Renewable Portfolio Standard Solar Carve-Out Program
| Program Type | Solar Renewable Energy Certificates (SRECs) |
|---|---|
| Technologies | Photovoltaics (solar energy) |
| Amount | Each SREC can be worth from $300-$600 per mega watt hour (mWh) |
| Required Documentation | Application (must be accepted before system can begin accumulating SRECs) |
| Official Web Site |
http://www.mass.gov/pageID=eoeeasubtopic&L=5&L0=Home&L1=Energy,+Utilities+%26+Clean+ Technologies&L2=Renewable+Energy&L3=Solar&L4=RPS+Solar+CarveOut&sid=Eoeea |
The RPS Solar Carve-Out Program is one of the most innovative performance-based incentives in the country, and might one day serve as a model for other similar programs across the states. While many renewable energy certificate (REC) programs are designed to stimulate interest and investment in solar energy early on, most of these programs have finite funds and offer dwindling returns. The value of RECs tends to become less and less as more solar photovoltaic (PV) systems spring up. On the other hand, in Massachusetts the RPS Solar Carve-Out Solar Renewable Energy Certificates (SRECs) are designed to hold their value as the supply of solar energy increases, drawing from consistent funds.
Each year, power suppliers in Massachusetts are required to supply a greater percentage of their power from solar energy than the year before, and they accomplish this either by ownership of solar generation or by purchasing SRECs from solar energy system owners, residential and industrial alike. According to RPS Solar Carve-Out Program Coordinator Mike Judge, in 2010, utility companies and power suppliers must provide 30 megawatts (MW) of installed capacity, generating approximately 34,164 MWh of electricity, or 34,164 SRECs. These electric suppliers can buy SRECs at the rate of $300-$600 each. The guaranteed minimum of $300 is the base price of SRECs at auction, while the ceiling price of $600 will be the price electricity providers will be required to pay for each SREC if they haven’t reached the obligatory minimum standard by the end of the year.
In order to qualify to receive SRECs, solar projects in Massachusetts must be no larger than 2 MW, which is significantly larger than your average residential installation. While it is very difficult to estimate the profits of a residential system because it is based on many factors (such as the system size, the solar panel orientation, and even the weather), Judge offers a rough estimate to serve as a model:
“For a 5kW system, I would estimate that it would likely generate 6,000 kWh per year, which would be the equivalent of 6 SRECs. If these all sold at the auction price of $300 (minus a $15 fee), they could expect to receive approximately $1,710 per year ($285*6 SRECs),” he said in an email interview.
Keep in mind that this estimation is based on the $300 minimum price of an SREC. “This is likely the lowest price SRECs will be sold for” added Judge. “The first SRECs sold were …for a price of $500 each.”
Selling SRECs can be a difficult process for the owner of a small, home-based system. The buying and selling takes place on a system called New England Power Pool General Information System (NEPOOL GIS). Any owner of Solar Carve-Out SRECs can create an account on NEPOOL GIS, but it can be difficult to sell there because of the confusing application process and because most entities interested in buying SRECs are interested in buying a large amount of them at one time.
While it is still possible to sell your SRECs on your own through this system, owners of small systems might opt to join an aggregation to simplify the process of marketing and selling your SRECs.
According to the Solar Carve-Out information website, “(An Aggregation) represents a number of PV systems and Owners, provides qualification from DOER (Department of Energy Resources), establishes an Aggregators Account on the NEPOOL GIS, and markets and sells its members' SRECs.” The aggregator will ask for a small fee for managing your SRECs, but in the end, it might actually be in your best interest since an aggregator is in a better position for negotiating a better price than you would be on your own.
