Financial Benefits of Solar Energy & Retiring RECs
Because there are large upfront costs associated with installing solar panels to own on your property, it is financially advantageous to find ways to make some of that money back. The primary ways to do so include the following, some of which happen automatically:
Take advantage of tax and other incentives (e.g., federal, state, and utility)
Enjoy a lower electricity bill. If you install sufficient solar panels to cover all of your electricity needs, the only fee you will need to pay the utility each month is a customer fee, which is typically around $10.
Reimbursement for producing more solar energy than you use (i.e., net metering). If your state supports net metering, you will likely be credited if your solar panels produce more solar power than is used by your home or business. Depending on the state and utility, these credits can be used on future billings or be paid out after a set period of time. Visit this website for more information on net metering.
Sell Renewable Energy Credits (RECs). An REC represents a specific amount of electricity generated from a renewable source (e.g., solar or wind) and delivered to the energy grid. For example, each Megawatt-hour (MWh) of electricity produced by a solar array generates one solar REC (or SREC) that its owner can keep, sell, or retire. More details about how RECs work can be found in the following video provided by the EPA:
Some states have created SREC markets to promote the development of solar; electricity suppliers in these states are required to purchase a certain amount of SRECs produced by in-state solar arrays. Homeowners and businesses that own solar arrays in these states can sell the SRECs they produce, the value of which varies by state, to reduce their overall electricity expenses. More information on how SRECs work and the individual state programs can be found here: SREC markets and current SREC programs.
There are a few caveats associated with the purchase of SRECs:
A homeowner or business that sells their SRECs no longer has the right to claim a reduction in their carbon footprint through the production of this solar energy; that right is transferred to whomever purchases the SRECs, even though they did not directly generate the solar energy.
There is no guarantee that purchasing SRECs actually promotes the development of more solar energy and reduced global carbon emissions; it may actually threaten the integrity of carbon reduction goals. For example, whether an electricity supplier does or does not purchase SRECs produced by a homeowner's solar array has no effect on carbon emissions unless the homeowner uses those funds to produce additional solar.
Helpful Hint
If you own a system that generates solar energy, consider retiring the RECs associated with the energy produced. This prevents the RECs from being purchased to "fulfill" someone else's carbon reduction goals. RECs can be retired by following a few simple steps (link to come).
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