We're still not one-hundred percent clear on what a Solar Renewable Energy Credit (SREC) is, how we receive them and what to do with them. This page on NJCEP's website was helpful:
Apparently the SREC is a state-based concept. I was poking around the internet and saw a New Mexico state government website describing their own program, which was similar but clearly independent.
Here in New Jersey it works like this. The SREC is a tradeable "certificate". It's electronic, though, not paper (Previously I was thinking it would look something like a Willie Wonka golden ticket). Each time 1000 KW of power is generated, an SREC is issued.
The value of SRECs will fluctuate much like the price of a stock on NASDAQ or NYSE. Currently they are trading for about $600. It could be that SRECs drop in value as more systems like ours go online meaning that there are more SRECs on the market. On the other hand, the SREC market is completely artificial, driven by the law that specifies how many SRECs the utilities must purchase. That will also rise each year which will probably negate the effect of a growing number of SRECs.
The SREC is issued by an SREC administrator who is appointed by the New Jersey Board of Public Utilities. This office tracks energy production for systems like ours, issues SRECs, and records sales/trades of SRECs. I'm still not clear on how this SREC Czar tracks our production but it must be through our power company (PSE&G) and their electric meter.
As I understand it the SREC market consists of the current providers of electricity in the state (the utility companies), who are required to purchase a minimum number of SRECs under New Jersey's Renewable Portfolio Standard. The number of SRECs the utilities must purchase rises every year under the current law, the purpose of which is to encourage the growth of renewable energy to meet growing needs for electricity rather than construction of new power plants.
Operators of solar systems can manage their own SRECs. To do this they must register with the SREC Czar for an SREC account. When SRECs are issued, presumably they are automatically deposited in this account.
Many operators enroll with commercial SREC brokers. This must be a lucrative business because every installer seems eager to push their customers towards their preferred broker. These companies will manage the sale of SRECS for a fee. My first impression is that unless it's more difficult than it looks, it would be wise to handle this ourselves.
groSolar sent us literature from their preferred broker. The proposal wasn't written very clearly but the gist of it was that we had to commit for five years. For part of the duration the installer actually receives a percentage of the profit, which explains why groSolar is anxious for us to enroll. At some point early on during the duration of the contract the arrangement settles into an arrangement by which we would keep 60% and the broker would keep 40% of the money generated by SREC sales. That seems steep, although one benefit of working with this broker is that they guarantee a minimum payment of $200 per SREC regardless of how low value drops.
We're still learning about SRECs. We've got about three months to master it.