Solar Renewable Energy Certificates (SRECs) are a hot topic these days! We hope the following guide will answer questions and provide some guidance on this topic.
New to SRECs? Here’s the scoop
SRECs are:
- Optional
- Completely separate from net metering and your utility company
- Something solar owners can sell to generate income
The summary for SRECs is that if you own solar, you can make some additional money by selling SRECs. To learn the basics of SRECs I recommend reading this page written by Solar United Neighbors, a solar advocacy group in our region.
SRECs aren’t a physical thing, rather an accounting of solar energy generated. Each 1,000 kilowatt-hours (kWh) a PV system produces is equal to one SREC. On average an, 8 kW PV installation generates around 10,000 kWhs per year and thus would also be creating 10 SRECs per year that are owned by the PV system owner. These SRECs can then be sold to generate income. Again, this does not impact in any way the net metering arrangement with the utility company.
SRECs are sold through brokers. These brokers handle registering systems, provide an easy reporting platform for clients to use, and manage the sales of the SRECs. They do take a cut of the sales for their efforts and their fees are posted on their sites.
Many of our clients with systems installed in 2016 and earlier were registered for SREC sales in Pennsylvania. We stopped registering systems in 2017 because the market rate for SRECs was below very low and because that year PA also closed their doors to systems located outside of PA. We had nowhere to sell! Thanks to the Virginia Clean Economy Act passed in 2020, Virginia now has its own SREC market. Current spot trade value is ~$30 per SREC, with options for selling with locked in futures contracts.
Getting set up to sell SRECs generally requires registration of the PV system which includes some paperwork generally handled by us, the installation company, and some from you, the system owner, and it also occasionally requires some additional hardware to be installed for recording solar generation.
We hope this information helps guide you. The Virginia SREC market is dynamic and has seen several changes in rates and policies over the last couple years. We’ll stay on top of it and work to keep you updated! As always we are here for any questions you may have on the subject.
Already registered to sell? You’ve come to the right place!
If you have been selling SRECs, you likely sold to the Pennsylvania market or perhaps the DC market. Thanks to the Virginia Clean Economy Act passed in 2020 Virginia now has an SREC market. Current spot trade value is ~$30 per SREC, with options for selling with locked in futures contracts. This is better than the Pennsylvania market. If you’re already certified in the PA market, you will automatically be assigned Virginia certification. If you are selling into DC, you are likely getting a much higher price, so you should probably keep selling there! Sorry folks, DC closed their doors to outside SRECs many years ago!
The choice of selling at spot trading market rates or with locked in contracts is yours. This is a classic risk/reward decision! The SREC law essentially set a ceiling price at $75 per SREC, and with the abundance of solar owners now registered, plus all of the future solar development, we’ve seen the value decrease from $65+ to ~$30 in recent months. It’s difficult to know what the future holds for these things without, and we’re not in the business of giving financial advice, so you will have to decide for yourself between spot trading market rates and futures contracts based on your own risk/reward equation!
We hope this was an informative guide to an exciting new development in solar here in Virginia! If we can answer any questions for you regarding SRECs or solar in general, give us a call today: 540-552-1511.