SRECs: What are they and what value do they have?

Intro to RECs and SRECs

As a quick primer, REC stands for Renewable Energy Credit (or Renewable Energy Certificate).  A REC is a commodity, which is used to track the “green” attributes from 1 MWh of renewable energy generation. An SREC is a REC generated from a solar project.

RECs (of any type) can be decoupled from the actual electricity generated by a renewable energy project, and sold separately.  However, it is critical to understand that ownership of the REC is essential to making claims about renewable energy.  So, for example, if Entity A purchases electricity generated by a wind project, but the RECs are sold to another Entity A, then Entity A cannot claim to be using green energy.  However, since Entity B purchased the RECs, they can claim to be using renewable energy, even if the actual electrons they use were generated from a coal plant. It may sounds confusing, but it’s really just an accounting method to ensure that the green attributes are not counted twice.

Beyond tracking green energy production, SRECs are also a commodity which provide monetary value to a project. The actual value depends on the market conditions, and can vary tremendously over time and from one market to the next. Recent figures indicate SREC prices ranging from $25/MWh to more than $400/MWh in different areas. The SREC market and associated value is impacted by the aggressiveness of the goals and the market supply, which is in turn affected by policy requirements project eligibility (location, size limitations, install date, etc.).  The penalty costs for not meeting set-aside obligations also impacts SREC values.

At these prices, SRECS can represent a significant contribution to annual project revenue.  On the high end, SRECs can be worth two or three (or more) times more the value of the electricity generated by a project, at least during the initial period when high SREC prices apply. (The value for SRECs typically reduce over time, whereas electricity prices typically increase. Furthermore, SRECs may only apply for a portion of 20 year project life.)

The Massachusetts SREC Program

With that general background, it’s worth delving into a concrete example of why SRECs matter.

Massachusetts (historically not viewed as a prime solar resource state) has had an SREC market since the Solar Carve-Out Program for the state RPS was initiated in January 2010.  The original program targeted development of 400 MW of solar PV across the Commonwealth, and was so successful that a total of 654.4 MW of capacity from nearly 12,000 projects has been qualified, and the program stopped accepting applications in 2014.

The second phase of the Massachusetts Department of Energy Resources (DOER) Solar Renewable Energy Credit program (SREC-II) was initiated on April 25, 2014.  This program is used to meet the RPS Solar Carve-Out II, with a goal of 1,600 MW of solar PV projects by 2020 (including the solar project capacity already covered under the SREC-I program).

Solar PV Generation Units must meet the following requirements to participate in the MA RPS Solar Carve‐Out II:

  • Capacity of 6 MW DC or less per parcel of land
  • Interconnected to the electric grid in the Commonwealth of Massachusetts
  • Use some generation on‐ site (includes any new or existing load, including parasitic loads from operating the unit itself)
  • Commercial Operation Date of January 1, 2013 or later

Unlike the SREC-I program, the SREC-II Program assigns an “SREC Factor” to each project based on market sectors.  The SREC Factor is used to determine the total qualifying amount of SREC IIs generated by a project, since SREC-IIs are calculated by multiplying the SREC factor times the number of MWh generated.  A list of the market sectors, project requirements, and applicable SREC factor is shown in the table below.

SREC-II Market Sector Categories

SREC-II Market Sector Categories

The Massachusetts SREC-II Program is set up to provide a higher level of support for development of smaller projects and systems that generate power for on-site use, or are built on land with limited other development opportunity such as landfills and brownfields.  This is apparent in part from how the SREC factors are set up. In addition, the DOER is also limiting the amount of projects that will be approved in the Managed Growth category by setting an annual cap in total capacity.  None of the other market sectors have a cap.

There is a Solar Credit Clearinghouse Auction to provide price support for the MA SREC programs. The fixed auction price for SREC-IIs varies from $285 in 2015 to $180 in 2024.  Actual prices for SREC-II’s may be even higher than this, although there are no guarantees.

