At Coldwell Solar, we always work with our partners to find the best ways to benefit from renewable energy. If you are part of commercial and industrial solar in California, one important additional advantage is known as RECs, or Renewable Energy Credits, often named SRECs for the solar version.
RECs can be created and traded to accomplish several different goals in the state. We’re going to go over common questions that those new to the renewable market often have about how they work and how they can be bought or sold.
What Are RECs?
RECs are Renewable Energy Credits that represent the creation of renewable energy – in this case, solar RECs. States create REC programs to help encourage and manage the renewable energy industry. RECs are connected to broader renewable energy production goals: Sometimes they are traded bundled with electricity, and sometimes they are traded “unbundled” on separate markets. A REC is typically available for trade within a 21-month period after is created – past this, it loses much of its value on the market because it cannot count toward energy goals (more on this below).
Once SRECs are created, they are held by the owner of the solar installation that created them. Even in cases like PPAs (Power Purchase Agreements) where the installation and power are managed by a developer, the host typically receives the RECs that are generated.
The REC market can vary over time due to supply and demand, as well as other factors – and are often separated by state as well. Note that California does not have a specific SREC market, although it does have a broader TREC (Tradeable Renewable Energy Credit) market, and owners of SRECs can sell them to other states that accept out-of-state REC trading. All this can create variance in pricing, but in the past RECs have sold between $50 and $200.
How Are RECs Produced?
RECs can be generated in a variety of ways depending on what type of renewable energy is involved and the latest regulations from California programs. Let’s look at SRECs, in particular.
One SREC is created for every 1MWh of electricity that a solar system in the state creates. If you look at Coldwell Solar’s recent solar installation projects, you’ll see that 1-megawatt facilities are a common capacity for commercial enterprises to choose when first deciding on a solar system. That makes SRECs relatively easy to produce compared to something like a residential rooftop solar system.
How Do You Sell RECs?
California RECs are tracked by WREGIS, or the Western Renewable Energy General Information System. If your business is interested in selling SRECs, there are several important steps to consider.
- Registering with WREGIS so that SRECs can be properly tracked
- Establishing monitoring and reporting systems for installation performance and tracking solar energy production
- Finding a bulletin board or auction site and creating a profile so that RECs can be traded – there are several different choices here, such as the GATS Bulletin Board, or aggregators like SRECTrade, depending on how hands-on the owner of SRECs wants to be
- Alternatively, owners can also use brokers that will help them find buyers in a more hands-off approach
- Earning additional certifications, such as CEC RPS (Renewables Portfolio Standard) which help increase the value of RECs
If this sounds like a lot of work, we encourage you to talk with Coldwell Solar about ways to make selling SRECs easier and faster – a little experience in the market can go a long way.
What are the Advantages to Selling RECs?
An additional source of revenue is the primary advantage to selling SRECs. The cash generated from trading RECs on the market can be used to fund further investment, or to cover the cost of things like solar installation maintenance (an experienced commercial solar company like Coldwell Solar can also provide these maintenance services over time). This can make it easier to plan commercial solar energy solutions in California.
How Do You Buy RECs?
There are a few different options for those interested in purchasing RECs. Hundreds of utilities around the country have their own programs where they sell bundled RECs to their customers, which is often an easy method to begin purchasing them. However, those looking for specific or purchasing large amounts of RECs within a short span of time can turn to bulletins, aggregators, and brokers that the sellers are using to buy RECs independently.
What are the Advantages to Buying RECs?
Buying RECs is generally divided into a voluntary and a compliance market.
For the voluntary market, entities purchase RECs to meet their own internal goals. They are not required to have any RECs, but RECs can still help in a variety of ways. Some companies, for example, have green programs with renewable goals to meet or want to tell customers that they were able to help the solar energy market in specific ways. On the voluntary side of the market, SREC prices tend to be much lower than the compliance side.
The compliance market is reserved for entities that are required to use a certain amount of renewable energy. This is due to state laws created to encourage renewable energy use, typically targeted at utilities and fuel producers. When these organizations cannot or choose not to create a certain amount of renewable energy, they can purchase RECs to make up the difference. On this side of the market, prices can be significantly higher because some buyers may have little choice.
Of course, when an entity buys RECs, that doesn’t mean it is producing any renewable energy of its own, only investing in the renewable energy industry. As a result, organizations must decide what strategies are most effective, and when it makes sense to purchase RECs vs. creating renewable energy or fuels of its own.
If you want to learn more about SRECs and other ways that a solar installation can help generate revenue, Coldwell Solar is your solar energy company in California with the right answers! Contact us today to set up a consultation or learn more about our solar services.
