The SREC: Revenue from Renewables

We just sold our first SREC and I’m stoked. It looks like we can afford to buy the cats another package of toy mice to keep them enthralled during another long West Virginia winter.

SRECs are Solar Renewable Energy Credits. These are also called, “RECs” for short. The market for RECs is growing thanks to the institution of aggressive Renewable Portfolio Standards or RPSs. That’s a lot alphabet soup, but the upshot is that ordinary homeowners like ourselves can receive payment for the clean power that we make with our PV system.

A SREC is equivalent to 1,000 kWh. The value of a SREC varies, but this most recent sale saw the price at $290/SREC. SREC sale value will differ from state to state and sale to sale. Some states, like New Jersey, see a SREC sale price that can be closer to $650. Companies who purchase SRECs are really purchasing the positive environmental benefits that go along with clean power generation – they are obliged to buy these to offset some of the pollution that traditional fossil fuel sources produce.

The clean energy we produce is worth more than the fossil fuel power that our local utility sells. Our SREC revenue represents $0.29/kWh while retail rate for utility power in our region of West Virginia is $0.07/kWh. The power that we produce from solar is therefore worth the avoided cost ($0.07/kWh) + SREC value ($0.29/kWh) which equals $0.36/kWh – more than five times the retail value!

Our SREC sale was handled by SRECTrade.com. This company holds a monthly auction to sell SRECs in a variety of different states within the regional PJM grid network. The SREC market is one that is still fairly new, but may become stronger as state RPSs ramp up and require utilities to provide a greater and greater portion of their power from clean sources. Even at this early stage, the sale of SRECs is providing a revenue stream to home and business owners who have taken the initiative to produce some, or all, of their power with solar technology.