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Massachusetts Solar Credit Clearinghouse Auction Explained

Posted July 26th, 2010 by SRECTrade.

MA Energy Year: January 1st – December 31st.

SREC Life: Two years for compliance buyers who may bank up to 10% of their requirement but sellers must sell SRECs in the year they are generated or deposit them in the DOER Auction. So an SREC produced in 2010 can be counted towards the 2010 or 2011 Solar Carve-Out.

When is the last SRECTrade Auction of each Energy Year?

The final SRECTrade auctions will occur in May and June of the following year, immediately before the DOER Solar Credit Clearinghouse last chance auction which closes on June 15th of each year. SRECs are generated quarterly in Massachusetts on a 4-month delay.  SRECs for Q1 (January-March) are available on July 15th and can be sold in auction at the beginning of August. Q2 SRECs are available on October 15th and can be sold in the November auction, Q3 SRECs are available on January 15th and sold in the February auction and Q4 SRECs are available on April 15th and can be sold in the May auction. Any SRECs remaining after the final SRECTrade auction can be entered into the DOER auction.

What happens if at the end of the year I still haven’t sold my SREC(s)?

If you are an SRECTrade client and you have any SRECs that were not sold then SRECTrade will automatically transfer your SRECs to the  DOER Solar Credit Clearinghouse auction.  You do not need to tell SRECTrade to transfer your SRECs if SRECTrade manages your SREC account. SRECs entered into the auction are “Re-Minted” meaning the eligibility of the SREC is adjusted. For example, a 2010 SREC is originally eligible for compliance in 2010 and 2011. If it enters into the DOER auction, the SREC is Re-Minted to be eligible for compliance in 2011 and 2012. It is no longer eligible for compliance in 2010. Buyers may then bid to purchase the SREC to get a start on meeting their requirements for 2011. The DOER auction will be open May 16th to June 15th each year.  SRECs will be sold at a gross fixed price of $300 less a 5% fee resulting in a net price of $285 to any sellers.

Am I guaranteed to sell my SRECs in the DOER Solar Credit Clearinghouse auction?

No, you are not guaranteed to sell your SRECs in the DOER auction. However, it is unlikely that the SRECs don’t sell. If there is an oversupply of SRECs in the DOER auction, the SRECs will all be granted a third year of eligibility and a second auction will be held. So, in our example, the 2010 SREC will now be eligible in 2011, 2012 and 2013. If there still aren’t enough bids to clear all of the SRECs, DOER will increase the requirements to the buyers by the number of SRECs that are available. The buyers bidding in the auction will now be required to purchase more SRECs in 2011. If after this third attempt, there still aren’t enough bids, the SRECs are returned to the owner as Re-Minted SRECs. These SRECs will be more valuable in the open market than any new SRECs that are created. Going back to our example, the original SREC was a 2010 SREC, eligible in 2010 and 2011 before the auction. Once it was entered in the DOER auction, it became eligible in 2011 and 2012. After an unsuccessful DOER auction it was released back to the owner as an SREC eligible in 2011, 2012 and 2013. This SREC now has a 3-year useful life, making it more valuable to a buyer than the new SRECs created in 2011 which only have a 2-year useful life.

If I’m unsuccessful in the DOER auction, how can I be assured that my SREC will still sell above $300?

Following the DOER last chance auction, SRECTrade will resume its monthly competitive auctions. If there was a surplus of SRECs in the DOER auction, they can be immediately listed in the SRECTrade auction the following month and made available to buyers who are now looking to meet their requirements – which have now been increased by the DOER. At this point, buyers will likely resume buying SRECs in the competitive market in order to ensure that they are able to meet their new requirement and avoid the $600 SACP. SREC prices should stay above $300 in the SRECTrade auctions since the DOER auction at the end of the year will guarantee that price.

Why would a buyer of SRECs ever pay more than $300 when they could just wait to buy their SRECs in the Solar Credit Clearinghouse?

Buyers cannot wait for the DOER auction to buy their SRECs for 2010. When an SREC enters the DOER auction, it is stripped of its 2010 eligibility and cannot be used to meet the requirement for the year in which it was generated. The 2010 SRECs placed in the DOER auction can therefore only be used to meet the 2011 or 2012 requirements. Meanwhile, buyers will want to purchase their 2010 SRECs in the competitive market prior to the DOER auction – otherwise they face the $600 fine.

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Posted in Massachusetts | 3 Comments »

California Sues Fannie Mae and Freddie Mac

Posted July 22nd, 2010 by SRECTrade.

