Wednesday, December 15, 2010

The Down Side of SRECs

Whoa, check this article out. I've said before that I sometimes wonder if it's good public policy to force solar energy into the pipeline with this artificial SREC mechanism (although on a personal level, I like getting money). Requiring power companies to buy SRECs owned by solar power generators like me drives everybody's power costs up, because the utilities must accrue the money to buy them. is that good? This article, which happens to be about my county here in New Jersey, sums it up well at the end. I sometimes crow about high SREC prices while this article speaks of a longing for low ones...

Gloucester County Becoming Solar Powerhouse

Greg Reinert, spokesman for the Board of Public Utilities, said the Garden State is attractive to solar developers for a couple of reasons.

One, state law mandates how many gigawatts of solar power must be generated in the state on an annual basis Ð and the number climbs a bit each year Ð but that number has yet to be met.

Second, because the state hasn't met the number, it drives up the price of the Solar Renewable Energy Credits (SREC), which are federal tax credits that owners of solar arrays receive for generating solar power. For every megawatt of solar power generated, the owner gets an SREC.

Unfortunately, solar power is a costly enterprise at the moment, Reinert said, and ultimately that cost falls back on the ratepayer. So, the more solar power, the lower the price of the SREC, and the lower the SREC price, the less that ratepayers will pay.

"The goal is to drive the SREC down," he said.


Douglas said...

SRECs are already saving rate payers money in NJ. A power company is forced to create a percentage of it's power from renewal sources in NJ. If they do not they are hit with a penalty, a SACP. Instead of the penalty they can purchase SRECs from consumers, which are currently selling for about 5% less than the SACP.

I know that the goal is to have a surplus of SRECs, so that the price will drop further, but currently there are not enough SRECs created each month to offset the lack of investment by power companies in Clean Power.

Since the power companies are not investing in our future, the SRECs allow consumers and investors to create jobs and push NJ towards better power options.


Dave Conifer said...

True, the utilities would pay a penalty, but the system that requires the penalty is part of overall program that I'm referring to. My (rhetorical) question is about that overall program.

I think renewable energy is where it's at for several reasons including the environment and creation of high-tech jobs. I just wonder if it's proper to shove it down people's throats, and how much resentment there is out there.

I like your last paragraph the best. It's hard to find fault with this as public policy.

I'm such a waffling hypocrite.

Douglas said...


It if makes you feel any better coal gets billions in subsidies every year. Unfortunately, our system is setup such that those with the money can lobby congress and get tax breaks, etc. This means that the ratepayer/taxpayer is the stuck with the bill.

The SREC is a subsidy as well, but it is hard to compete when one form of energy is subsidized and other is not. So, solar, coal, corn and the rest of them enjoy breaks at the expense of the ratepayer. It is up to you to pick your poison/weapon, and I'm glad to choose solar over the others.

Here is an article on some of the coal subsidies.


Josiah Garber said...

I find the subsidies immoral, despite the fact that I have a solar system installed on my house and sell SRECs. I will not call my congressman and support legislation requiring more subsidies, even though my solar installer recommended I do.

Cheapest Solar  ACT said...

I know that the goal is to have a surplus of SRECS so the price will fall further, but currently there is not enough SRECS created each month to compensate for the lack of electricity companies to invest in the clean energy.

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