In California, the environmental attributes of solar electricity are bundled with the electricity; in fact, they are not allowed to be separated. For this reason, the environmental attributes of solar-generated electricity, or Solar Renewable Energy Credits are not tradable as compliance commodities. This means there is no secondary market for Solar Renewable Energy Credits (“SRECs”) in California. However, this may change.

The people of California have been trying to create an SREC market since 2006 when the California Assembly passed Senate Bill 107 (the “Bill”). This Bill granted authority for the California Public Utilities Commission (CPUC) to develop and administer a secondary market for Tradable Renewable Energy Credits (TRECs).

Three years later, in March 2010, the CPUC issued a decision establishing the rules and regulations that would structure California’s future secondary SREC market. The regulations proposed an alternative compliance penalty of $50.00 for 2010 and 2011; this amount would effectively serve as the ceiling value for the TRECs. (This is a relatively low value when compared to more robust SREC markets such as New Jersey and Maryland). However, the CPUC sidelined their decision in May 2010, and that is where the secondary SREC market sits today in California. The decision was sidelined in response to concerns expressed by investor owned utilities (IOUs) and energy suppliers.

However, a new bill in the State Assembly proposes a legal framework for a secondary SREC market in California. The details of this new bill are not firm enough to offer a good viewpoint on what a future SREC market may look like in California.

In the meantime, California solar energy system owners must sell their electricity and attributes bundled.  Systems sited outside of the state of California can enter into Power Purchase Agreements with California IOUs, to sell their bundled electricity and attributes.  However these systems must be located within the Western Regional Energy Generation Information System (WREGIS).  If, and when, California’s laws change, Sol Systems will be there to develop the SREC market for our customers.