FAQs
Use the navigation bar below to view answers to some of our Frequently Asked Questions regarding:
- Renewable Energy Credits (RECs) and Solar Renewable Energy Credits (SRECs)
- Requirements for electric meters and solar monitoring solutions
- Partnerships with Sol Systems
- Payments for SRECs
- Sol Brokerage, our newest product offering for New Jersey and Massachusetts system owners
About RECs & SRECs
1. What are Solar Renewable Energy Credits (SRECs)?
5. Are RECs and SRECs paper certificates?
7. How much will my SRECs be worth in the future?
10. Why do SREC prices vary state by state?
11. How do I start producing SRECs?
12. How many SRECs will my system produce?
13. How will Sol Systems know how many SRECs my system is producing?
14. My system is already operational, will I receive SREC credit for past energy production?
15. What happens to my SRECs if I move?
16. Does my system need to be grid-tied in order to produce SREC's?
17. Can I sell electricity back onto the grid and also sell SRECs?
1. What are Solar Renewable Energy Credits (SRECs)?
Renewable energy credits, or RECs, are tradable commodities that represent the green attributes associated with energy generated from renewable energy resources, such as sunlight, wind, or water. One REC is generated every time one megawatt-hour (MWh) of clean, renewable electricity is produced. A REC allows someone to say “this is clean energy and I own it.” Solar renewable energy credits or “SRECs” are simply RECs generated from solar power.
RECs are valuable because some states have passed legislation requiring energy suppliers to provide a certain percentage of their electricity from renewable energy sources. This type of legislation is called a Renewable Portfolio Standard (RPS). Under certain types of renewable portfolio standard (RPS) legislation energy suppliers must either produce a certain amount of solar electricity or purchase SRECs.
An RPS requires that energy suppliers in a certain state produce a proportion of their energy from renewable energy. To meet these RPS requirements, energy suppliers can (1) develop their own renewable energy facilities such as solar plants or wind farms to produce RECS, or (2) purchase RECs from others that own renewable energy facilities. Under certain renewable portfolio legislation energy suppliers must secure a subset of energy from solar energy, often called a “solar carve-out”. Under the solar carve-out, a subset of the required renewable energy must come from solar systems. Because developing renewable energy facilities can be a costly and complicated endeavor, many utilities choose to purchase RECs from homeowners and businesses.
If a utility fails to meet a state’s RPS requirements by securing the necessary number of RECs, it must pay a penalty called an Alternative Compliance Payment (ACP). Certain states have RPS legislation that requires a subset of renewable energy be generated from solar energy (this is called a solar carve-out or set-aside). Generally, this is accomplished by establishing a higher ACP for solar energy than for other technologies so that energy suppliers are financially incentivized to purchase solar energy specifically. SRECs are often more valuable because of this higher ACP.
5. Are RECs and SRECs paper certificates?
No, RECS are electronic certificates that receive a unique ID number. RECs and SRECs are monitored, counted, and stored on attribute tracking platforms such as PJM-GATS or NEPOOL-GIS.
The value of an SREC varies based on a number of factors. Some of the major factors include:
• Value of Alternative Compliance Payment (ACP)
• The number of qualified generators producing SRECs (SREC Supply)
• The legislated demand for SRECs (SREC Demand)
SREC prices tend to be high if ACP values are high, SREC supply is low, and SREC demand is high. The higher the demand for SRECs in a particular state the more this state’s SRECs are worth. Alternatively, SREC values tend to be low if the ACP values are low, SREC supply is high and SREC demand is low. If there is little or no demand for SRECs in a particular state the state’s SRECs will be worth less.
Because some states have an RPS with a higher alternative compliance payment (ACP) for utilities that do not meet their solar obligations (effectively a higher penalty fee), SRECs often tend to be much higher in value compared to wind RECs, biomass RECs, or other types of RECs.