Last week, the state of California filed a lawsuit against mortgage giants Fannie Mae and Freddie Mac. California’s Attorney General, Jerry Brown, hopes the legal action will realign the momentum of the Property Assessed Clean Energy (PACE) financing program. Earlier this month the Federal Housing Finance Agency (FHFA) instructed the mortgage lenders to avoid homes or tighten lending standards in geographies with PACE financing in place.

The lawsuit filed claims that the FHFA violates California law, which approved the PACE programs, and “severely hampers California’s efforts to assist thousands of California homeowners to reduce their energy and water use, help drive the state’s green economy, and create significant numbers of skilled, stable and well-paying jobs.”

Additionally, the lawsuit states, “the actions of these government-sponsored, shareholder-owned private corporations have placed California’s PACE programs – and the hundreds of millions of dollars in federal stimulus money supporting them – at immediate risk while benefiting their own pecuniary interests.”

The FHFA’s response focused on the additional credit risks PACE programs could impose in the event of a mortgage default. The PACE financing structure puts the clean energy loans in a position ahead of the home mortgage. If a property were to go through a foreclosure process, the PACE loan would be paid off prior to the home mortgage.

In addition to the California lawsuit, representatives from the California Public Utilities Commission and the U.S. House of Representatives took action against the FHFA’s decision. Click here to see the full blog post from the New York Times.

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Posted in California, Solar Financing | 2 Comments »

Importing and Exporting SRECs across Registries

Posted July 21st, 2010 by SRECTrade.

With the launch of the North Carolina Renewable Energy Tracking System (NC-RETS), North Carolina is paving the way for what could be the future for SREC markets. For the first time, an SREC created in one region’s registry will be transferable to a buyer in another region’s registry. This cooperation amongst registries could be the first step towards a permeable nationwide SREC market.

North Carolina is currently working with other renewable energy certificate tracking systems to approve a process for importing and exporting SRECs. The approval of exporting SRECs from other tracking systems and importing them into NC-RETS would allow solar system owners located in states without viable SREC markets to sell into the North Carolina SREC market. This is all possible because almost all of the registries were built with similar technology developed by APX.  More information on all of the registries can be found here: APX Primer on REC Registries.

NC-RETS is working with the parties responsible for maintaining the other regional registries to develop the importing and exporting process.  Here is a list of those registries and an update on the status of importing and exporting:

NARR: The North American Renewables Registry (NARR) was developed by APX to serve the needs of states and regions that have not implemented a REC tracking system.  This covers most of the Southeastern U.S., Alaska and Hawaii.  NARR has already established importing/exporting procedures with NC-RETS.

MRETS: The Midwest Renewable Energy Tracking System (M-RETS), the registry that tracks the generation of SRECs in 8 Midwest U.S. states and the Canadian province of Manitoba, has approved the exportation of SRECs and is implementing the necessary software upgrades.

GATS: Generation Attribute Tracking System covers the Mid-Atlantic states and currently tracks the majority of SREC volume due to member states like New Jersey, Pennsylvania and Maryland.  GATS is expected to allow importing/exporting soon.

WREGIS: The Western Renewable Energy Generation Information System (WREGIS), the registry that tracks the generation of SRECs in 14 Western U.S. states, Baja California, and the Canadian provinces of Alberta and British Columbia, is capable of managing exports and is in the process of making a policy decision to allow the system to export SRECs.

ERCOT: Texas, the sixth state to adopt an RPS in 1999, was the first to implement a procedure for meeting the RPS.  The Electric Reliability Council of Texas (ERCOT) was the first registry of its kind.  Unfortunately, it does not currently have the capability to export SRECs and it may require legislative approval to make the necessary changes to the system’s software. However, NC-RETS and APX are working with ERCOT to come up with a solution.

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Posted in Arizona, California, Cross-Listing, Illinois, Michigan, New Mexico, North Carolina, Ohio, SREC Markets, Texas, Wisconsin | Comments Off on Importing and Exporting SRECs across Registries

Florida Solar Industry Turns Attention To SRECs

Posted July 21st, 2010 by SRECTrade.

We often are asked about Florida SRECs and have decided to keep a static update of the opportunities for Florida solar owners on our Florida SREC page.  In addition, we will continue to update this blog as we learn more about the potential for selling SRECs in Florida.  Here is what we know now:

No renewable portfolio standard currently exists in Florida, but there have been significant efforts to bring one into existence.  In 2009, The Florida Public Services Commission sent a draft RPS plan to be considered by the Florida legislature.  The RPS has been considered but never ratified in the two legislative sessions since the draft was submitted.  New bills pertaining to renewables are expected to be submitted in the 2011 legislative session, or possibly sooner in a special session being called in September to address the economic and environmental impacts of the BP oil spill.  Whether new submissions will include a Renewable Portfolio Standard draft is unknown.

