Massachusetts Solar Renewal Energy Credit (SREC) self-serve selling how-to

By | April 16, 2012

The solar photovoltaic (PV) electrical generation system on our house, i.e., our solar panels, “went live” on December 29, 2011. We are now happily generating solar electricity. This is great for the environment now, and in a few years when the system breaks even, it’ll be great for our finances as well. Our electric bill last month was $1.27. Our system has generated 117% of the electricity we’ve consumed so far in April and 76% of our usage for all of 2012.

The savings on our electricity bill is significant, but just as important to our finances is the Massachusetts Solar Renewal Energy Credit (SREC) market. State law requires electric utilities to produce a certain percentage of their power from renewable energy. If they don’t produce enough renewable energy, they have to pay the state what is essentially a fine, proportional to their renewable energy shortfall.

However, instead of paying that fine, they can buy credits for renewable energy produced by others who are not under the same obligation. This is similar to the “cap and trade” system proposed to limit carbon emissions. Residential solar PV systems generate SRECs, and their owners are under no obligation to do so, so we can sell our SRECs to the utilities. These sales happen in auctions every three months, and the auction prices tend to end up quite close to the per-credit fines the utilities would otherwise have to pay, because there is a lot of demand for SRECs. The utilities have a significant shortfall in their renewable energy production, and while the supply of SRECs from residential PV systems is growing, it still isn’t nearly enough to make up that shortfall. In the January 2012 auction, the last on record before I wrote this blog posting, the closing price at SRECtrade.com was $540 per SREC, i.e., per MWh of solar PV production.

Like any other government bureaucracy, the process of becoming eligible to generate and sell SRECs is twisty and time-consuming. However, once all the initial setup is done, it’s straightforward to sell your SRECs.

Small SREC producers like me have to go through a site like SRECtrade to sell our SRECs — there’s no way an electric utility is going to bother dealing directly with someone who produces only a few SRECs per year! SRECtrade has two fee structures for selling SRECs through them:

  • If you sign up for their “EasyREC” program, they’ll do all the work for you to make you eligible to generate and sell SRECs and also handle most of the ongoing work related to reporting your energy production and selling your SRECs. For this, they charge 7% of your SREC sales on an ongoing basis.
  • Alternatively, you can do all the work yourself and pay a fee of only 2% of your SREC sales.

The difference between 7% and 2% may not seem like much, but it is significant in the long run. For example, I expect to generate at least six SRECs per year, and I’ll be generating SRECs for at least the next ten years (that’s how log the SREC program is guaranteed to continue, though it may last for even longer than that). That means that if I do the work myself instead of signing up for EasyREC, I’ll make over $900 more after taxes!

It is hard to understand why SRECtrade has structured their EasyREC program as an ongoing fee rather than an one-time charge, since the ongoing work required to sell SRECs is minimal. If SRECtrade has said, “Pay us $150 and we’ll do all the initial paperwork for you, and then charge you a 2% fee,” I would have jumped at the chance to avoid dealing with the numerous government bureaucracies. But I wasn’t about to pay a 5% premium forever for work that only needs to happen once. I therefore decided to go with the self-serve option.

However, I did not find the necessary steps for doing that documented anywhere, so I had to figure them out myself. Another residential solar PV system owner who decided to do the same thing helped with some of the details. Here, for the benefit of anyone else who would rather pay 2% than 7%, is what you need to do to be a self-serve SREC seller.