7. How much will my SRECs be worth in the future?
That is difficult to determine, and few actually know. SREC prices will depend in large part upon SREC supply, SREC demand, and the Alternative Compliance Payment (ACP). Although SREC supply will increase as more solar systems come online, SREC demand is also legislated to increase in all states with a RPS. However, the ACP is set to drop in many states, which is meant to reflect a drop in the costs of solar technology. One of the main benefits of signing up with Sol Systems is that we offer SREC financing solutions which remove the risk of fluctuating SREC values. For example, Sol Annuity provides a 5 year price guarantee.
The volume of SRECs that are supplied in a state is directly proportional to the size (and number) of solar systems registered in a state to produce SRECs. The more solar systems that are producing SRECs, the greater the supply, and the lower the SREC price in that state (all else being equal).
The volume of SRECs that are demanded in a state is directly proportional to the overall RPS requirements for that particular state. This number is typically legislated to increase on a year by year basis until around 2020. SREC demand for each state is set out below.
10. Why do SREC prices vary state by state?
SREC prices vary state by state because states have different regulations that impact the value of SRECs. In states that enforce a Renewable Portfolio Standard (RPS) and a solar carve-out with an Alternative Compliance Payment (ACP), the value of SRECs tends to be highest (New Jersey is a good example of a state with a high ACP).
In some cases, SRECs produced in states that do not have an ACP or RPS may still have value if they can be sold across state borders.
11. How do I start producing SRECs?
After you register your system with Sol Systems through our company's easy online tool (available at www.sellmySRECs.com) and provide us with a signed contract, we will proceed to register your solar energy system as a qualified renewable energy generator with the appropriate regulatory authorities.
Once this process is complete, we then certify your system with the relevant REC trading platform such as the PJM Generation Attributes Tracking System (PJM-GATS) or the NEPOOL Generation Information System (NEPOOL-GIS). These regional trading platforms track the energy generated by each system and award the appropriate number of RECs (in equivalence to the energy generated).
12. How many SRECs will my system produce?
SREC production directly correlates to the solar system size, location, and equipment used, among other factors. To obtain a rough estimate of production, you can use PV Watts, an online tool developed by the National Renewable Energy Laboratory. PV Watts estimates the amount of electricity produced by a solar PV system based on nameplate capacity, location, tilt, and azimuth. Please visit the PV Watts website and enter your system specifications in order to receive a production estimate.
13. How will Sol Systems know how many SRECs my system is producing?
Sol Systems tracks your SREC production through PJM-GATS or in the case of Massachusetts, NEPOOL-GIS, to determine how many SRECs your system is producing. Depending on your location and system size, PJM-GATS and NEPOOLGIS will award SRECs based on meter readings or production estimates. Only small/residential systems, generally less than 10 kW in size, can qualify for estimated energy production, and only in selected states.
14. My system is already operational, will I receive SREC credit for past energy production?
It depends. Each state has different regulations for awarding retroactive credits for past production. In the majority of cases, we will be able to get you credit dating back to January of the calendar year in which we register your system. For example, if your system has been producing electricity since August 2009, but you sign up with Sol Systems in March 2010, you will receive credit for all energy produced since January 1, 2010.
Please double check with Sol Systems to receive state specific information. You may email Sol Systems at info@solsystemscompany.com.
15. What happens to my SRECs if I move?
If you decide to move during your contract with Sol Systems, you have the choice to either assign the SREC income rights to the new homeowner or you must notify the new homeowner that he will be unable to sell SRECs from the system. Please contact Sol Systems at info@solsystemscompany.com if you are planning on moving to obtain the necessary paperwork.
16. Does my system need to be grid-tied in order to produce SREC's?
Yes, only grid-tied systems qualify for SRECs at this time.
17. Can I sell electricity back onto the grid and also sell SRECs?
Yes. Most states have net metering rules which provide you with a certain amount of money per kWh that your solar energy system produces. Selling your electricity back to the grid does NOT prevent you from selling your SRECs. You can sell your electricity to the grid and also sell your SRECs to Sol Systems.
Please visit the Database of State Incentives for Renewable Energy (DSIRE) at www.dsireusa.org to obtain state specific information on net-metering regulations.