Selling SREC’s

May 19, 2005 by
Filed under: Solar Energy 

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.

  1. 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.
  2. 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.)
  3. 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.

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Comments

3 Comments on Selling SREC’s

  1. Solar on Tue, 7th Jun 2005 2:11 am

    2. What if they dont sell them? You must eat them? This seems like a silly arrangement. Whay wouldn’t you sell them for cash – even if it is for less? You just got hung up on a promise. i hope it works out for you but it would seem tto be a sucker bet where you take all the risk!?!?!?!?

  2. Steve Carlson on Wed, 22nd Mar 2006 1:18 pm

    3. When you sell these SREC credits you are no longer producing clean energy because you are allowing other utilities to increase their emmisions by the amount that you produce cleanly. According to njcleanenergy, if you sell your credits YOU ARE NO LONGER A SOLAR ENERGY PRODUCER. The environmentaly friendly thing to do is to get FREE electricity and RETIRE your credits.

  3. cindy fay on Tue, 4th Apr 2006 10:28 am

    4. I am in the process of trying to install solar panels on my Vineland home and I am having great difficulty with my municipal electric utility. I will get SREC’s but I will not have net metering. My metering options with the city are bad and worse. Without the SREC’s, my system will never pay for itself. Are you still having difficulty selling your SREC’s?

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