SREC Sale Completed
Well, my SREC’s for 2004-2005 sold. I got a check in the mail yesterday for $208.55 for each of 6 SREC’s.
Considering that I was offered anywhere from $115 to $150 by the big guys (Sharp, Mainstay) in the last month, it seems that I did the right thing holding out for a better offer.
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One question – please reply in Comments. Is SREC income taxable for Federal or NJ purposes? I’m assuming that it is, but I’d like to hear from someone who has done some research.
Selling SREC’s
This month marks the end of the fiscal year for Solar Renewable Energy Credits (SREC) in NJ.
Each solar facility creates one SREC for every 1MWh of electricity that they generate. NJ utilities are required to meet a requirement that a particular percentage of their total power generation comes from NJ-based solar sources. If they fail to do so, they pay a penalty that’s the equivalent of $300 per SREC. Other companies (out-of-state utilities, green power companies) purchase NJ SREC’s and Green Tags from other states to back their renewable energy label.
As an example – my system generated 6 SRECs this past year (and may eke out a 7th at the end of the month).
The problem for small producers like us is this: we’re just too small for large companies to do the paperwork and buy directly. Enter the aggregator or broker. These folks purchase SREC’s (and other things like pollution credits) from producers and sell them to buyers. You won’t get the full value selling to a broker, but you will likely be able to sell them.
I sold mine yesterday to a broker for a minimum $200 per SREC, minus a 3% commission. They will now try to sell them to a buyer for at least $200 each, and I will get paid what they sell it at minus the commission. If they fail to sell by the end of July, the certificates will be transferred back to me. At that point, I’ll probably retire them.
Next year, there’s talk of a bunch of us little guys banding together to sell directly to a renewable energy company. It’s good to make a few bucks off the greenness of your power – it’s much better to support the green power industry while doing so.
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I’ve heard several explanations.
- The cost of the SREC purchase process has to be paid for somehow – that’s where the margin comes in. This is especially true for brokers.
- The NJ utilities have already built the penalty into customer rates. There’s no reason for them to bust their tail buying SREC’s. If they do, they save money. It’s in their best interests to buy low. (I don’t know how true this is, but I have heard it.)
- Green tags from out of state are cheaper (this is true) – running about $100-150 per MWh. I believe that this requirement was shot down by the state BPU’s recent amendments requiring that NJ SREC’s must be used to satisfy the requirement.
At any rate, I never expected to be able to sell SREC’s when I installed the system. For each year that I can sell SREC’s at about this rate, I take one year off the time to pay back my costs. Now, my 16-18 year payback is one year shorter.
And I just made $1200 for doing nothing that I wasn’t already gonna do.
A Spring Update
It was recently pointed out to me that this site hasn’t been updated recently. Time to fix that with a few little notes.
Power production is up as expected now that spring is here. We’re getting about 30kWh on sunny days. Of course, if you get 2.5 inches of rain and the Delaware has a 50-year flood, you produce nothing. (The flood didn’t affect the house – just my commute.)
We still have not sold our SRECs (Solar Renewable Energy Credits). My wife and I are leaning towards NOT selling them, based on the premise that this will force utilities to pollute less. We’d retire them instead. A reader points out that we could sell them to renewable companies and help the environment. Right now, the highest offer that we’ve received (unsolicited for the most part) was $150 each. Reportedly $175 is the going price now – I expect it to continue to climb until near the end of the SREC fiscal year in a few months.
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I’m also in the hunt to buy a hybrid car – probably a Toyota Highlander Hybrid SUV. So far no local dealers are willing to take my deposit – though one dealer thinks he’ll be able to accommodate me in a month or so. I plan to write more about that quest and the final results here, and therefore I’ve started a new category.
That’s all of the news for now. Once I get a full year under my belt, I plan to write up the full statistics on my solar usage and production.
New Jersey Solar Renewable Energy Credits (SREC)
The State of NJ has a law that requires utilities to produce a certain amount of their energy (I think it’s 1/100 of 1%) per year from solar energy. Of course, the utilities haven’t actually built solar facilities yet.
Enter the Solar Renewable Energy Credit (SREC). This is a credit of the “greenness” of 1 MWh (megawatt hour) produced in a particular year that can be sold separate from the actual electricity to meet the Renewable Portfolio Standard requirement. One SREC is created for each MWh of electricity produced by a grid-connected solar power system in NJ. That SREC can be sold to a buyer (usually an aggregator, broker or utility). The state estimates (on a conference call training session held today) that up to 7200 SREC’s will be required for the plan year 2005.
A plan year runs from June 1 to May 31, with SREC’s generated in the year eligible for sale through August 31 of that year. If you don’t sell the SREC’s, you lose their value.
