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.
- Go to www.nepoolgis.com and apply for an account:
- Check “Generator” as the account type and uncheck “NEPOOL Member”.
- 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.
- Send it to Alex Kuznecow at the ISO-NE, either [email protected] or fax it to 413-540-4226
- 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.
- 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.
- Once logged in to your account, click the “Register Non-NEPOOL Generator” link located towards the upper half of your account screen.
- Fill out the 2 page generator form, only filling in the required fields
- 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.
- 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.
- Don’t lose your username and password, for this or any of the other web sites!
- Email [email protected] 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.
- 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.
- 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.
- 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 [email protected] (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.
- 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.
- 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.
- 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.
- 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.