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RECs & SRECs & Green Tags, Oh My!

green-tag

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.

Last modified: January 15, 2019

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GregBen ZientaraJimDave LlorensMedford NJ Resident Recent comment authors
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Greg
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Greg

I sold the rights of my SRECs to my installer. Do I need to reduce my cost basis by the SREC purchase price when calculating the %30 tax credit? Thanks in advance.

Jim
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Jim
Ben Zientara
Admin

Good catch, Jim! The link has been updated, but since DSIRE changed their whole site last year, we’ve got our work cut out for us. we link to them so many times.

Medford NJ Resident
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Medford NJ Resident

This is directed to those of you that are not solar panel experts and are thinking about making the investment. Before you invest in solar panels you really need to do your due diligence and research this thoroughly. I can’t express this enough as we were blindsided. We live in NJ and 2 years ago we were talked into a $50,000 solar panel investment with promises that through the S-recs we would recoup our investment within 4 years. The S-recs at the time were about $600. We did not understand S-recs or how they worked. We were told that “the… Read more »

Somerset County Resident
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Somerset County Resident

NJ SREC prices for 2012 energy year dropped substantially due to the oversupply in the state. I guess that is a good thing for those of us who love solar but did slow down my payoff of the system I installed last year. They are starting to bounce back this month. I noticed on the SREC Marketplace website that they are up to $300. Not the $600 of last year but better than the low of $150.

philaphonic
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philaphonic

Regarding RECs, I need help with some legaleeze. I got a bid for a PV installation from the largest local installer here in Houston. Their contract has a clause that looks like it says THEY get all the RECs and carbon credits! Is this common practice??? What would you do in this case? Here’s the actual wording: L. Carbon Credits; Renewable Energy Credits. To the extent not otherwise assigned or sold to Customer’s electric utility provider, in consideration for the Equipment, and for other good consideration, the value of which is hereby acknowledged by Customer, Customer hereby assignes its rights,… Read more »

Rockhopper
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Rockhopper

Marty in MD and NJ Hamilton – I’m in MD, getting ready to make the dive into our SREC management, too. Our installer offered two SREC deals: a 15-year upfront buyout to reduce the cost of our intitial install, or to buy our SRECS as produced and aggegate/sell and give us our share. We chose to do it ourselves and I’m just getting started. Marty, you answered my question about whether I could enter the NJ market. Bummer. We have our interconnection paperwork from BG&E – but I think I need something else from the MD Public Service Commission. Our… Read more »

T
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T

Nice post Solar Fred. You explain SRECs and RECs to the newbies well. I just have a few comments. There is a big difference between a megawatt and a megawatt-hour. 1 MWh = 1 SREC. Almost 2 years ago the Alternative Compliance Payment was changed to $711 dropping off about 2.5% every year for 8 years, etc. SRECs were double in value when you posted this, if you take the right sales approach. SRECs don’t just change in value from $300 to $400 randomly or because of an auction. It’s not a very volatile market. The value changes because of… Read more »

martyg
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martyg

MD-Marty

I’m soooo jealous. I live in MD and i’m shut out of the NJ SREC market. The most I can get for my SREC’s is $400 which is equal to the state’s current compliance fee. I can sell in PA also but NJ has the highest SREC prices. Stay away from the brokers and use SREC Trade. 3% commission is way better than the 25% commission those crooks charge!

Ivan Zimmerman
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Ivan Zimmerman

I just got a 10KW solar system installed on my roof by a local contractor using Solar World panels. The installer is a broker for srecs but charges 15% commission on every sale. I think that is too high and want to register as a seller myself. My question is , I am in PA , can I sell to NJ , and where to I sign up? http://[email protected]

Dave Llorens
Member

SRECtrade.com would be my recommendation. It’s an open market, very low fees.

Dave Conifer
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Dave Conifer

Way to go Hamilton Res !!!!!!

NJ-Hamilton-Res
Guest
NJ-Hamilton-Res

Well, I’m a little late but… here’s results of my first SRECS transaction experience.. I I transferred the certificate from the GATS account to my Flett-exchange account and it was sold within minutes… price $665.75 smackarus… LoL.. well I was skeptical at first, but now… let the sun shine….

NJ-Hamilton-Res
Guest
NJ-Hamilton-Res

HI again, I finally figured out all the details about the NJ SRECS… well at least on how to sell them. Once I’ve earned an srec, I can either post on the GATS bulletin board, or I can transfer that srec to my flett exchange account. I’m not sure which is better, or even if there’s an advantage on one or the other, tomorrow the 31st I will have earned my first srec. I will post my experience with this either way.