At these prices, the SREC program can be a huge factor in project revenues. As an example, the graph below shows potential annual revenue / value associated with a hypothetical 500 kWDC ground mount array in MA, categorized in Market Sector B.  The system is assumed to generate 625 MWh per year to offset on-site electricity consumption, as well as 563 SREC-IIs based on the SREC Factor of 0.9.  Massachusetts has a pretty high electric costs—using the average retail rate over the last year, which was about $160/MWh, the project would save nearly $100,000 in the first year from electric costs.  However, even with these high rates and the decreasing value of SRECs over time, SRECs could provide more than half of the project’s value in the first 10 years.

example project revenue for the first 10 years

Example Project Revenue for the First 10 Years

As noted, the MA SREC program has been successful in spurring meaningful growth of the Solar PV market in the state, despite its relatively modest solar resource. It wasn’t so long ago that if you weren’t planning to build your PV project in the Southwest, you might as well forget about it. Now, programs like the MA RPS and associated SRECs have totally changed the math. As with many projects, “follow the money” is always good advice. For solar projects (at least in the northeast) that usually means – follow the SRECs.

ANTARES Offers Complimentary Solar Energy Site Assessment Service

ANTARES Group Incorporated (“ANTARES”), Lanham, MD announced the launch of a free, web-based service intended to spur nationwide development of rooftop and ground mounted solar PV systems in the commercial/industrial sectors. Chris Lindsey, a Principal in the company, stated, “We kept getting calls from organizations that wanted help understanding if there was any real potential for developing solar projects at their site. The cost of a full-blown feasibility study is often a barrier to further discussions, and a simpler analysis is all that is usually required to keep good projects moving forward. Since we have gotten very good at offering feasibility services to our clients, we decided that we could offer a free assessment to help interested parties determine if their site has the potential for development. We also plan to pair that analysis with our industry contacts to help get more projects moving.”

Completing the initial data request form only requires entering a few important facts about a particular site. Unlike “do-it-yourself” websites, an ANTARES staff member with expertise in solar project development will analyze the supplied data and return a customized report. ANTARES has indicated that their analysis will be completed and returned within approximately two business days. The report is presented in a graphical format that is easy to understand and will indicate the site’s development potential and provide customized recommendations.

Organizations or individuals wishing to use the new service may go to the company’s website – 

ANTARES is an engineering and project management company exclusively dedicated to clean energy technologies. The company was established in 1992, and its clients include private companies, state/federal governments and a variety of non-governmental organizations.

For more information:
Christopher Lindsey,
(301) 731-1900 ext. 16
4500 Forbes Blvd, Suite 410
Lanham, MD 20706

Originally published at:

Learning to Look Critically at Your Vendor Energy Savings

Whenever I talk to a vendor, I always learn something new because they truly are experts in their field.  With that being said, even though these guys are really good, you have to keep in mind that they don’t work for you, they aren’t your energy managers, and they aren’t the ones who answer to upper level management as to why a project isn’t performing adequately.  At the end of the day, only you can make the final call if a project is a good investment or not.

As part of their sales pitch, many vendors present a high-level energy savings estimate showing you just how much energy or money you could be saving by implementing their equipment.  It is important to keep in mind that these energy savings estimates are based on a series of assumptions that may or may not be totally inaccurate for your facility.  You’ll need to do a “sanity check” and then make the decision as to whether or not you can reasonably believe the provided estimates.

Things to Look For

The vendor analysis will usually outline a series of assumptions that were used to complete the calculations (and if they don’t outline their assumptions, you need to be extra careful!).  Check the following metrics to make sure that they line up with what you would expect for your facility:

  • Annual hours of operation – how long is your equipment really on?  How much product are you really using?  Check the assumptions against your historical data.
  • Equipment efficiencies – Check boiler efficiency (%) and cooling equipment efficiencies (kW/ton).  These can really vary depending on the age, type of equipment (ex: steam boiler vs. hot water boiler), and how often the equipment cycles on and off (more cycling = less energy efficient).  When in doubt, check out the ASHRAE rated efficiencies for your type of equipment and rated capacity for a good starting point, and then make adjustments as needed depending on your situation.  Want some more reading material?  I really like this write-up, which was done by a PE engineer out in California and talks about looking critically at boiler efficiency claims.
  • Utility rates – Your natural gas rates in $/therm and electricity rates in $/kWh.  Make sure you take into account your supply rates too, if you go through a third party provider.  And check out this article that Clair wrote on utility rates that may be just a little too optimistic for their own good.
  • Historical utility consumption – We frequently look at historical utility bills to make sure that the level of savings proposed makes sense.  Total up your annual consumption and compare it to the vendor energy savings.  Anything that’s really high is probably too good to be true.
  • Peak Loads – You may have three 100 ton chillers, but maybe only two of them operate at peak load.  The vendor won’t know this until you tell them.  Conversely, maybe you have separate winter and summer boilers.  When does each one operate throughout the year?

