Monday, April 5, 2010

SREC: Solar Renewable Energy Certificates

Solar Renewable Energy Certificate (SREC) or Renewable Energy Certificates (RECs) are known by numerous names. Sometimes called Green Tags, they are also known as Tradable Renewable Certificates (TRCs). These are tradable certificates that represent that 1 megawatt-hour (MWh) of electricity was produced from an eligible renewable energy resource like Solar Panels or Wind Mills etc. These are only available in the States where Renewable Portfolio Standard (RPS) exists.

SRECs are created on behalf of the solar panel’s owner, to be sold to the utility companies, to meet the requirement of the RPS. The electric companies are bound to follow the states incentives. Thus the electric companies buy SREC from the consumer of solar panels. SRECs are a part of financial incentives designed to encourage the use of renewable energy sources to generate electricity, for homes or businesses. Instead of waiting for direct, up-front payments from the government the owners of solar panels can sell their SRECs to the utility providers and reap the financial benefits.

To qualify for receiving SRECs you must have Solar panels installed to produce electricity for your business or house. Other renewable sources that qualify get RECs instead of SRECs, for example wind, geothermal sources, biomass etc.

There are two main markets for the SRECs, the Compliance market and the Voluntary market. The differences between the two are discussed below:

• COMPLIANCE MARKET: Compliance market exists in those 29 states which require that their utility providers provide a certain number of their energy from renewable power sources. Such companies buy the SREC from the private consumer and show the state that they have provided that house or business electricity from a renewable source, like solar panels. Thus the utility providers are buying the SRECs to comply with the laws and requirements of that specific state.
• VOLUNTARY MARKET: Like its name a voluntary market exists where customers choose to use a renewable power supply for their businesses or houses for the production of electricity. Such markets usually exist in states where there is no RPS, thus voluntary buyers buy the SRECs at cheaper rates.

The prices of SRECs are greatly dependent on the law of supply and demand. Thus they keep fluctuating. In the states where a lot of people selling SRECs the utility companies pay less compared to the states where fewer people are using renewable energy. Thus, the more SRECs in the market the cheaper it is and vice versa.

To add to the thrill of the SRECs buying and selling game universities and numerous other organizations also sometimes buy SRECs. Nowadays the Duke University is advertising that they may be interested in buying your SRECs. So act quick and contact YellowLite as soon as possible to get your own SOLAR PANELS installed today.