A key (and unique) benefit of the SRECTrade aggregation in Massachusetts is that all facilities produce their own SRECs and can track and control them online. SRECs are created each quarter at a rate of 1 SREC per 1,000 kWh and tagged to each individual facility in the SRECTrade aggregation. Any remainder is then carried forward and added to the generation for the next quarter.
One of the fundamental components of any successful market is diversity of sellers and buyers. The market-based platform that SRECTrade has designed relies on this diversity. In Massachusetts, SRECTrade manages the largest aggregation in the state’s SREC program. One of the key selling points of the SRECTrade aggregation over others is the individual facility’s ownership of SRECs. Unlike other aggregations where the generation of multiple facilities are combined to create “shared” SRECs in NEPOOL GIS, SRECTrade takes additional steps to ensure that each facility has its own separate SREC account in NEPOOL GIS.
By way of background, there are 3 types of entities that make up the SREC ecosystem in Massachusetts. The Mass CEC Production Tracking System (PTS) is responsible for verifying readings and transferring them to the SREC tracking registry. NEPOOL GIS is the SREC tracking registry that every aggregation will use to track and trade SRECs in the market. In addition to providing a market functionality, SRECTrade offers an aggregation service, known as EasyREC, that gives individual solar facilities access to their SRECs and the market in one online account on SRECTrade.com. Verification (PTS), tracking (NEPOOL) and trading (SRECTrade) make these markets work.
Prior to the SREC program in Massachusetts, a similar structure was used for the Class I REC market dominated by wind and other non-solar renewables. A major difference between the Class I REC market and the SREC market is the value per certificate. Class I RECs trade around $10/REC, while SRECs could be anywhere from $300 to $600/SREC. Since the value (and variability) of the Class I REC market is so insignificant, the existing aggregation model was simplified to combine the generation of all the facilities in an aggregation into one REC account. When this happens, the RECs are only tagged to the aggregation and not to any individual facility. This doesn’t work for SRECs since the value is so much greater and individual ownership is therefore much more important.
The problem with the existing model at the implementation of the Massachusetts SREC program was that it limited the diversity of sellers. All the SRECs created by an aggregation would be tagged to the aggregation and not-differentiated. It also created complexity around accountability in the SREC market, where a buyer who purchases from an aggregation will have no way of verifying what facility the SREC comes from and where that facility is located (though PTS does account for this at the generation level). From the standpoint of SRECTrade, it would not be possible to operate a fair and competitive market if the SRECTrade aggregation lumped all of its customers’ generation together to create one large batch of SRECs. The resulting market on SRECTrade.com would include a couple smaller aggregations and one large seller representing all of SRECTrade’s aggregation. Facility owners would lose control over when, where and how much the SRECs were sold for in the market.
Fortunately, SRECTrade was able to work with the DOER, NEPOOL and PTS to implement a solution that allowed individual facilities to have their own listings in NEPOOL GIS. Their flexibility in allowing aggregations to report for individual facilities meant that any generation reported by a facility to PTS is sent directly to that facility’s record in NEPOOL GIS each quarter, where the SRECs are created for the facility. Since SRECs are created for every 1,000 kWh, any remainder is then carried forward and added to the next quarter. The screenshot of an online account on SRECTrade.com is a good example of how SRECs are created and the remaining generation is carried forward.
In establishing individual facility ownership of SRECs, SRECTrade has successfully created a diverse platform that gives sellers the control over, and accountability for, their own SRECs in the market. Without this diversity, the open, public and fair market platform would not exist and facility owners would be limited to the options provided by a small group of non-transparent aggregators – a throwback to the early years of the New Jersey SREC programs when the early aggregators could make as much as 40% on trades behind closed doors. Fortunately, the advent of the public SREC markets have transferred much of the SREC value back to the facility owners where it belongs.