Systems under 10KW will have SREC’s generated from their estimated generation. Systems over 10KW must use a meter reading (systems under 10KW can opt for meter readings, but once you make that choice there’s no going back). In this case, the meter reading in question is a special meter counting ALL output from the system or the counter built into the inverter that counts power produced since initial activation. Systems that use meter reading for credits will self-report their production, and the state has the option to do an in-person inspection. All systems may be inspected to ensure that they are actively in use and grid-connected.
Another requirement for participation is that you have not already sold your SREC or applied it towards a requirement. For example, a company that is producing solar electricity and using that production to offset a reduction in NOx output cannot sell their SREC – that would be double-counting the production. If you’ve already sold your SREC (also known as a “green tag”) out of state, you can’t sell it again.
SREC values in NJ are essentially capped at $250 each, since the state portfolio standard has an alternative route for utilities to satisfy their requirements at that cost. Brokers are estimating values at about $150 each, but a perusal of the state trading site shows SREC’s being currently offered at $200 each.
SREC’s can also be retired without sale. This will be done by buyers who need the credits for themselves (after they buy them). It can also be done to remove SREC’s from the NJ system (because they are sold in another state) or to permanently take them off the market to make a statement about pollution (an SREC that is retired without sale can never be applied against a requirement – forcing the potential buyer to reduce emissions instead).
Former users of these products have reported it as quite helpful. generic 10mg cialis This pill must not practice daily buy cialis in australia as ED considers a kind of sexual disorder not a disease; one must not practice this pill on a regular basis. Love making is one of the strongest precursors for inducing breast cancer causes. brand viagra pfizer Adolescence to Age http://www.learningworksca.org/item-4074 generic viagra online 40 When you are young and energetic. My system will probably produce 5-6 SREC’s per year – for a potential income of $1000-1200 per year. That will help to more quickly payback the system’s initial costs, and reduce the break-even point from 18 years to something shorter.
Generators with an NJ system should follow this procedure to get started:
1. Read the information available at the SREC website http://www.njcep.com/srec/. The Overview and Attestation document is a good place to start.
2. FAX or mail the Attestation document to the NJBPU at the location shown on the document.
3. Create a user ID on the SREC website (see the Training Overview document for information).
4. A few days later, your facility will be linked to your user ID.
5. If required, report meter readings between the 1st and 3rd of each month.
6. SREC’s will be generated on the 5th of the month and made available for sale on the site.
7. Negotiate the sale of one or more SREC’s off-line (the Bulletin Board can be used to find buyers).
8. Record the sale on the site. You have 30 days to cancel for non-payment.
If you have more questions, contact Scott Hunter at the NJBPU, or Jan Pepper at Clean Energy Markets at the contact locations found at the NJCEP website.
Final Cost Roundup
We’ve made the last payment to our installer – the only remaining cost as far as I know is the PSE&G interconnection fee.
For those who are interested, here is the final cost roundup:
$52,893 Installer’s Total Cost from Contract
-$37,025.63 Final Rebate Amount from State (70% of total)
—————-
$15,867.37 Our cost from the Installer
$118 Permit Cost (paid directly by us)
$100 PSE&G Interconnect Agreement Fee (paid directly by us)
—————-
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The system produces 6.825 kWh at peak. That means $7.78/watt total cost, or $2.36/watt our cost.
We expect an approximate savings of $716/year (estimated 2/3 of our power usage), making the payback about 22 years based on straight savings and assuming no increase in electric utility rates. It’s probably more like 17-18 years assuming a reasonable increase in the cost of electricity. My cost for the system will never go up, but electrical rates will almost certainly go up – at least as much as the inflation rate.
There is a rule of thumb that your property value goes up $20 for every $1 in utility savings. In that case, we will increase our property value $14,320, or most of the cost. Combine that with 2 years of energy savings and the system is paid for. I should note that my installer feels the increase in property value is a little higher – somewhere between the $16,000 that we spent and the total $53,000 – more like the low $20k’s.
An additional available source of revenue is the sale of green tags or Renewable Energy Credits (REC). I’m investigating that now. It means that you sell the “greenness” of your system to a broker who ultimately sells it to a company that is required to produce a certain amount of energy from green sources. For example, utility company B could purchase my green tag and therefore have covered 6.825 kWh of their green energy requirement for the life of the sale. It appears that this could provide $400-500 of income per year to us, but at the cost of the actual environmental benefits of our installation (since somebody else is avoiding pollution less than they “have to”).
Of course, money isn’t the only benefit here. We have the benefit to the environment – after about 2-3 years the system has produced enough energy and environmental benefits to cover it’s manufacture. We’re reducing dependence on oil and natural gas for electric power – most of which come from foreign sources. We’re also doing more local generation than before – reducing stress on the electrical infrastructure in our area (less current has to travel over the wires from the power plant when our system is injecting it locally).
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