The Solar Situation
There’s a situation. With Solar. In New Jersey.
Did you know New Jersey is the #2 solar market in the US just behind California? Well, there’s a reason such a tiny state has more solar per capita than the best solar market in the United States. The reason is SRECs. SREC stands for “Solar Renewable Energy Credit.” They are a certificate for renewable energy production you can trade on the open market.
How do you get an SREC?
You own something that creates renewable energy. In this case, solar. When your thing that you own that creates renewable energy pumps out 1mWh or 1000kWh (1000 kilowatt-hours) of juice (enough to power a big giant home for a month), you get one.
How much is an SREC worth?
At the moment, $700. Why you ask? Because if the utilities don’t meet their RPS standards, which they are not, they get ding’ed to the tune of $720. It makes sense then, that they’d be happy to buy your SREC’s for anything under $720, so it’s pretty easy to set the market rate for them. If they all the sudden start magically meeting their RPS standards, that could change, but for now, SRECs are a freaking gold mine for any homeowner who has a good roof setup in NJ.
Why is solar in NJ such a sick investment?
This is best shown with an image. Here is a financial breakdown of an example system estimate in New Jersey taken from 1BOG’s solar estimate tool (it only works where they have active solar group purchase campaigns).
In other words, the SRECs, which are money in your bank, are four times as valuable as the money you spent on the system in the first place. That DOESN’T EVEN INCLUDE your electrical savings. Yes, it’s crazy. Yes, I know it sounds too good to be true. I know, I know, I know. Believe me, I know. Most are skeptical, and yah sure there’s some fine print:
The Small Print – What’s the catch?
There’s not a REAL catch, it is actually a ridiculous investment where you get a free solar system that makes you money for 40 years. But here’s the small stuff you should know.
- The SREC incentives are so sick, that they state will try to keep you from gaming the system and installing a system in suboptimal conditions. You can only have the state rebate (which is currently $1,750 per DC kilowatt) if you have a roof situation that will be 90% efficient (good orientation and no shading). Some people who do not have this install systems anyway just to get the SRECs and abandon the state rebate)
- There is enough money for the state rebate at $1,750 per kW to last a few more months, then it drops to $1,550. That’s about a $1,400 decrease in rebates on the average sized system in NJ, so you better get moving.
- If the utilities all meet their RPS standards, albeit extremely unlikely, the SREC market could become volatile. They will still be worth considerable amounts of money, but they won’t have a clearly defined market value like the current penalty is pinning it to close to $720.
- SRECs are hard to trade personally, although there are some online tools coming about to help you do it. Most people sell them to aggregators (which the solar installers help you with). The aggregators of course take a cut, I think around 10%
- The utility penalty I talked about drops 3% a year, so expect SRECs to do something similar
If you live in New Jersey and you are interested in solar (hopefully you are now), sign up to find out if solar works on your home in New Jersey. There is currently a group purchase program in the north and there will be one coming soon in the south.
New Solar Group Purchasing Programs in San Antonio. Here’s the Solar Beef. »« Bloom Energy vs Solar Power. And the winner is… both.
