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Solar Renewable Energy Certificates (S-RECs) have emerged as a crucial mechanism for fostering the growth of solar power. Especially for commercial enterprises, understanding the nuances of S-RECs can be a game-changer in terms of economic viability and sustainability commitments.

🤗 Understanding S-RECs

An S-REC represents the environmental and renewable attributes of electricity generated from a solar energy system. Each S-REC corresponds to one megawatt-hour (MWh) of solar electricity produced. Utilities and certain other electricity providers purchase these certificates to meet their renewable portfolio standards (RPS) requirements, which are mandated by state laws to increase the proportion of renewable energy in their energy mix.

For commercial entities who do not have firm net zero or sustainability goals, S-RECs offer an additional revenue stream beyond the savings on electricity bills, enhancing the financial attractiveness of investing in solar energy. The price of S-RECs varies based on supply and demand dynamics, influenced by factors such as state policies, the overall capacity of installed solar systems, and RPS goals.

🏦 The Impact on Commercial Solar

If a buyer is willing to part with a project’s environmental attributes, applying a state S-REC incentive can increase a project’s ROI by 28% to 180%* (*Actual impacts will vary depending on specific project details).

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New Jersey (NJ)

New Jersey's solar market is bolstered by its Solar Renewable Energy Certificate (SREC) program. The state operates a vibrant SREC market, wherein the prices are determined by market forces. NJ's aggressive RPS goals have historically ensured a high demand for SRECs, maintaining their value and offering substantial incentives for commercial solar installations. Furthermore, the transition to the Successor Solar Incentive (SuSI) program, which includes both an administratively determined incentive and a competitive solicitation process, aims to provide a more predictable and stable market for SRECs.

Massachusetts (MA)

Massachusetts has taken a different approach with its Solar Massachusetts Renewable Target (SMART) program, which replaced the earlier SREC system. The SMART program provides a fixed payment over ten years for the energy produced, offering stability and predictability for solar project economics. However, SRECs generated under previous programs still play a role in the market, and the transition has been designed to respect the investments made under the old regime.

District of Columbia (DC)

DC's SREC market is known for its high SREC prices, driven by the district's ambitious RPS goals and limited space for large-scale solar installations. This has made solar investments particularly lucrative for commercial entities in the area. The demand for SRECs in DC is expected to remain strong, underpinned by stringent renewable energy targets and the district's commitment to renewable energy adoption.

Illinois (IL)

Illinois introduced the Adjustable Block Program (ABP) as part of the Future Energy Jobs Act (FEJA), aiming to support the development of solar energy. This program provides payments for the production of solar energy, with rates determined by the market. While not a traditional SREC market, the ABP incentivizes solar development by offering a clear, long-term revenue stream for generated solar power, encouraging commercial solar investments.

California (CA) and elsewhere

While not a utility run program, S-RECs can also be sold in the market to interested corporate buyers who are trying to achieve their net zero goals. S-REC trade is a valuable resource for understanding the latest market pricing for these S-RECs and Station A can help you find an interested buyer or seller to meet your goals.  

👋 Station A can help

If you are thinking about taking advantage of the state S-REC bonuses or any of the other incentives available for commercial solar this year, please reach out to the friendly team at Station A to learn more. You can also reach out if you are interested finding a buyer for S-RECs generated from your existing systems.

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