The Massachusetts Department of Energy Resources (DOER) runs a program that offers an on-going production incentive for businesses with solar systems, known as SRECs, or Solar Renewable Energy Certificates.
SREC stands for Solar Renewable Energy Certificate. It represents the environmental benefits of producing one megawatt-hour of electricity using solar PV technology.
SRECs behave like stock certificates. They are bought and sold on a market administered by the Massachusetts Department of Energy Resources (DOER).
Whenever a solar system produces a megawatt of electricity, SRECs are “minted” on that system’s behalf, provided that the system owner has registered their system with the DOER and that their system is reporting its solar electric production on a monthly basis.
SRECs are purchased by the investor-owned utilities, such as National Grid and EVERSOURCE. In Massachusetts, electric utilities need SRECs in order to resolve their obligations under the State’s renewable portfolio standard (RPS). The current SREC II program will be “fully subscribed” when the State reaches 1600 megawatts of installed solar PV.
An SREC is worth whatever a utility will pay for it: SRECs are bought and sold on an open market. That said, there are price support mechanisms put in place by the DOER to create ceiling and floor values for SRECs. The ceiling is determined by the fine levied on utilities for not meeting the solar standard, called the Alternative Compliance Payment (ACP). Under the current SREC II program for 2016, the ceiling is set at $350 per SREC.
The floor is established by the DOER’s Solar Credit Clearinghouse, an auction of last resort should an SREC not sell. Under SREC II, the Solar Credit Clearinghouse values SRECs at $285 each in 2016, and declines year by year; SRECs are valued at $180 in 2025.
A commercial roof-mounted solar system in Massachusetts with a nameplate capacity of 100kW will generate approximately 110 megawatt hours annually, earning 99 SRECs (most roof-mounted systems are compensated at .9 SRECs for every MWh). These SRECs should earn the system owner over $28,000 in year one and approximately $17,000 in year ten. SREC income is in addition to other income streams from the solar system, including the utility savings the system owner derives for not purchasing power, and the two federal tax benefits offered to solar systems—the investment tax credit (ITC) and accelerated depreciation (also known as MACRS).
To learn more about solar for your commercial property, contact us to request a no-cost solar assessment.
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