Project Financing Options
There are a number of financial incentives available to help you reduce the cost of a solar project and improve your return on investment. In addition to federal and state incentives, one of the best ways you can improve your solar project’s economics is to monetize the SRECs associated with your solar project. This page provides you with an overview on SRECs and options available to you.
What are solar renewable energy credits or SRECs?
Solar renewable energy credits (SRECs) are tradable credits that represent all the clean energy benefits of electricity generated from a solar energy system. Each time a solar energy system generates 1,000 kWh (1MWh) of electricity, an SREC is issued which can then be sold or traded separately from the power.
The value of SRECs in a given state is quantified by three major factors:
RPS Compliance Fee Schedules
Compliance fee schedules dictate how much energy suppliers must pay for each SREC they fail to produce or acquire. As a result, SREC prices usually trade at or below the dollar amount of these compliance fees. In some states the fee remains the same dollar amount year over year while in other states, like New Jersey and Ohio, the fee decreases over time which will result in a decrease of the price for SRECs over time.
SREC supply will increase in the coming years. As solar panel prices fall, solar will become more affordable and more popular. As more solar systems are installed, more SRECs will be available on the market. Additionally, as credit markets continue to improve, more large projects will become financeable and built, resulting in more SRECs. Both of these trends will put downward pressure on SREC prices.
SREC demand will also increase in the coming years. The demand for SRECs in a given state is set by RPS legislation that determines the overall number of SRECs energy suppliers are required to acquire each year, and this number quickly increases year over year in every state with an RPS. Because SRECs are a compliance commodity, if there are more SRECs supplied than demanded in a given state market, the pricing for excess SRECs will likely be equivalent to pricing seen on voluntary SREC markets, which today trade at $15-$30 per credit.
Because of these factors, SREC values can vary dramatically from state to state. To find out more information about the requirements in your state, please visit www.dsireusa.org.
How can I monetize my SRECs?
Most residential and commercial system owners have limited options for selling their SRECs. Energy suppliers are not typically willing to engage directly with small system owners and most system owners have little price leverage. That’s why we have partnered with Sol Systems, the largest SREC aggregator in the country, to provide you with reliable financing solutions that are tailored to fit your needs. Sol Systems is dedicated to making solar more affordable for solar project owners. Sol Systems offers:
Utility-backed contracts: Sol Systems backs its long-term customer contracts with utility contracts. Unlike brokers who do not have secured counter-party agreements, this ensures that Sol Systems is able to pay guaranteed SREC rates in the long-term.
Competitive Pricing: Sol Systems utilizes its market expertise to secure the best pricing and secure products. Whether a customer selects one of Sol Systems’ long-term SREC purchase agreements or a brokerage solution, they can rest assured that they are getting a quality return for their SRECs.
Quarterly payments: Sol Systems makes quarterly payments for customers that choose production based payments or the brokerage option.
Streamlined registration process: When you sign up with Sol Systems, they will manage the registration and certification process with all required regulatory agencies so your system begin producting SRECs promptly.
By choosing one of the following offerings from Sol Systems, you can reduce solar project costs anywhere from 20-40%.
Sol Annuity is a long-term solution that gives you guaranteed prices for your SRECs even when spot market prices fall. You will receive a fixed, quarterly payment for each SREC produced over a 3 or 5 year term. For example, a system that produces 1 SREC/quarter at a fixed rate of $325/SREC would generate $6,500 over a 5 year period. You will receive your first payment 4 to 6 months after signing up with Sol Systems. After that, you will receive a quarterly payment in February, May, August, and November based on the number of full SRECs your system produces.
Sol Upfront helps reduce your out of pocket costs by giving you a lump-sum payment that is based on the size (kW) of your system. Once you sign up, Sol Systems will lock the amount of your upfront payment. After your system has been properly registered, you will receive a check within 10 business days, providing you with immediate financing for your solar energy system and eliminating all risk associated with fluctuating markets, legislation, and SREC prices.
Sol Brokerage is a flexible SREC solution that lets you benefit from the risk-reward of spot-market rates with no effort required. Sol Systems will monitor SREC trading platforms and legislative changes, and will use their market expertise to establish a target price for your SRECs. They will only enter into SREC purchase agreements that achieve the highest market SREC prices. Each quarter, you will receive a payment for each SREC produced by your system. This payment will mirror the weighted average of SREC sales for that quarter less the higher of $5 or a 5% brokerage fee.
To learn more about your SREC financing options, please contact us today to discuss your specific financing requirements.