Real Life Examples

Facility #1 – This facility was installing a new tank-less hot water heater.  The vendor estimated that the facility was consuming 6,000,000 gallons of water each year, when in reality they were only consuming about 2,000,000 gallons (per their historical water bills).  This one assumption alone cut their energy cost savings down to 1/3 of the vendor’s initial estimate.  The vendor also estimated that the site was paying $1.00/therm of natural gas, when in reality the facility was paying close to $0.60/therm.  This cut their energy cost savings down even further.  The vendor estimated $30,000 in annual energy cost savings.  In reality, the energy cost savings were closer to $2,000.  Ouch…

Facility #2 – This manufacturing facility was upgrading their Building Automation System (BAS) that would automatically control their heating and ventilation units.  Initial vendor estimates projected that the facility would save a total of 80% of their existing natural gas consumption.  This magnitude of energy savings doesn’t seem realistic because the facility still needs to heat its large manufacturing area.  In reality, the projected energy savings are closer to 26% of the facility’s existing natural gas consumption.  Contributing factors to the over-estimation of the energy savings included over-estimating the facility’s annual run hours and under-estimating the new amount of outside air needed to keep the building pressurized.

However, not all of the projects that we evaluate are this far off.  Below is a bar chart summary of ten different vendor cost savings estimates versus the savings that were compiled by ANTARES for a random selection of past projects.  As you can see, some of the vendor estimates are close to, or even less than the energy cost savings that we evaluated for the project.  However, 2 of these 10 projects were disastrously different. It would be counterproductive to generalize from this sample, but in our experience, these are not isolated examples.

Vendor Savings Chart

What You Can Do

Make sure that your vendor has as much information as possible—utility rates, efficiencies, annual hours of operation etc.  The more information that you give them, the more accurate their calculations will be.  If you are spending lots of money on a new project – it may be a good idea to get a second opinion upfront, rather than pay for the forensic opinion after management asks you, “What went wrong?!”

Solar News: Research Breakthroughs on Solar Technologies

There have been a number of informative and interesting articles and studies regarding solar technologies published by various media sites lately.  For years, the advances in solar technologies have increased efficiency of photovoltaic cells, reduced the unit price ($/kW), and streamlined the installation with packaged units.  A sample of interesting recent articles are listed below.  Enjoy!

Also remember, ANTARES has years of experience evaluating solar projects and monitoring installation, as seen in this Virginia project.  Please contact us with any questions regarding the feasibility of a solar project at your facility!

  •  Elon Musk, the famous and successful entrepreneur and CEO of Tesla Motors is hoping to reveal an energy storage unit for residential customers. This new battery could provide the storage solution that solar panel owners have been looking for, and reduce interconnection issues.
  • Thankfully, research around the world has allowed for solar energy advances in reliability, efficiency, aesthetics, and cost to generate and store solar energy. Research institutions from Harvard University to Cornell University to Finland’s VTT Technical Research Centre have had solar technology breakthroughs, such as 3D printed solar powered trees, PV panels in the form of thin film material, and solar panels in a variety of colors.
  • Aerial photographs taken by Jamey Stillings display awe inspiring visuals of some of the largest solar plants in the world. Set in the desert of California and Nevada, the enormous solar plants blend technology and nature beautifully.
  • Sunshine states aren’t so sunny on the prospect of solar technologies. Policy issues favoring utility companies, residential aesthetic policies, and lack of incentives are hindering the solar market in a couple of the sunniest states.
  • Ornithologists rejoice! The large solar concentrator plant (photographs in article above) in Nevada is reducing the number of avian fatalities by operational changes like repositioning the plant’s mirrors.  Testing at this solar power tower has shown that it has less risk to wildlife than even just a month ago, however, like many technologies operating above terrain (i.e. airplanes, wind turbines), birds can’t get too close without risking their mortality.
  • Home and business owners need to stay aware of federal and state policies regarding solar HB 2201 is a recent bill passed in West Virginia removed incentives for solar energy system installation.  Many utilities encourage solar energy installations and have initiatives to incentivize systems, but policies and regulations vary for each state so citizens need to be aware of regional issues.