  1. Go to www.nepoolgis.com and apply for an account:
    1. Check “Generator” as the account type and uncheck “NEPOOL Member”.
    2. Click the submit button at the bottom of the registration page. This will prompt a box asking you to print out and send in a Non-NEPOOL agreement form.
    3. Send it to Alex Kuznecow at the ISO-NE, either akuznecow@iso-ne.com or fax it to 413-540-4226
    4. Alex will sign off on the agreement and send the counter-signed agreement back to you and the NEPOOL administrator, James Webb. At that point he will approve your account, which will give you access to register your generation asset.
    5. Go back to the same place where you hit the submit button to get the Non-NEPOOL agreement form. Fill out what you can but NOT the Unit ID, you don’t have it yet. It will allow you to get in now and set up the account.
    6. Once logged in to your account, click the “Register Non-NEPOOL Generator” link located towards the upper half of your account screen.
    7. Fill out the 2 page generator form, only filling in the required fields
    8. Skip the entire second page, and click the submit button at the bottom of the second page. The second page denotes RPS eligibilities, and James Webb will update that field once the state regulator approves your generator as RPS eligible.
    9. When you return to your home page, you will see your newly registered generator, with a corresponding Unit ID number. It will begin with “NON” followed by a series of numbers. This is the NEPOOL GIS number that other forms you need to fill out, e.g., the SQA Application described below, will ask for.
    10. Don’t lose your username and password, for this or any of the other web sites!
  2. Email pts@masscec.com and ask them to set you up with an account at www.masscec-pts.com. They’ll respond with further instructions. about getting the account fully set up. Include in your email your NEPOOL Unit ID number and, if you’ve started your SQA, its application ID number.
  3. Go to rps-aps.ene.state.ma.us, select “RPS Class I” in the drop-down, and click “Start New SQA”. Then fill out the application. You may also want to check out http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/solar/rps-solar-carve-out/statement-of-qualification-application.html, which contains a larger overview of the SQA process. There are some short-cuts you can take with the “Project Detail Form” if you applied and got a Solar II rebate. Several of the documents from the SQA process need to be printed out and signed in front of a notary public. The site recommends sending in the documents by registered mail, presumably to ensure that they aren’t lost. I personally went the the DOER office and turned in the forms in person since I work downtown, but that was a bit of a hassle (getting past security into the building, finding someone in the building who would take the forms from me since that office isn’t used to dealing with members of the public), so it’s probably easier just to mail them.
  4. Go to www.srectrade.com and register for an account. Select “Self Serve” on the registration page. Don’t forget to enter your payment preferences so that SRECtrade can pay you later when you sell SRECs.
  5. Wait for several months for NEPOOL GIS, MassCEC, and the DOER to finish all of the paperwork. Supposedly, all of the bureaucracies talk to each other, so everything should eventually work out on its own, but there’s no harm in keeping track of who the current bottleneck is and contacting them occasionally to ask about status. The long pole seems to be the SQA process run by the DOER, for which the contact you’d need to deal with is michael.judge@state.ma.us (617-626-7368). LCH: Note that the various agencies do their work in batches and are particularly busy near the end of each quarter to ensure that production from that quarter can generate SRECS, so go easy on them.
  6. While waiting, report your production each month at www.masscec-pts.com (they’ll send you reminder emails). As long as you report your production, you’ll eventually get all of your SRECs, even if you generate your first MWh before all the paperwork is finished. Deadlines for reporting are important. Your first reporting can include everything since the authorization to interconnect was granted. There are specific monthly deadlines for reporting production to MassCEC. Those guys then report it to NEPOOL and they mint the SRECS on a QUARTERLY basis. For example, I generated 707 kwh in March but I will not be auctioning any SRECS when the Q1 2012 auction happens at the end of Q2, since I didn’t get to 1000 kwh in Q1. Q1 production data and systems must be approved by May 1 to qualify for Q1 SRECS. There are different deadlines for different quarters.
  7. Once you are notified that SRECS have been minted for you and they show up in your NEPOOL GIS account, you put them up for auction at SRECtrade. This is as simple as logging into your SRECtrade account, clicking the “Place orders in the Auction now” button, clicking the “Sell” button, and filling out the form. You have to select an offer price, i.e., the minimum price you’re willing to accept for your SRECs. I’m not sure how best to do that except perhaps to look at the price history (make sure you have Flash Player installed to be able to view the interactive price history graph at the bottom of the page) and the Solar Alternative Compliance Payment (SACP), which is the fee per MWh the uitilities are required to pay to the state if they don’t have enough SRECs. and use them as your guide.
  8. If you sell your SRECs in the auction, i.e., if your offer price was low enough to be above the auction closing price, then you need to transfer your SRECs to SRECtrade within a few days of the auction close, as per the instructions at https://www.srectrade.com/transfer_srecs.php.
  9. Once you’ve transferred your SRECs to SRECtrade, they will pay you the auction closing price, less their 2% fee, via either direct deposit or a mailed check.

