What are SRECs? A Solar Renewable Energy Certificate, known as an SREC, is a solar energy attribute representing 1,000 kilo-Watt hours (kWh) of electrical production.
For example, a solar system that produces 10,000 kWh per month would be awarded 10 SRECs each month.
The
electrical production from each approved solar system in New Jersey is
provided to the Generation Attribute Tracking System (GATS), an
organization who awards SRECs to solar system owners.* The SRECs
received each month by the solar system owners may be sold for cash to
SREC brokers, who then sell blocks of SRECs to the utility
companies.
* SRECs are not affected by the savings you receive on your energy bill.
What is Their Purpose?
In order to encourage the deployment of
renewable energy solar systems, the State of New Jersey's Clean Energy Program
(NJCEP) has established a Renewable Portfolio Standard (RPS) whereby
electricity utilities (such as JCP&L, PSE&G, and Conectiv) must secure
a portion of their electricity from solar renewable energy sources.
The electric utilities are required to
show this compliance through the use of the SREC program.If the electricity utilities cannot
produce sufficient solar electricity themselves, they must purchase the SRECs
from other solar electricity producers in New Jersey.
If the utilities do not obtain
sufficient SRECs to satisfy their RPS allocation, they are required to pay an
"Solar Alternate Compliance Payment" (SACP). The NJCEP has set the
SACP price schedule for years 2009 through 2016 as follows:
Energy Year
2009
2010
2011
2012
2013
2014
2015
2016
SACP .
$711
$693
$675
$658
$641
$625
$609
$594
How do I benefit from SRECs?
It is in the best financial interest of
the electric utilities to purchase SRECs because they cost less than SACPs.
While the value of the SACP sets an upper limit on an SREC's sales price, the limited
availability of SRECs for the utility companies ensures ahigh SREC spot price for the seller.During the 2008 - 2009 SREC year, SRECs
were being sold by solar system owners for up to $685 with the ACP set at $711. SRECs
may also be sold on a three, five, or ten year contract at predetermined
prices.
Selling SRECs based on the electricity
production from solar facilities provides an economic benefit for investing in
solar. The income from the sale of SRECs plus
the electrical savings gained from the solar system provides a significant
operating cash flow from the solar system.
