Is SREC Income Taxable?

I asked SRECTrade this question. It turns out that this is as murky a question as we suspected. They sent me an informative blurb, which consists in part of a post from a blog similar to mine that originates in Maryland (great resource by the way, check it out: www.solarpvhome.com).





Here's a link to the blurb from SRECTrade:

http://www.srectrade.com/blog/srec/taxes

The position of Michael, the Maryland solar blogger, is that SREC income is not taxable because a profit on the solar electric system will not be generated until the entire system is paid off.

SRECTrade recommends consultation with a professional accountant but adds this:

Is the income generated from SRECs considered taxable income?

Questions constantly arise regarding the tax treatment of SRECs and it seems that no legislative body or government agency has explicitly answered the question. For example, the New Jersey Office of Clean Energy, the pioneer in SREC markets, provides the following information in their FAQs:

Is SREC income taxable? Will I be issued a 1099 if I sell my SRECs? Is there sales tax on an SREC?

- There is not a definitive ruling on this issue. We recommend you discuss the issue with your tax accountant and perhaps a tax lawyer.

SRECTrade doesn't even issue 1099 forms.

My plan is to hand the issue to my accountant and let him decide. Based on what I've seen here my own opinion is that the income is not taxable.

Edit: see the March 20 blog post. That's where I decided that for me, SREC income is not taxable.

1 SREC Sold for January

We generated enough power for 1 SREC in January, which sold at auction for $660. As far as I'm concerned that makes the system $660 closer to paying for itself.

Thanks again as always to SRECTrade. I didn't have to do a thing except notice the deposit in my account.

Folks, if you're putting in a system, make sure to shop around before choosing somebody to broker your SRECs. There are vast differences between the terms of the agreements they'll want to make with you. If your installer is trying to hook you up with a particular broker, chances are they are getting something out of the deal. That doesn't mean it's the right deal for you.

Survived the Big Wind

The panels survived another durability test earlier this week when we experienced a day of violent wind. There were a lot of loose shingles blowing around the township (but none of mine, as it turns out). The winds were so strong that they did this to Washington Township High School just a few miles away:

Strong winds peeled sections of the roof off piece by piece until rain was falling into classrooms. The damage was so bad that classes were dismissed, everybody was sent home in the rain and school was cancelled the next day so the roof could be repaired.

From Fox News:
In New Jersey, Washington Township High School is closed. Fox 29's Steve Keeley reports a portion of the school's roof was peeled off by high winds. Heavy rain poured into several classrooms. Students were evacuated and sent home Monday just before lunch. It's not clear when classes will resume for the 3,000 students, faculty, and staff.

We sustained no damage at all to the panels, which started cranking out juice as soon as the sun came out the next day. That's a relief.

Clouds + December = No SRECs

Since I was bragging a few weeks ago about selling SRECs it's only fair that I report that we didn't earn any full SRECs this month and so had none to sell in the auction. This time of year is the slowest period for solar to begin with because of the short days and the low sun. On top of that, it was very cloudy. Hopefully we'll have two or three next month...

Landslide! (Snow on the Panels)

We had our first significant snowfall since the panels went up. Significant is an understatement -- it was about two feet of snow. It started early Saturday morning. Here's what the roof looked like as night was falling on Saturday night.



Needless to say, the panels were covered over completely with a healthy layer of snow.



We were out early Sunday morning to get a head start on shoveling. The panels were still completely covered. Then we heard it -- it sounded like thunder but it was actually an avalanche. When it was over a sizable group of panels on the main roof were visible again (and the front sidewalk suddenly had three feet of hardpacked snow so we had to reshovel it.)

Since then there's been some melting but there's still snow on the main roof panels and the garage roof (including panels) is still covered.

I didn't expect any production given that so many panels were covered but it was a rather sunny day and by afternoon we were producing more juice than we used.

Snow on the panels is something I worried about because I suspected (correctly, as it turns out) that snow would let go and slide off in large sheets. That's what happened but the only consequence was a need to do some reshoveling...

Subsidies for Greening of Developing Nations

One of the major sticking points at the Copenhagen climate change discussions is whether and by how much the industrialized nations should subsidize the efforts by developing nations to "green up." Now, I have some qualms about how nations are divided into "developing" vs. "industrialized" but that's a whole different kettle of wax.

I don't necessarily oppose subsidizing the developing nations but I do oppose doing it by sending a wad of American taxpayer dollars to do it. That money will go straight to China or Malaysia to buy technology made on the cheap (probably by subsidiaries or derivatives of American companies, but that's another digression.)

What I'd rather do is pay American companies to hire American workers to build whatever these developing countries need, and then ship it over. That way, we will help put Americans to work in a growing, vibrant high-tech sector, which is something that's good for our country. If there were stipulations that the work could not be farmed out overseas to save on labor costs, an entirely reasonable arrangement, a lot of "obsolete" American workers would have a new start in a field that has tremendous upside.

Just across the river in Philadelphia a company will be setting up shop building solar panels on the former Navy Yard site. That's a rarity that only happened because of a slew of tax breaks and incentives. Most of the new solar panel factories are going up in other countries where the labor is cheap. This idea might help to change that.

Just something to think about. I've greatly oversimplified but I think the concept is sound.

Sold Our First SRECs!

We sold our first SRECs.

This is the email I just received from our SREC broker, SRECTrade:

Dear Dave :

You successfully sold 4 2010 New Jersey SREC(s) in the December 4, 2009 auction. The clearing price for this auction was $660 and your total payment is $2640 (please see attached statement for details).

I was surprised that we had four to sell. I didn't know if we had any at all. The system has actually generated about 6 SRECs worth but we only passed inspection and were certified a few weeks ago. I had no idea if we would be awarded SRECs for power generated before the system was certified, but apparently we were.

SRECTrade auctions off SRECs in the Mid-Atlantic area. Here are the prices they fetched in yesterday's auction:

District of Columbia $290
Delaware $200
Maryland $360
New Jersey $660
Pennsylvania $290

Very cool. In my next post I'll talk about SRECTrade and how easy this was. They literally did everything for us. I'm so thankful I didn't sign on with the brokers that we first learned about.

I also want to review the process by which it's determined how many SRECs we have. Trust me, nobody came by the house and read our inverters. I think I blogged about this last summer but I need a refresher.