What are Solar Renewable Energy Certificates (SRECS) & How Do They Work?

You will find a lot of incentives for businesses to set up solar panel systems. However, one of the most complex to understand is Solar Renewable Energy Credits (SRECs). In fact, one thing that most business owners are difficult to comprehend is that SRECs can offer a business a high income, especially if they own a solar power system.

Is your commerce in a state that has Solar Renewable Energy Credits? You might not be aware of it, but you could be qualified for that income.

What are Solar Renewable Energy Credits?

SRECs are incentives for residential and commercial properties to sell credits to their utilities. The quantity of money a solar panel owner will get differs from one state to another. It could range at least $300 SREC.

Those solar incentives are a good incentive for businesses to set up solar paneling, as they could boost financial returns and business profits of installing solar panels. It enables a company to monitor how their solar power systems generate much renewable energy.

You will find some states, which have directives for producing solar energy precisely. Simply put, the more energy produced, the more your business is issued with SRECs.

The credits could be merchandised in an open market. Often, it is categorized to be a type of currency. Most businesses prefer to sell these to help them lessen the rate of installing solar programs and to keep that system later.

Availability of SRECs

SRECs come from a program referred to as the Renewable Portfolio Standard (RPS). The RPS rule is imposed in thirty-six states. However, not all of them have a carve-out for solar energy. The requirements of SREC in each of the states differ. Thus, the value of the credits varies from one state to another.

One particular rule, which differs by the state is the location prerequisite of the solar system. Some states obliges that Solar Renewable Energy Credits come from solar systems within the boundaries of their state. The state of New Jersey is one of them.

On the other hand, a few states approve Solar Renewable Energy Credits bought from solar systems, which are situated outside of their state boundaries. That could be a tremendous advantage for solar owners in states with no solar carve-outs.

Below is a list of the states, which have SREC market:

The Impact of SRECs in Your Solar Investment

The worth of SRECs will differ based on supply and demand. Additional aspect, which will affect the cost of Solar Renewable Energy Credits is the Alternative Compliance Payment of the state. That’s the fine utility firms should pay if they do not buy sufficient SRECs.

Utility firms might prefer to pay the fine rather than buying SRECs if the fine amount is less than the price of an SREC. Thus, the prices and demand will descend.

Selling SRECs is similar to joining the stock market. Prices increase over time with policy and demand changes. That’s why it could be advantageous to partner with a solar business that handles your SREC portfolio for you.

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