Hoosiers considering a photovoltaic
(PV) system to generate electricity from the sun face the financial equation of
balancing the initial investment against the benefits. Now they have another
good reason to “go solar” besides saving on energy bills and helping the
environment. They can create a revenue stream by selling the SRECs their PV
system generates. This income can really add up and significantly improve the
payback of a PV system.
Here are the basics on SRECS:
WHAT is an SREC? SREC is the acronym for solar
renewable energy credit for which
there is a growing market in many states. One SREC represents 1000 Kilowatt hours of energy production.
WHO buys SRECs? Utility providers in states that
have an RPS, or renewable energy portfolio standard, are required to obtain a
certain percentage of their power from renewable sources like sun and
wind.
WHY buy SRECs? If the
utility companies do not meet their RPS requirement, they have to pay a penalty.
The percentage and the penalty vary by state, but provide a real incentive for
compliance. They are allowed to purchase credits (SRECS) to meet their
requirement. This provision has created a market for the credits, and provides a
powerful financial tool for PV owners.
WHERE are SRECs sold? At present, Indiana PV owners
can sell their SRECS into the Ohio, Washington D.C. and a portion of the
Pennsylvania markets only. Just like any commodity, market prices fluctuate
based upon supply and demand. Credits are sold at auctions, and the prices can
change monthly. The current rate for an Indiana SREC at auction can go as high
as $350 per SREC for a private seller but average about $200 per SREC if sold
through a SREC broker. Many PV owners choose to sell through a broker to
streamline the process and avoid market fluctuations.
HOW much money can a PV system
generate?
Many factors affect the SREC
revenue a PV owner can anticipate; including system size, power generation, and
price. The following is a rough and conservative example:
Based on an average of 4.6 hours of usable
sunlight per day in Indiana a 5 Kw system could produce about 6.7 SRECS per
year. If we assume an average price of $200 per SREC the system would generate
$1300 or more for the PV owner, and that is in addition to their energy savings,
which could reach $800 or more per year! That is over $2,000 per year in the PV
owner’s pocket from the system.
So now the equation looks like this:
Rising
energy costs + falling solar installation prices + tax credits+ energy savings +
SREC income = good investment for Hoosier PV
owners. |
