Solar Renewable Energy Credits (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. As an 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. Baseline Solar has primarily worked with SRECTrade in the past and we continue to find them an excellent partner. SolSystems is another fine option that some of our customers work with.
Many of our clients with systems installed in 2016 and earlier were registered for SREC sales in Pennsylvania through SRECTrade. 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 an SREC market. Current value is $30-60 per SREC with options for selling at the market rate or with locked in future contracts. Keep in mind that income from SREC sales is subject to income taxes.
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 often requires some additional hardware to be installed for recording solar generation. Because of the flood of people trying to register to sell SRECs in Virginia, the brokers are fairly backed up in processing applications. Our company is also very busy these days with installation work, but we are working to add some capacity to our team to help with SREC registrations for our past and future clients. It will take us and the brokers some months to be able to catch up on registering past clients. Do not expect to be selling SRECs in 2021! It will likely be early 2022 before we and the brokers are caught up.
We hope this information helps guide you. The Virginia SREC market is dynamic at this time as the kinks are getting worked out. We do expect changes to rates and policies over the next few months. 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 value is $30-60 per SREC with options for selling at the market rate or with locked in future contracts. This is better than the Pennsylvania market, so we’d recommend you talk with your broker about selling in Virginia. 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 years ago! Registered system owners should be able to complete the process of changing from selling in PA to VA directly with their SREC broker without input needed from Baseline. Check your email or your broker’s website for info about changing over or give them a call. If you get stuck, we will try to help out!
The choice of selling at market rates or with locked in contracts is yours. This is a classic risk/reward choice! The SREC law essentially set a ceiling price at $75 per SREC, and with the abundance of solar owners registering now and expected future solar development, the market may become oversupplied soon. It is hard to know! I heard from a client that they have been selling their SRECs in VA for $60 each since January, 2021. That is certainly higher than the future contracts advertised recently from SRECTrade, but that price is subject to the market and could easily go down. I don’t have a crystal ball here, so you will have to decide yourself 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.