What are SREC's?
SREC's means Solar Renewable Energy Certificates. They are a certificate that recognizes that 1 MWh (Megawatt hour) of electricity will be generated by solar power. They are purely created by statute. The statute that creates them is called a Renewable Portfolio standard.
What is a renewable portfolio standard?
A renewable portfolio standard is a law that requires power retailers in a specific state to purchase a certain percentage of the overall energy they sell to clients from renewable sources. These standards are usually expressed as a percentage of their electricity sales and they usually rise each year until the required percentage of renewable energy is being used in a state.
What is a solar carve out?
A solar carve out is a requirement within an overall renewable portfolio standard that a certain percentage of the utility companies requirement to buy power from renewable sources must come from solar power specifically. Some states even have a requirement that a small percentage must come from small scale distributed rooftop solar.
Where there is no solar carve out in a renewable portfolio standard then most of the requirement usually comes from wind and so there is usually not much value in SREC's in that state.
How much are SREC's worth and do I get them in my utility area?
SREC's exist and have significant value in the following states. The links will show you the current market price in that state:
SREC's exist but have very little value (because of flaws in RPS legislation design) in:
- North Carolina
What determines the value of an SREC?
SREC’s are determined by market forces between those that build solar generation capacity (and are entitled to create SREC’s) and those that need to buy SREC’s to meet their obligations under tan RPS Law of a state (Utility Companies).
What frames this value other than normal supply and demand is the size of the Alternative Compliance Payment. This is a payment amount that the utilities have to pay if they don’t surrender enough SREC’s at the end of the year to meet their obligations. Prices for SREC’s can be below the alternative compliance payment if market forces mean there is more supply of SREC’s than the obligation created by the RPS law on utilities to to buy them. However, prices will never rise above the alternative compliance payment because utilities can just pay this amount instead of surrendering SREC’s.