However, Florida solar facilities are eligible to register with the state of North Carolina and can sell generated SRECs into the new North Carolina market.  This would also require that the facility register and generate SRECs through either the NC-RETS or NARR tracking systems.  North Carolina energy suppliers are allowed to meet 25% of their compliance requirements with SRECs from out-of-state generators.  The prices on out-of-state SRECs are expected to be low as supply will flood the market pretty quickly, but this remains a possibility for Florida solar facilities and more importantly, perhaps, a sign of things to come in the southeastern states.

Although North Carolina offers some limited potential for solar owners in Florida, it is not a viable long-term solution for the industry.  The Sunshine State needs to implement its own solar RPS and establish an in-state SREC market before it can really live up to its nickname!  Perhaps the New York Solar Jobs Act could serve to be a blueprint for driving legislative change in the solar industry in Florida.

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First Massachusetts SRECs created!

Posted July 21st, 2010 by SRECTrade.

The first set of SRECs eligible for the Massachusetts solar carve-out were created in the SRECTrade aggregation on July 15, 2010. These SRECs represent Q1 2010 generation and over 50% of the total share of SRECs created in NEPOOL GIS for Q1 2010 can be attributed to customers of SRECTrade.  With partners like SunBug Solar, Alteris Renewables, Sunlight Solar, My Generation Energy and more, the SRECTrade marketplace is quickly becoming the platform of  choice for installers searching for an efficient, transparent and cost-effective way to serve the SREC needs of their clients.

One key benefit of SRECTrade’s aggregation is that the customer owns and controls their SRECs until sold to a buyer in the auctions or the forwards market.  Each SREC created in the SRECTrade aggregation is attributed to a single facility. Other aggregations may require a contract that does not allow for flexibility because the generation from multiple facilities is lumped together to create a single SREC.  You don’t have your own SRECs, but your electricity gets counted toward a portion of the aggregate’s SRECs.  With SRECTrade’s aggregation, you own your SRECs until you tell us what to do with them. Our goal is to provide the most effective platform in Massachusetts along with the best customer service in the business.

Now that Q1 2010 SRECs are created, SRECTrade will close the first MA SREC auction on August 6, 2010. Auctions will be available monthly, but since SRECs are generated quarterly, the first auction after quarter-end will always have the most volume.  Q2 2010 SRECs will be available on October 15, 2010 and available starting with the November auction.

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North Carolina Systems Able to Sell SRECs into DC

Posted July 20th, 2010 by SRECTrade.

The DC Public Service Commission is accepting applications for facilities in ALL of North Carolina.  This word comes after some initial confusion regarding the eligibility of areas adjacent to territories directly served by PJM.  The DC market provides an alternative means for selling SRECs for small commercial and residential facilities in North Carolina.

Although prices in the DC market are close to $300 per SREC, the market is small.  In 2010, a total of approximately 3 megawatts must be installed in order to meet the requirement.  That number grows to 15 megawatts in 5 years (dwarfed in comparison by North Carolina which grows from 23 MW to 85 MW in 5 years).  Considering that facilities in the entire PJM region are eligible for the DC market, it is quite possible that this market becomes oversubscribed in the future. We foresee the DC market as a viable option for smaller facilities (under 250 kW) for now, but in the long-run, it will be difficult for the solar industry in North Carolina to rely on DC legislation. The long-term solution for the North Carolina solar market hinges on the state making some changes to the current legislation that encourage the development of a real in-state SREC market.

In the meantime, SRECTrade is accepting applications from solar facilities in North Carolina.  We will register the facilities in both DC and NC.  SRECs will be sold in the market with the best pricing.  To get your NC system signed up, just fill out our EasyREC forms here.

More on North Carolina soon. You can always check our North Carolina page.

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Delaware Legislation Would Expand Solar Requirement

Posted July 15th, 2010 by SRECTrade.