Once you’ve completed all the steps in this process, all you need to do on an ongoing basis is the last four steps above, which are easy.

NOTE: If you go through this process and discover any corrections or additions that need to be made, either because the process has changed over time or because I missed something, please email me and let me know so I can update the page for the benefit of others.

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4 thoughts on “Massachusetts Solar Renewal Energy Credit (SREC) self-serve selling how-to

  1. Rol

    Thank you for your interpretation of MA SREC but I believe you are overly optimistic of the STECs you will generate each year unless you put in a commercial size system. Also your belief that there was a large demand for SRECs has proven to be incorrect. The demand and market for SRECs has CRASHED! Those of us who have PV systems since pre 2012 were not able to sell our 2012 generated SRECs on the open market because the power companies now have a surplus of alternative energy credits and no longer need to purchase them. The State is trying to figure out an SREC 11 program that will still encourageore solar facilities by Jam 1, 2014 but so far there proposed new program looks very unwieldy to administer or participate in

    Reply
    1. jik Post author

      Thank you for your interpretation of MA SREC but I believe you are overly optimistic of the SRECs you will generate each year unless you put in a commercial size system.

      I’m not sure what makes you say that, because I don’t think I included in my article an estimate of how many SRECs I would generate.

      I did say that I expected to break even “in a few years,” but that has a lot more to do with how much I expected SRECs to sell for than with how many SRECs I expected to be generating.

      In the 20 months my system has been online, I’ve averaged 6.38MWh per year. Assuming a worst-case scenario of $285 per SREC and no increase in electricity cost, subtracting the income tax on SREC sale proceeds and adding the amount of energy savings per year, I will break even in 2021.

      However, neither of those worst-case assumptions are likely to come to pass. While you’re right that the SREC market flipped in 2012-3 and prices were low (more on that below), it is in the process of being corrected by the DOER, and SREC demand and prices are likely to increase. And electricity rates are likely to go up rather than down, thus making me break even earlier by increasing my energy savings.

      Having said that, even if those worst-case assumptions do come to pass, a 10-year break-even point is fine with me, and certainly within the bounds of what I considered acceptable when I installed my system.

      Also your belief that there was a large demand for SRECs has proven to be incorrect. The demand and market for SRECs has CRASHED! Those of us who have PV systems since pre 2012 were not able to sell our 2012 generated SRECs on the open market because the power companies now have a surplus of alternative energy credits and no longer need to purchase them.

      This situation is temporary…

      The SREC quota imposed on the utilities in any particular trading year is determined by formula based in large part on the solar generation capacity that was on-line in the prior trading year. Because of the huge surge in new solar installations in 2011 resulting from the generous federal, state and local incentives that were being offered, the quota for the 2012-3 trading year was much too low, and as a result, there was a huge surplus of SRECs.

      This is in the process of being corrected in several different ways:

      1. The quota formula has been changed to be less vulnerable to this problem.
      2. The quota formula takes into account surpluses from previous years.
      3. The current incentives are much less generous, and as a result there is a lot less new capacity being brought online right now.
      4. The DOER offered to buy all of the surplus SRECs for the 2012-3 trading year from generators for $285 per SREC, thus taking most of them off of the market to reduce the surplus for future trading years.

      As a result, I think it is likely, but by no means certain, that demand will outpace supply in the coming trading year and prices will go up. Prices will continue to fluctuate in future years, but overall I think the situation will improve for generators.

      The State is trying to figure out an SREC II program that will still encourage more solar facilities by Jan 1, 2014 but so far there proposed new program looks very unwieldy to administer or participate in.

      To be clear, it is my understanding that the SREC II program currently under development is for new solar installations only; installations which were brought online under the SREC I program will continue to generate and sell SRECs under the rules of that program.

      Reply
  2. Leo

    Very useful article to save someone’s sanity and for a good cause.

    I would change the symbol for megawatt hour to MWh. Find it written both ways, MWh and mWh, but more often as MWh, and some consider mWh to be a milliwatt hour. Avoid discussions, make it MWh. Even though the price makes it clear which one you’re talking about. But do you really want thinking about price to be necessary to resolve ambiguity?

    Reply

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