Dave Conifer
Guest
Dave Conifer

I made a mistake on my last post. The broker I use now charges a small commission to the seller. It’s either 3 or 5 percent. If you’re installing a system and your installer has a recommended broker, read the literature from that broker carefully. In many cases, including mine, that broker wasn’t offering a very good deal. I estimated that I was receiving less than half the revenue generated by my SRECs! For the first term of the agreement the installer was actually getting a cut, which explains why they are interested in ‘recommending’ the broker. I love my… Read more »

Dave Conifer
Guest
Dave Conifer

NJHamiltonres — I live about forty miles south of you in Gloucester County. For the last few months I’ve sold my SRECs at auction for $660. If you sign up with the wrong broker you won’t see all that money, and I suspect that’s what you’re talking about. The broker I use runs auctions across in states all across the mid-Atlantic, and only the buyer pays a commission. So I get the entire price of each SREC, which has been $660 for the past few months in New Jersey. You should check out my blog, where I talk about SRECs… Read more »

Dave Llorens
Member

NJ-Hamilton-res, I don’t have any experience managing the SRECs or doing it myself. In general, no matter what product you’re talking about, I believe in the old adage that you get what you pay for. If you’ve got the time to go through the details and keep up with the SREC market, do it yourself. If you just want to collect the check and not worry about the market, have an SREC broker manage SRECS and know that he/she is earning his cut by saving you time and effort.

Hope that helps.

NJ-Hamilton-res
Guest
NJ-Hamilton-res

Yes, they evaluated orientation, trees, electrical usage, Solar angels etc.. the system is actually advertised as an 8KW system, but the actual output for SRECS is 7.2 yearly (estimated). I think i’m glad I did it.. LoL… still a little leary you know… until I see the first check in my hands, then I think I’ll feel a little better.. anyway, there are many reasons why I purchased the system, 3 of the most important to me is “environment,the added value to my home and the SRECS” everything else is just a plus. But I have a question if you… Read more »

NJ-Hamilton-res
Guest
NJ-Hamilton-res

Hello, I’ve just purchased a 7.2KW 36 Panel Solar system, through Home Depot, all their marketing forms had the SREC’s selling anywhere from $400 – $700… I’m slowly realizing that is not the case… I’m finding that the most they could be worth is $300.. well I guess its better then nothing, but boy $400 or even $700 would have been better… LOL

Tor a.k.a. "Solar Fred"
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Tor a.k.a. "Solar Fred"

NJ Hamilton, First of all, you rock for going solar. Thank you. Second of all, as explained here and in the comments below, the value of SRECs are variable. It’s a market based system in NJ, so what is $300 now could be $400 or more in a few months. It depends on the auction. Finally, keep in mind that your SRECS is the gift that keep on giving. It’s not a one time payment, but a yearly payment for as long as the system in NJ continues to have this auction based system. That’s ON TOP of the NJ… Read more »

Pam Wojcik
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Pam Wojcik

Thank you Solar Fred. This is my first search into solar panels, which we will probably install. SREC’s were the most vague part of the plan. Thank’s for the plain language. This was easier and more fun than the Government Dribble Websites :)

Ben
Guest
Ben

I’m not quite clear on this selling your green energy to the devil business. In a net-metering arrangement that many grid connected solar installations are producing their electricity, do you get (S)RECs for *every* MW you produce or just the MWs you produce over your consumption?

Tor a.k.a. "Solar Fred"
Guest
Tor a.k.a. "Solar Fred"

Ben, you get SRECS for every megawatt you produce. I know it’s confusing, believe me, but the point of it is for the utility to have “proof” that it is complying with the state mandate of producing so much renewable energy, as required by law. So, it doesn’t matter whether you use it or it’s excess, an SREC shows the State, hey, look, I used that much less coal fired CO2 generation this month. I’m complying with the law, and I’m paying Ben for his “green” power because y’all know I’m not producing any (or much.)” Does that sort of… Read more »

Tor a.k.a. "Solar Fred"
Guest
Tor a.k.a. "Solar Fred"

Chris, this terrific information! Thanks so much for these clarifications. There’s more info on SRECs on Chris’s SREC Trade service at:

http://www.srectrade.com/

Thanks again, Chris.

Chris Schaller
Guest
Chris Schaller

Hey SolarFred, great blog and great post! You have some really good information on here for people interested in solar. Here’s some additional info on SRECs: -An SREC is created after the solar system has generated 1000 kW (1 MW) of electricity. It is important to remember that the SREC is separate from the electricity. The owner of the solar system uses the actual electricity the system produces, decreasing their electricity bill, and then can also sell the SREC as a way to recoup the initial investment. You’re correct in your explanation of selling the “environmental benefit” of your solar… Read more »

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