New legislation which would modify Delaware’s Renewable Portfolio Standard (RPS)  has passed in both of Delaware’s legislative bodies and is awaiting the Governor’s signature. This bill, titled SS1 for SB119, will change the RPS by increasing and extending the required minimum percentage of renewable energy supply and contribute to the growth and longevity of the SREC market in Delaware.  The RPS currently requires that 20% of energy come from renewable sources. The new legislation will expand this requirement to 25% by 2025 and will also increase the proportion of renewable energy which must come from solar generation each year. For example, for the 2011 compliance year the solar requirement will change from .048% of the renewable energy mandate to .2%.

Key Changes:
1. The number of SRECs required will dramatically increase
2. The SACP which sets a ceiling price for SRECs will be raised to levels competitive with other states
3. The municipal utilities that have been exempt thus far will now be required to comply

The alternative compliance payment (ACP) an energy supplier must pay if failing to meet the solar requirement will also increase following this bill being signed into law. The solar ACP will strengthen from $250 to $400 per missed SREC, with this payment increasing to $450 if an ACP were paid in the previous year and to $500 if non-compliance continued for a third year. This will effectively raise the ceiling on SREC prices in Delaware to $400+.

The legislation also adds a premium to SRECs produced by systems created by in-state resources.  An additional 10% credit toward meeting RPS requirements is granted for any SREC obtained from a facility constructed or installed with at least a 75% in-state workforce.  The same credit is granted for systems with at least 50% of their components manufactured in Delaware.  These provisions together will likely lead to a premium on SRECs from in-state solar systems.

Though well-intentioned, it is unclear how the state will track this premium given that it essentially will result in two markets for SRECs… one for normal SRECs and one for the special “Made by Delaware Labor” SRECs.  Other states have tried to implement various types of multipliers with limited success and more likely resulting in more trouble than their worth.  However, it could be particularly useful in giving an advantage to local Delaware companies on the larger projects that face tough competition from well-capitalized out-of-state developers.

Nonetheless, the intent is clear: Delaware wants to develop a strong solar industry in-state.  This is a positive sign for the solar market there and in some ways a contrast to other states.  SREC markets have a variety of benefits to a state.  Besides a move to renewable energy, a properly setup program will also encourage the development of a commercial and residential solar industry.  In some cases,  like New Hampshire and North Carolina, the state will benefit from the former, but it doesn’t necessarily mean a boost to the latter.

Overall this is a huge win for the Delaware solar industry.  Today, most of our customer base from Delaware sells their SRECs in the PA or DC markets.  It will be great for them to know that their future SRECs will likely be sold in their home state!  Delaware now joins Maryland and New Jersey who have also passed recent legislation directed at strengthening their respective SREC markets.

The full text of SS1 for SB119 can be found here.

Details can be found here: Delaware SREC Program

Chart numbers are based on 2007 electricity sales into Delaware assuming a 1.5% annual growth rate

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Posted in Delaware | 1 Comment »

PA Bill Could Alter Regional SREC Market

Posted July 9th, 2010 by SRECTrade.

House Bill number 2405, currently waiting for review in the PA house of representatives, contains many changes that would significantly alter the PA SREC market. The Bill has yet to be subjected to a vote, largely because its supporters understand that the bill is a solid 10-15 votes shy of the 102 votes it would need to pass the 203 person house of representatives in Pennsylvania. The House is currently not in session, so the Bill remains stagnant for now, and is most likely not to be voted on before the legislative period ends in November.

Notable changes in the Bill include a six-fold increase in the solar requirement for utilities. The requirement is currently slated to reach .5% by the 2024-2025 energy year, but would be 3% in this same year if Bill 2405 were passed. The Bill would also set an SACP of $450 per credit starting in 2011, decreasing by 3% each year. The SACP as currently stated in PA is double the average price of SRECs in the state for each year ($550 for 2010). The bill would also close the Pennsylvania SREC market, limiting buyers to SRECs exclusively from in-state solar facilities. Each of these changes is geared toward promoting the growth of the solar industry in Pennsylvania, keeping the job creation and other economic benefits local.

Changes from this bill, if it is passed, would be scheduled to be put in place on December 31, 2010. Regarding systems from out of state that have already been approved for the Pennsylvania AEPS program, unfortunately, if this legislation passes, buyers will be unable to purchase SRECs from out-of-state, even if they have previously been accepted into the Pennsylvania AEPS program.  The pending legislation states the change shall apply to “all contracts and short-term purchases made after December 31, 2010.”

This Bill is still a long way from being passed. In order to become law, the Bill would need to gain the extra 10-15 votes it needs in the PA House of Representatives, presumably through key revisions, and then pass the state Senate as well. Because the representatives are currently on summer recess, these changes do not appear to be imminent, but could be on the horizon.