Big Additions to U.S. Solar Jobs in 2014

The end of any year always gives us heaps of new information about industry trends: the big gains, the big losses (hopefully not), who’s hot, who’s not, etc. A particularly interesting year-end report on the current state of solar energy-related jobs the U.S. is providing even more fuel to the proverbial fire for those seeking an expanded use of solar energy. According to the 2014 National Solar Jobs Census[1], a report released last month by The Solar Foundation, the solar industry has had yet another banner year in terms of adding domestic jobs to the U.S. economy.

solar MW growth

So how many jobs are we talking?

In the last 5 years, the industry has reached almost 174,000 jobs, an 86% increase from 2010, which makes sense when you consider installed capacity has increased by over 700% in the same time frame. As of November 2014, 31,000 new solar-related jobs were added last year alone, accounting for 1.3% of all new jobs in the U.S.

increase in solar jobs for 2014

What about big oil and gas?

So how does this stack up against solar’s very distant energy cousins in the fossil fuel industries you might ask? Despite solar being a David to these industries’ Goliath at only 1% of total U.S. electricity generation, solar added more jobs in 2014 than the oil and gas pipeline construction (~10,500 jobs) and crude petroleum and natural gas extraction (~8,700 jobs) industries combined. The report goes on to project an almost 21% increase for solar jobs in 2015 as well.

Future of ITC and beyond…

All this is great for headlines (not to mention the economy) but the big question on everyone’s mind is what will happen at the end of 2016 when the current 30% federal Investment Tax Credit (ITC) expires (see Heidi’s recent post for more info on current ITC). The solar ITC is slated to be reduced to 10% starting 2017 and, according to The Solar Foundation’s report, about 60% of current solar industry employers are anticipating job cuts following the reduction. The good news is programs like the Department of Energy’s SunShot initiative are making big-time investments aimed at bring solar to grid parity.




New NREL Reports Discuss Best Options for Financing Solar Energy Projects

Looking to install a solar PV installation?  You’re probably facing the all-important question: “How am I going to finance my solar energy project?”  While you can certainly pay for the system upfront, not everyone has ample cash flow to fund a project right way, especially if it’s a larger-scale system.  In terms of paying for it over time, there are a variety of options available to you, including (but not limited to) a low-interest solar specific loan, and even leasing your solar PV system from a third party provider.

Two new reports that were funded by NREL look at the benefits, risks, and overall levelized cost of energy for the different options that are available for financing solar energy projects. One study evaluates solar specific loans versus PV system leasing for home scale applications through financial modeling while the second evaluates the business case for solar and various financing methods through a case study approach.  So whether you are a homeowner or a business,  take a look at the link and if you’re still having trouble deciding which option may be best for you, let us know—we have a lot of experience evaluating the economics of solar PV systems and helping clients make the best decisions moving forward.

Renewable Energy Tax Incentives – 2015 Update

The start of a new year always generates lots of questions on the current state of renewable energy tax incentives. This is particularly true for the Tax Increase Prevention Act, which was signed into to law on December 19, 2014. In a move that has become all too familiar to anyone working in this industry, the Tax increase Prevention Act took many of the biofuel and renewable energy tax credits that had previously expired at the end of 2013 and retroactively extended them through the end of 2014. It is important to note that as of January 1, 2015, these affected incentives have expired once again, and that their ongoing status for the 2015 year has not yet been addressed. This post will review what was changed by this legislation, and highlight the gist of some important incentives that are still available.


