Today, I’m going to attempt to explain “REC” “SREC” aka “Green Tags.” I say try because these can be really, really…really complicated. They’re also worth money, so again, I’ll try, but the truth is that these things are variable in every State.
First the simple: What do all of those letters mean?
- “REC” “SREC” and Green Tags are all different short handed names for the same thing.
- REC stands for Renewable Energy Certificate. Sometimes the “C” stands for Credit.
- SREC (Sometimes spelled S-REC) stands for Solar Renewable Energy “Certificates” or “Credits.” As for Green Tags, I have no idea where that nickname comes from, but it’s the same thing as the others.
- RECs, SRECs Green Tags or whatever you want to call them can be derived from other kinds of renewable energy, such as wind. So they don’t just count for solar, but that depends on your state. For sake of simplicity, I’m going to call them SRECs, and the “C” will stand for “Credit.”
What kind of “credits” are we talking about, Solar Fred?
- I’ll tell you one thing. It’s not a “carbon credit.” That’s something entirely different. Don’t get me started on carbon credits. Dogs will howl if I get started on those things. Let’s stick with SRECs.
- It’s not a Feed-in-Tariff (FiT), either.
- SRECs are in fact a “credit” for the amount of clean solar energy that your solar panels produce. Dirty utilities in some states need a certain amount of these credits in order to comply with the State’s Renewable Portfolio Standards (RPS).
- How do utilities get these credits? Generally, two ways: They either build solar or wind farms and/or they pay you for the clean power your solar panels produce.
- And how much cash is that credit worth?
- That answer is complicated, but let me keep it simple: It depends.
- Currently, it depends largely on your state, sometimes your utility, the laws that have been passed in regards to the RPS, and how much the SREC is worth on your local SREC market. The SREC market is similar to a stock market…in some states. Supply and demand determine the price.
- This means that 1 SREC in Connecticut will not be the same price as an SREC in New Jersey, and visa versa. In fact, depending on the State and market, that SREC could be worth, say, $50 one month or $200 another month–in the same state. Again, think Wall Street.
- Other things to keep in mind if you still have a mind and reading this:
- Your solar or wind system must be tied to grid to get SRECs. This is not a program for off-grid homesteaders.
- Now it gets really complicated, because every state is different. With some states, utilities have their own special SREC programs. Some states allow you to sell your SRECs directly to the market. Some utilities will give you a lower upfront State solar rebate if you decide to keep your SRECs instead of selling them to the utility at a set price for a certain time period. Entire states, like New Jersey, let you to keep your SRECs and let you sell them at a scheduled SREC auction…or to a middleman who does this for you. Some SRECs are guaranteed a steady per kilowatt rate that your panels produce for a certain amount of time, say a 3 year period. The exceptions and variables are numerous. But wait, it gets worse!
When you sell your SRECs, you are selling the “environmental benefit” of your solar panels to someone else, like the utility, who by law needs clean power. Think Vampire. You’re selling the “green soul” of your solar panels. Your panels become the Solar Undead.What does this mean in practical terms?
- In effect, it means that you personally can no longer claim to have green power on your roof. Yes, I know that the panels are clearly on your roof, but as far as the law is concerned, you as a home owner (or a business owner) cannot advertise or claim to produce clean green solar power energy. You’ve sold that right when you sold your SRECs.
- You think I’m lying or purposely trying to confuse you, but it’s all true! And because I’m writing generally across these 50 United States, I can’t be specific.
- The good news is that I will eventually get to robust SREC States like New Jersey and Connecticut and try to break these programs down for you.
- In the meantime, you can also check your utility’s website, your State’s website, or www.dsireusa.org/solar, a database of solar incentives across the 50 states.
- Of course, you can also easily get this info from a local installer by getting a free quote. They might even be able to explain it better than I can, ’cause, you know, they live in the state and should know.
- That’s enough for now. Stick the fork in. Solar Fred is done.