Here is a table detailing the changes made by PA HB 2405, and comparing them to the market under current legislation:

For more information, click here to see the entire Pennsylvania House Bill No. 2405

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North Carolina launches NC-RETS for tracking SRECs in state

Posted July 8th, 2010 by SRECTrade.

The North Carolina Renewable Energy Tracking System (NC-RETS) designed by APX, Inc. launched earlier this week.  This will be North Carolina’s online mechanism for the issuance and tracking of SRECs.  Both solar photovoltaic and solar hot water projects are eligible to receive Solar Renewable Energy Certificates (SRECs) through NC-RETS, and North Carolina electricity producers will use this system to demonstrate their compliance with North Carolina’s Renewable Energy Portfolio Standard.

Registration of a solar project with NC-RETS requires the creation of a NC-RETS general account and prior registration of the project with the North Carolina Utilities Commission (NCUC). Projects under 1 MW will be able to self-report their energy production data into the NC-RETS system to receive SRECs, while larger projects will require a designated “Qualified Reporting Entity” with a separate NC-RETS account to upload generation data on their behalf.    There are no fees associated with the creation of NC-RETS accounts, and the cost of operating the tracking system will be billed to NC electric power suppliers based on each one’s percentage of load in the state.

RECs are readily transferrable between NC-RETS accounts and will be “retired” in the accounts of NC electricity suppliers in order to demonstrate their portfolio compliance.  NC-RETS also allows account holders to import SRECs from and export SRECs to tracking systems in other states.   As of now, there is 2-way transferability with the North American Renewable Registry (NARR) tracking system.  Transferability with PJM GATS is expected shortly and conversations are ongoing with WREGIS, ERCOT, and MRETS.  There is a negligible $.01 fee per SREC exported but imports will be free.

Although there is a “bulletin board”, no financial agreements will take place on NC-RETs, and SRECTrade is accepting bids from both sellers and buyers in NC in anticipation of a North Carolina SREC auction.  Our EasyREC program will streamline the process for solar power generators looking to receive and sell their SRECs efficiently in North Carolina.  When a solar facility owner signs up with EasyREC, SRECTrade will quickly take care of registering the project with the NCUC  and NC-RETS!  As always, the solar facility owner retains ownership of all SRECs until they are sold at auction, at which point SRECTrade takes care of transferring the SRECs to the buyer through NC-RETS.  Our EasyREC service also covers annual updates required for continued NCUC registration.

Find out more on North Carolina’s SREC program here

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Arizona – Utility Solar Incentives

Posted July 1st, 2010 by SRECTrade.

Note: Refer to our Arizona SREC page for specifics about any SREC potential.

There is currently no viable SREC market in Arizona as the state Renewable Energy Standard does not have a solar carve-out. The Renewable Energy Standard in Arizona requires the utilities to acquire renewable energy bundled with RECs.

While trading AZ SRECs in an an online auction is currently not a viable option, some Arizona utilities offer upfront and performance based incentive programs to encourage the installation of solar. Below is an overview of the incentives currently in place.

Tucson Electric Power Company (TEP):

  • Owners accepting the upfront incentive sign a 20 year REC agreement with the utility.
  • The residential (systems up to 20 kW) incentive through TEP for 2010 is $3.00/watt for grid tied systems and $2.00/watt for off-grid systems.
  • The small commercial (systems up to 100 kW) incentive through TEP  for 2010 is $2.50/watt for grid tied systems
  • The large commercial (systems greater than 100 kW) incentive through TEP for 2010 differs from the upfront incentive payments for the residential and small commercial programs. Large commercial solar installations are provided with a performance based incentive (PBI), which means that customers will receive a fixed price for their SRECs over a set period of time. This PBI is offered to commercial grid tied systems as follows:
    • 10-Year REC and Payment Agreement for 18.2 cents / kWh (1 SREC for $182)
    • 15-Year REC and Payment Agreement for 16.7 cents / kWh (1 SREC for $167)
    • 20-Year REC and Payment Agreement for 16.2 cents / kWh (1 SREC for $162)
  • The total upfront incentive can’t be greater than 60% of the total system cost. The incentive amounts for 2011-2014 are scheduled at the 2010 rates, but are still to be approved. Also, TEP incentives in combination with all federal and state tax credits can be no more than 85% of total the project cost. A customer must cover at least 15% of the total project cost.