Some of the biofuels tax credits that were affected include the Second Generation Biofuel Producer Tax Credit and the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit, among others, which were retroactively extended through 2014, but not otherwise modified. The full list of extensions is rather long, and can be found at the Alternative Fuels Data Center.

Production Tax Credit (PTC)

The Section 45 Production Tax Credit (PTC) was also retroactively extended through the end of 2014. This is excellent news for the 4,859 MW of wind generating capacity that was installed in the US in 2014. This is four times as much wind as was installed in 2013, although far short of the record 12,000 MW of capacity installed in 2012. For more discussion on the PTC, background information, and the terms of its expiration, please see my post from January 2014.

Investment Tax Credit (ITC)

No legislative changes have been made to the Section 48 Investment Tax Credit (ITC) since the last update I posted. In summary, it is still available through the end of 2016 for the following technologies:

  • Solar, fuel cells, and small wind turbine are entitled to a credit equal to 30% of expenditures.
  • Geothermal heat pumps, microturbines, and CHP are entitled to a credit equal to 10% of expenditures.
  • At the end of 2016, the credit for solar will reduce to 10%, the credit for geothermal electricity production will remain at 10%, and the credit for all other technologies will expire.

Section 1603 Grant

The Section 1603 Grant, which was created by the American Reinvestment and Recovery act of 2009, is a close relative of the PTC and ITC.  Many people do not realize that although the deadline for submitting new applications for the Section 1603 Grant was October 1, 2012, the “placed in service” deadline associated with this grant is not until January 1, 2017, for several renewable energy technologies. Projects that applied for the Section 1603 Grant must be placed in service before the credit termination date, located in the table below by technology, and in the Treasury Guidance Document.

Section 1603 Grant summary

Renewable Energy Tax Incentive Summary Table

As always, is a great place to seek out basic information on local, state, and federal incentives. If you have more complex questions, please give ANTARES a call. We have helped a variety of clients evaluate their opportunities for bringing alternative funding to their projects, including tax credits.

Sponge-like Solar Energy Collector

One of the major ways we convert fossil fuels to useful energy is to burn them and heat water to produce steam. Steam turbines then can use that steam to produce electricity, or that steam can heat facilities or serve process heating needs in manufacturing.

So when I learned of MIT’s recent announcement that its researchers had found a way to convert solar energy directly to steam using relatively inexpensive materials, I was really excited. This technology produces steam without the use of complex and costly solar concentrators such as mirrors and lenses. This is a whole new way that solar energy can be harnessed as an alternative to fossil fuels.

How does it work? Apparently, the process hinges on a sponge like structure that includes a graphite layer covering carbon foam that floats. When sunlight hits the graphite layer, the graphite layer heats up, drawing water through the foam that turns to steam. Hadi Ghasemi, of MIT’s Department of Mechanical Engineering, says this is potentially an important breakthrough for several reasons. Perhaps the most important of these is that the technology is very efficient – it converts up to 85% of the solar energy into steam, and therefore it can be used in areas with lower sunlight. It also uses relatively simple, low-cost materials.

There are many potential applications of this technology. Ghasemi called out the potential for this technology to allow remote communities to produce steam using small, compact, inexpensive systems for sterilization or desalination. The potential for integration of this technology in larger, industrial or utility-scale energy applications is something that will remain the focus of further research. Stay tuned, this is a technology that has the potential to really change how we think about solar energy.

For more information see the source article.


The VA Continues to Pursue Renewable Energy Projects

The US Department of Veterans Affairs (VA) continues to support solar project development at their facilities, as shown by 2.1 MW PV array on top of a landfill at the Salem VA Medical Center in Virginia, scheduled to be completed by mid-November.

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Does it Make Sense to Use Solar Energy for an Absorption Chiller?

Here is an article that recently caught my attention: Solar Panels Can Be Used to Provide Heating and Air Conditioning

Spanish researchers considered the use of solar thermal systems to produce hot water for absorption-based cooling. Though the design of their trigeneration (electricity, heat, and cooling) system is not clear, we wonder about the incremental capital expense of an absorption chiller and a solar collector system compared to a simple cogeneration system. Absorption chilling, as we have discussed before, can be difficult to justify if the heat that fuels it is not extremely low cost.

What are your thoughts?