What are solar performance payments?
Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you’ll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies aren’t benevolent creatures and most don’t have deep pockets flush with Benjamins, why would they be giving anything away other than a rate increase?
That’s a great question. Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
I need some visual explanation of this, too many words. I’m confused.
Fine. Check out this video:
Why are some utility companies paying people in certain states, but not all?
Some states have strong renewable portfolio standards, and other states do not! For those that do, SREC exchanges develop and homeowners get paid. For those that don’t, you are mostly out of luck, even if you live in a sunny state like Mississippi.
How many SRECs does a typical solar system crank out a year?
It’s usually about a 1 to 1 ratio between SRECs and the size of your solar system. For example, a 5kW solar system will pump out about 5 SREC credits a year.
Why are SREC credits are worth different amounts in different states?
The variation in SREC credit amounts is largely dependent on the size of the alternative compliance fee imposed on utilities for not meeting their targets by the specified year for solar energy generation in the renewable portfolio standard.
Aside from SRECs, what other payments are there?
Some states and larger municipalities have adopted pilot feed-in tariff programs, which pay homeowners a set amount per kilowatt hour of electricity produced from the panels, usually at a considerable premium to the going rate of electricity. Those yearly estimates are also outlined in the left-most column. For example, Washington and Oregon have great feed in tariff programs.
I checked out part 3 of your snazzy report, and my state doesn’t seem to have a strong RPS. Why are there SREC credits even available to me?
Even though many state legislatures have not stipulated a specific solar set aside in their RPS, the rules in states that do are lax enough to allow bordering states to participate in state renewable energy credit (SREC) exchange programs. Those states are illustrated below in this informative infographic from SRECtrade:
A special important note though, for homeowners to participate in the SREC programs in Pennsylvania and DC, your utility company needs to be part of a special district called the PJM, outlined below:
If you like this then you may also like these:
- SPR Report Card 2010 – Part 4 – Solar Incentive Summary Grades
- SPR Report Card 2010 – Part 1 – State by State Solar Energy ROI
- SPR Report Card 2010 – Part 6 – State Rebate Details
- SPR Report Card 2010 – Part 3 – Renewable Portfolio Standards by State
- SPR Report Card 2010 – Part 7 – State Tax Credit Overview