Salt River Project Water and Power (SRP) – Earthwise Solar Energy Program:

  • Home owners accepting the upfront incentive sign a 25 year REC agreement with the utility. Small commercial systems sign a 20 year REC agreement.
  • The residential incentive through SRP is $2.15/watt up to $10,750. This incentive level is set through April 30, 2011. Once a total capacity of 4.5 MW (4,500 kW) has been reserved, any additional applications received will be reserved at future incentive levels.
  • The small commercial incentive through SRP is $2.00/watt up to $60,000. This incentive level is set through April 30, 2011. The small commercial incentive currently has funds reserved for 0.5 MW (500 kW). As of 6/10/10,  46 kW has been reserved with another 120 kW pending approval.
  • The large commercial (systems greater than 30 kW) incentive through SRP for 2010 differs from the upfront incentive payments as outlined for the residential and small commercial programs. Large commercial solar installations are provided with a performance based incentive (PBI), which means that customers will receive a fixed price for their SRECs over a set period of time. The large commercial incentive currently has funds reserved for 5.0 MW (5,000 kW). As of 6/10/10,  864 kW has been reserved. This PBI is offered to commercial grid tied systems as follows:
    • 10-Year REC and Payment Agreement for 18.8 cents / kWh (1 SREC for $188)
    • 20-Year REC and Payment Agreement for 14.7 cents / kWh (1 SREC for $147)
    • SRP will receive the solar renewable energy credits for 20 years for both the 10 year and 20 year PBI plans.

APS:

  • System owners entering into an upfront incentive program sign a 20 year REC agreement with the utility.
  • The residential incentive through APS is $1.95/watt; as of June 17, 2010.
  • Non-residential systems can choose between upfront incentives and performance based incentives. Below is an overview of APS’ current offering:
    • Grid Tied:
      • Upfront incentive – up to $2.50/watt, capped at $75,000
      • Production based incentives –
        • 10 Year REC agreement / 10 Year Payment: 18.2 cents / kWh (1 SREC for $182)
        • 15 Year REC agreement / 15 Year Payment: 16.8 cents / kWh (1 SREC for $168)
        • 20 Year REC agreement / 10 Year Payment: 22.5 cents / kWh (1 SREC for $225)
        • 20 Year REC agreement / 20 Year Payment: 16.2 cents / kWh (1 SREC for $162)
    • Off Grid:
      • Upfront incentive – up to $1.50/watt, capped at $75,000
      • Production based incentives –
        • 10 Year REC agreement / 10 Year Payment: 12.1 cents / kWh (1 SREC for $121)
        • 15 Year REC agreement / 15 Year Payment: 11.2 cents / kWh (1 SREC for $112)
        • 20 Year REC agreement / 10 Year Payment: 15.0 cents / kWh (1 SREC for $150)
        • 20 Year REC agreement / 20 Year Payment: 10.8 cents / kWh (1 SREC for $108)
  • For systems under 100 kW, funding is divided into 6 bi-monthly allocation periods. Funding for systems over 100 kW is awarded on a competitive basis two times a year.

SRECTrade Analysis – Upfront Incentive Payment vs. Selling SRECs On the Spot Market:

  • Currently, although there is no market Arizona SRECs can be sold into, SRECTrade has conducted an analysis to determine an approximate SREC value at which solar system owners in Arizona may consider forgoing their utilities’ upfront incentive payment to realize greater value selling in an auction platform.
  • The analysis is made up of the following assumptions:
    1. A market with a great enough demand exists in which AZ solar system owners can sell their SRECs into
    2. The system size is assumed to have a capacity of 5 kW
    3. The low end upfront incentive payment is $1.95/watt (APS) and the high end is $3.00/watt (TEP)
    4. Arizona systems receive approximately 5.5 sun hours per day (assumption from wholesalesolar.com)
    5. The system generates approximately 10 SRECs per year
    6. Both the upfront incentive and the SRECs are considered taxable income; assumed tax rate 35%
    7. 20 year fixed SREC agreement with utility
    8. 10% discount rate to determine net present value of future cash flow from SREC sales
  • After taking these assumptions into consideration, the following valuations would have to be achievable for system owners to consider foregoing the upfront incentive option. Systems that receive an upfront incentive of $1.95/watt would have to sell SRECs into a market that could support a valuation of approximately $115/SREC . Systems that receive an upfront incentive of $3.00/watt would have to sell SRECs into a market that could support a valuation of approximately $175/SREC. Both scenarios result in a simple payback on the upfront incentive of approximately 8.5 years.

SRECTrade is watching the SREC market place to see how our platform can generate more value for Arizona SRECs. We will continue to provide additional information as the landscape changes.

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