In light of Massachusetts’ recent proposed new solar incentive program, we wanted to take a step back to review its predecessors, SREC-I and SREC-II. For those who have already installed an array, the new solar incentive program will have no bearing on your SRECs or their value. Alternatively, if you’re already in the process of installing solar or considering an installation, and will have 50% of its project costs disbursed by January 8th, with construction completed by May 8th, your project should be eligible under the extended SREC-II program. While your SREC factors are slightly reduced, the values will still be very attractive.
History of the SREC Program
Solar Renewable Energy Certificates (SRECs) were introduced in 2010 as part of the Solar Carve out program, which aimed to help utilities comply with their Renewable Portfolio Standard (RPS) quota of a 15% renewable share in energy production. Solar has come a long way in 6 years—with Massachusetts being named the second largest solar energy job provider in the country last year, and ranked the sixth best state to go solar in the country - in principle based upon the opportunity for residents, businesses, and municipalities to derive attractive returns from the incentives offered. The incentive came in the form of SRECs (Solar Renewable Energy Certificates).
The first SREC program (SREC-I) proved to be exceedingly effective, as it met its 400 MW cap in 2013, only a third of the way through the envisioned lifespan of 2020. The new program (SREC-II) was then introduced to support installations up to a 1600 MW cap, with a targeted goal date of 2020.
This past April, we achieved the program’s 1600 MW cap once again. However, instead of introducing another version of the SREC program, the DOER opted for a temporary extension of the SREC-II while they developed the next generation solar incentive program. In the absence of a new program, the SREC-II program was extended again in late August 2016, pushing out construction deadlines and reducing SREC factors by 20% to accommodate for the continuance of the program.
SREC Selling & Minting Process
If you previously installed a solar array, or are currently in the process of installing, then the SREC program remains an essential part of your investment. As an SREC participant, you have the benefit of collecting and selling these certificates for 10 years, so it’s important to understand how the selling and minting process works.
First, you should know what your SREC factor is, and the stage in which you entered the program is important here. Projects that receive certificate of completion before January 8, 2017 are eligible for the original SREC-II Factor values as seen below. Projects completed after January 8, but before May 8th (and can prove that 50% of their construction costs have been disbursed by January 8th ) are eligible for the SREC-II Extension Program, and will receive the discounted SREC-II Extension Factor values.
We’ve provided the original SREC-II Factors and SREC-II Extension Factor values below for reference.
|Market Sector||SREC-II Factor||SREC-II Extension Factor|
Upon your array becoming operational, the electric output will be monitored by the utility meter, and sent to the Massachusetts Clean Energy Center (MassCEC) on a monthly basis. Each quarter, for every 1,000 kWh your system produces, you will be rewarded with one SREC at a rate equivalent to your placement on the SREC Factor chart referenced above. The SRECs are minted electronically and deposited quarterly in the solar array owner’s account which is managed through the MassCEC’s Production Tracking System (NEPOOL GIS). The MassCEC acts as the Independent Verifier of all production data for both SREC-I and SREC-II. If a PV system owner has a designated SREC aggregator (like Solect) that manages their SRECs for them, they will be deposited into the aggregator's account. Each SREC has a unique serial number assigned to it that carries information about where and when it was generated.
Once minted, you have the option to sell your SRECs to buyers that need to meet a regulatory compliance requirement under the RPS, such as the utilities. This is what most customers choose to do as the money they receive for sold SRECs helps them to recover the initial cost of their solar investment
Assuming you decide to sell your SRECs, you have a couple options. First, you can sell them on the quarterly “spot market” where the value of the certificates fluctuates in accordance with demand. This is the most common way to manage your SRECs in order to maintain a recurring cash flow throughout the year, although value is subject to the market’s volatility. If you choose not to sell your SRECs on the quarterly spot market, you have the option to deposit them for a later date.
|Quarter Generated||Date SRECs Minted|
|Q1 Jan 1 - Mar 31||15-Jul|
|Q2 Apr 1 - Jun 30||15-Oct|
|Q3 Jul 1 - Sep 30||15-Jan|
|Q4 Oct 1 - Dec 31||15-Apr|
Alternatively, the DOER hosts an annual “fixed price auction” where they set the floor value for deposited certificates each year. Here, energy companies will bid in terms of quantity on fixed-priced SRECs in an effort to meet their RPS standards. The auction itself is broken into a number of stages.
The SREC process may seem complicated, however, it is a valuable aspect of solar investment for customers participating in the program.
At Solect our customers have access to SREC Management services where we work diligently to maximize the value of your investment. Whether you have an installed array and wonder if you’re getting the most out of your SREC values, or are in the process of becoming a solar owner and want to participate in the SREC-II extension program - we’re here to help!