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Archive for December, 2010

One of the ways New Jersey has become a leader in solar electric (PV) installations (7,270 by Oct 31, 2010) is their program of “Solar Renewable Energy Certificates,” known as “SRECs.”  The state has other types of loans and incentives for renewable energy but the SREC program has proven popular and successful.  Simply put, it’s a subsidy paid by electric utilities to anyone who wants to install solar and is willing to register his/her system with the program.  The amount of the subsidy will change depending on supply and demand and so the SREC is sometimes referred to as a “market-based”  subsidy.

The concept of Renewable Energy Certificates is not easy to grasp because it is a monetary value representing the intangible, “good” characteristics of solar energy.  How do you put a price on that?  Photovoltaic (PV) is still the highest priced clean energy and coal is still the lowest priced dirty energy.  What is the value of eliminating sulfur dioxide and heat-trapping carbon dioxide from the atmosphere?  The New Jersey SREC attempts to “monetize” the clean aspects of solar.  Every time a registered PV system produces 1,000 kilowatt-hours (one megawatt-hour) of electricity it is automatically awarded one SREC.  Because it is based on actual production of electricity rather than the rated capacity number of a system, it is also called a production subsidy.

First the state had to mandate a renewable energy standard (RES), a requirement that utilities include renewable energy as some percentage of their supply.  New Jersey’s legislators voted to require each utility to provide 22.5% renewable energy by 2021.  This clean energy may come from a variety of sources such as wind power, hydropower, biomass and PV.  This is the reason a wind farm developer has applied for permits to install hundreds of megawatt-sized turbines off Atlantic City’s shore.

In order to insure that the business of PV manufacturing and installation becomes part of the NJ economy, the state dedicated a percentage of the RES just to solar PV.  They said that solar PV must provide 2.12% of the RES.  If a utility fails to meet this solar “carve-out” (e.g. 2.12%), then it must purchase SRECs.  Otherwise, the utility must pay a fine.  They softened the word fine by calling it a “Solar Alternative Compliance Payment” (SACP).

Let’s say the SACP (fine) is $600.  If the utility doesn’t have enough kilowatt-hours of PV production to meet the solar carve-out, it will have to buy SRECs to make up the difference.  If there are SRECs available for purchase in the online market, they may be cheaper.  The utility may be able to buy SRECs for only $500.  SRECs won’t ever be sold for more than the price of an SACP.  If there are a lot of SRECs the price may be less than $500.  The owner of a registered SREC is allowed to sell every 1,000 kilowatt-hours produced for a period up to 15 years.

SRECs won’t pay the entire cost of a solar system, but they certainly are helping many homeowners and businesspeople in NJ transition to clean energy right on their own rooftops.  Ohio, Pennsylvania and the District of Columbia (DC) also have SREC programs.  Florida policy-makers should look closely at the NJ program for adaptation in this state.

Next Era Energy (FPL) is to be congratulated for their utility-scale solar facilities, but ratepayers have been helping fund their big projects.  Unfortunately, other utilities in the state have not followed their lead in building solar.  A Florida SREC program could be designed to balance utility solar projects with private solar installations.  A competition between centralized solar power stations owned by utilities versus utility-subsidized, distributed generation owned by homeowners and businesses, would accelerate the growth of solar industry in Florida, creating more jobs and quieting the sucking sound of money leaving the state, chasing coal deposits.  Why should a smaller state with only moderate solar insolation trump the sunshine state?

Sam Kendall

Interview with Brad Bowery, CEO SRECtrade

NJ SREC Program – DSIRE

NJ Cleanenergy.com

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