An electric credit represents the green value of your electricity. SREC credits are separate from the electricity your solar panels produce.
Think of them as a “voucher” that proves the electricity generated by your solar panels is renewable energy. You therefore receive one SREC credit for every 1,000 kWh of electricity your solar power system produces. These credit “vouchers” are valuable, as many electricity companies are required to purchase a number of vouchers to verify that they meet sustainability requirements.
Why do we receive electricity credit?
Many states have developed a portfolio of renewable energy standards. These laws require electric companies to obtain a certain amount of electricity from renewable energy. Instead of complying with the regulations by building their own solar power projects, companies can purchase renewable energy credits (SRECs) on the free SREC market. Electric companies can use these SRECs to comply with the established requirements. Once you have installed your solar system, you can sell the SRECs you generate on this market.
What is the cost of SREC credits?
Because electricity credit is bought and sold in the free market, there are a number of factors that influence its price. The most important thing to remember is that the price of SRECs is determined by supply and demand. The more demand there is for SREC by electricity companies, the higher the price. In another aspect, the more SRECs of solar projects are offered on the free market, the lower their price will be.
It is important to remember that the market for SREC credits can change at any time, and that the price depends on the availability of SREC. Currently the price of SRECs is on the rise. However, you cannot assume that it will continue to be so. Think of the SREC credit market like the stock market, as it can change and fluctuate.
How many credits will my solar energy system produce?
Once certified and registered, your solar energy system will produce a SREC credit each time it produces a megawatt-hour (1,000 kWh) of electricity. As a general rule of thumb, you can calculate the number of SREC credits a system produces by multiplying the system capacity by 1.2. For example, a 5-kilowatt system will produce 6 credits each year.
Things to Consider
Many states have a law called the Renewable Portfolio Standard (RPS) that requires the state utility to produce a minimum amount of solar energy each year. If they can’t do it with their own power generation facilities, they must purchase SRECs.
Solar RPS requirements are intended to create a market for SRECs and a dynamic incentive for the solar industry. Solar RPS requirements require that energy providers or utilities obtain a certain percentage of electricity from qualified renewable solar energy resources in a state. These energy and/or utility providers can meet solar RPS requirements by purchasing SRECs from homeowners and businesses that own solar systems and produce SRECs. Homeowners and businesses can use the sale of the SRECs they generate to help finance their solar systems. SRECs can be sold in a variety of ways, such as on the spot market, at auction, or by trading long-term contracts.
At Zolarzo we can advise you on electric credit. Contact us! And our team will gladly answer your questions.