Energy Certificates, represent the green attributes of the electrical energy generated by photovoltaic (solar) power. SRECs can be traded on an open market using the same metrics as electricity. One SREC amounts to the green attributes of one megawatt hour (1000 kWh) of electrical energy, the approximate amount of energy generated by a 1 kW PV system in a year.

A renewable portfolio standard (RPS) is a state policy that requires electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. Currently there are 24 states plus the District of Columbia that have RPS policies in place. Together these states account for more than half of the electricity sales in the United States. Utility companies are penalized with an Alternative Compliance Payment if they don’t meet the RPS.

 

Delaware SREC Procurement Program

Delaware has provided an SREC Procurement Program for the past 3 years (2012, 2013 & 2014), designed to meet the guidelines of the Renewable Portfolio Standards Act.

Key Program Components
SRECs were procured from the following Tier schedule for Delmarva Power for the 2014 compliance year:

New Systems
(systems with final interconnection approval after April 12th, 2013)
Tier Nameplate Rating – (DC at STC) SRECs in Tier
N-1 Less than or equal to 30 kW 3,800 Pool*
N-2 Greater than 30 kW but less than or equal to 200 kW 1,600
N-3 Greater than 200 kW but less than or equal to 2 MW 1,600
Existing Systems
(systems with final interconnection approval before April 12, 2013)
Tier Nameplate Rating – (DC at STC) SRECs in Tier
E-1 Less than or equal to 30 kW 3,800 Pool*
E-2 Greater than 30 kW but less than or equal to 2 MW 3,800 Pool*

2014 DE SREC Solicitation Results

The results by tier are as follows:

Tier                          Low        High         Weighted Average
N1, E1, E2 Pool       $0.00     $300.00   $53.44
N2                            $34.46   $141.23   $88.84
N3                            $98.73   $98.73     $98.73

*The lowest priced bids from tiers N1, E1, and E2 will all compete for the same pool of 3,800 SRECs.

All Tiers will be competitively bid. Each winning bid will enter into a contract with a term of 20 years. For the first 7 years, the SREC price will be the accepted bid price. For the remaining 13 years, the SREC price will be fixed at $35 per SREC.

Changes from 2013 Program

The 2014 program has only three substantive changes from the 2013 program:

  • Tiers N1, E1, and E2 will all compete for the same pool of 3,800 SRECs. Bidders will still enter only one bid for each system based on the system’s size and status. The lowest price from all three of these tiers will be used to fill the 3,800 SREC allocation.
  • The price per SREC for years 8-20 of the contract has been changed to $35/SREC.
  • The bid tie procedure has been changed to first consider all systems with both Delaware labor & equipment, before entering the 5 day rebid period.

SREC Aggregation Services

CMI Solar & Electric has partnered with Sol Systems in order to provide our customers with the best solutions in SREC financing.

Sol Systems provides flexible brokerage SREC solutions that allow you to benefit from the risk-reward of spot-market rates with no effort required. Sol Systems will monitor SREC trading platforms and legislative changes, and will use its market expertise to establish a floor price and a target price for your SRECs. It will only enter into SREC purchase agreements that clear the aggressive floor and achieve the target SREC price. Each quarter, you will receive a payment for each SREC produced by your system. This payment will mirror the weighted average of SREC sales for that quarter less a 5% brokerage fee.

There are a number of financial incentives available to help you reduce the cost of a solar project and improve your return on investment. In addition to federal and state incentives, one of the best ways you can improve your solar project’s economics is to monetize the SRECs associated with your solar project.

 

How Much Are SRECs Worth?

The value of SRECs in a given state is quantified by three major factors:

RPS Compliance Fee Schedules
Compliance fee schedules dictate how much energy suppliers must pay for each SREC they fail to produce or acquire. As a result, SREC prices usually trade at or below the dollar amount of these compliance fees. In some states, the fee remains the same dollar amount year over year while in other states, like New Jersey and Ohio, the fee decreases over time, which will result in a decrease of the price for SRECs over time.

SREC Supply
SREC supply will increase in the coming years. As solar panel prices fall, solar will become more affordable and more popular. As more solar systems are installed, more SRECs will be available on the market. Additionally, as credit markets improve, more large projects will become financeable and built, resulting in more SRECs. Both of these trends will put downward pressure on SREC prices.

SREC Demand
SREC demand will also increase in the coming years. The demand for SRECs in a given state is set by RPS legislation that determines the overall number of SRECs that energy suppliers are required to acquire each year, and this number quickly increases year over year in every state with an RPS.

Because SRECs are a compliance commodity, if there are more SRECs supplied than demanded in a given state market, the pricing for excess SRECs will likely be equivalent to pricing seen on voluntary SREC markets, which today trade at $15-$30 per credit.

Because of these factors, SREC values can vary dramatically from state to state. To find out more information about the requirements in your state, please visit www.dsireusa.org.

 

How Can I Monetize My SRECs?

Most residential and commercial system owners have limited options for selling their SRECs. Energy suppliers are not typically willing to engage directly with small system owners and most system owners have little price leverage. That’s why we have partnered with Sol Systems (www.solsystemscompany.com), the largest SREC aggregator in the country, to provide you with reliable financing solutions that are tailored to fit your needs.

Sol Systems is dedicated to making solar more affordable for solar project owners. Sol Systems offers:

  • Competitive Pricing: Sol Systems utilizes its market expertise to secure the best pricing and secure products. Whether customers select Sol Systems’ long-term SREC purchase agreements or brokerage solutions, they can rest assured that they are getting quality returns for their SRECs.
  • Quarterly Payments: Sol Systems makes quarterly payments for customers who choose production based payments or the brokerage option.
  • Streamlined Registration Process: When you sign up with Sol Systems, it will manage the registration and certification process with all required regulatory agencies so your system begins producing SRECs promptly.
  • Best-In-Class Customer Service: Sol Systems has knowledgeable, hardworking and friendly staff members dedicated to serving our customers. Their goal is to de-mystify the SREC market and offer you a seamless SREC transaction process.

To learn more about your SREC management options, please visit the Sol Systems website at www.solsystemscompany.com.