If you are a homeowner or business owner with a solar electric system located in the state of Massachusetts, you now have the opportunity to significantly improve the economics of your solar project and receive income for the solar renewable energy credits (SRECs) associated with the electricity you will be generating from your solar energy system. Because the Massachusetts SREC market is so new, Sol Systems thought it may be useful to summarize the Solar Carve Out Program and highlight some of the available options for selling your SRECs.
What is the Massachusetts Solar Carve Out Program?
In January of this year, Massachusetts implemented a Solar Carve Out Program as part of the Green Communities Act of 2008. As a result, Massachusetts utilities must now provide a portion of their total energy load from solar power generated from photovoltaic (PV) systems located within the state. This year the Minimum Standard, which is the total solar capacity that all utilities must procure, is 30 MW and is spread proportionally across all local utilities. If a utility is unable to meet the requirement by producing solar electricity on its own, it must purchase SRECs from independent PV system owners (like homeowners or businesses) or face a penalty called an Alternative Compliance Payment (ACP). For load contracted after 2010, the ACP is set at $600/MWh (higher than most states with a solar carve out program) and for load contracted prior to 2010, the ACP is set at a much lower value of roughly $60.
How does the Solar Carve Out Program Benefit Solar Project Owners?
The benefit of the solar carve out program is that solar project owners in Massachusetts can now secure a higher value for the green attributes associated with their solar electricity. Previously, the green attributes of a solar energy system were valued under a different program and were selling for only $10-40/credit. The new ACPs offer the potential for SRECs to sell at a much higher price.
How much are SRECs in MA worth?
The value of each SREC in MA depends on a variety of factors including the ACP, SREC supply, and SREC demand. Since there are two ACPs in effect until load contracted prior to 2010 phases out, there is a bit of uncertainty over where SREC prices will settle during the initial years. However, as the market is likely to be undersupplied this first year, many solar stakeholders are hoping that spot market SREC prices will settle closer to the $600 ACP.
If a PV system owner opts to enter a long term contract for a fixed SREC price, the value of each SREC is likely to be lower than spot market prices. However, in exchange for the lower price, the owner get added security knowing that they have a predictable source of income, regardless of where spot market prices end up in the long run.
What is the Solar Credit Clearinghouse Program?
The ACP mentioned above is designed to set the ceiling for SREC prices, the Solar Credit Clearinghouse, however, is designed to set the SREC floor price. If a PV system owner is unable to find a short term or long term contract for their SRECs, they may place the solar credits into the Clearinghouse, which is a fixed price auction that takes place every July. The Clearinghouse price for SRECs is set at $300, minus a 5% ($15) transaction fee.
Which projects are eligible for the program?
A PV project is eligible if the PV system meets the following specifications[i]:
• Located in the Commonwealth of Massachusetts
• Is 6 MW or less
• Began operation on January 1, 2008 or later
• Is interconnected to a utility grid
• Received less than 67% of total funding from the American Recovery and Reinvestment Act
What options does Sol Systems offer for SRECS?
Sol Systems currently provides three options to help Massachusetts customers take advantage of the solar carve out program.
Option 1 – Sol Annuity. Sol Annuity provides a fixed, quarterly payment for each full SREC produced. This option removes SREC price volatility, and provides customers with a steady income stream over a five year contract term. As spot market prices change (and decrease) over time, Sol Annuity gives you consistent, guaranteed income. You can match this cash flow against a solar financing payment, such as a loan or solar power purchase agreement (PPA).
Option 2 – Sol Brokerage. Sol Brokerage lets you take advantage of high solar renewable energy certificates (SREC) spot market prices without any effort or market knowledge required. We monitor all solar renewable energy certificate trading platforms and legislative changes, and we establish an aggressive floor price that reflects current market conditions. As the market changes, you’ll receive payment for solar RECs at prices that are between our achievable floor price and the ACP.
Option 3 – Sol Flex. Sol Flex is a hybrid option between Sol Annuity and Sol Brokerage. This option provides a guaranteed base price for your SRECs for 5 years, but also allows you to benefit from upside and profit sharing, if the spot market performs above the base price.
Regardless of which option you choose, Sol Systems will take care of registering your system with the appropriate regulatory agencies. All you have to do is sign up with Sol Systems and we’ll take care of the rest. Customers that are interested in working with Sol Systems should contact us for more information. We can lead you through the simple registration process and get you set up to receive SREC income.
About Sol Systems
Sol Systems is a Washington D.C. based solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. Sol Systems enables solar developers, homeowners, and businesses to fully realize the value of their solar energy systems by providing them with a range of options for selling their SRECs. To date, Sol Systems has helped over 1,100 customers, with projects ranging from 1 kW to over 1 MW, realize the value of their SRECs.
Sol Systems currently operates in Delaware, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Virginia, Washington, D.C., and West Virginia and has partnerships in place with over 100 solar installers and developers. For more information, please visit www.solsystemscompany.com.
Phone: 888-235-1538 x1