Solar States Blog

Time and again, we hear about a new “solar project” in the works.  The plans for these large-scale installations are always quite grand and include the promise of profits in the near term.  However, more often than not we don’t see projects coming to fruitarian.  For some reason, great projects are not growing the wings they need to get off the ground.  Obviously, it all comes down to money.

Consider the finances of a solar project.  Per kW installed cost, federal tax credits and state incentives are fairly similar across the board.  In terms of income, we have the value of generated electricity, which is usually chump change compared to the big hitter…  SRECs.  Yes, the government’s answer to the age old question “How do we make them comply?”  For those of you unfamiliar, there are hundreds of websites, but generally speaking, Solar Renewable Energy Credits (SRECs) are credits generated for every MW-hr of photovoltaic derived energy.  The owner of the panels owns the credits and is free to sell them.  Buyers of credits are the large electricity generators (PECO, PennPower, Edison, etc.)  The generators will buy credits to make up for any shortfalls they have in meeting the state mandated renewable energy standard.

Now lets get back to SRECs.  How much are they worth?  Well, it depends where you live.  Check out the table below for June 2010 prices:

Prices for SRECs vary from state to state ($290 to $665).  Between states that all trading of SCRECs across state lines, the prices are more normalized, however, the driving forces for the markets are still ambiguous.  That’s another word for unpredictable or volatile.  Two words that investors don’t like to hear.  Of course the laws of supply and demand come into play here, however there is no means of predicting where prices will go.  So, if you were an investor and the return on your investment was based on a volatile and unpredictable commodity would you feel safe investing your money?  Is investment in solar projects the equivalent of visiting the tables in Vegas or AC?

So, although the state regulators had good intentions with the renewable energy portfolios, incentives for projects and mandated penalties for non-compliance, the plan had a huge hole.  Since SREC prices can not be counted on, the driving forces thrusting us into the age of renewable energy have sputtered.  Is there a solution?  Of course…  1) Renewable Energy Portfolio standards need to be nationalized; 2) A “bottom price” needs to be placed on SREC prices.  By nationalizing the programs, the disparity between neighboring states will be normalized.  Meanwhile a bottom price will reduce a portion of the risk associated with investment in solar projects.  If governments are really serious about energy independence and investing in the green future, they too will soon see the shortfalls in the current system.  Lets hope for change.

Sandip D. Shah, Ph.D.

When the eggheads at Princeton University set out to put solar panels on the roof of the building that houses the Research Collections and Preservation Consortium, the project looked doomed to fail. After all, Tom Nyquist, Princeton’s director of facilities engineering says that the array will not produce enough to power the building and that the costs will be considerable. But the project looks like a smarter long-term investment as it launches Princeton into the world of SREC’s.

SREC’s, or Solar Renewable Energy Credits, are units of produced power. Each time a solar electric system generates 1,000 kwh of electricity, the project’s investor–in this case, Pennsylvania Power & Light–can then sell or trade the SREC’s. As power is being pumped back into the electricity grid, Princeton is effectively renting their roof space to Pennsylvania Power and Light in exchange for reduced energy bills. The result is a fully functional and sustainable power system with no upfront costs to Princeton.

Solar Ivy

The best part about this system is that solar is the fastest progressing energy technology, increasing in productivity by over 10% per year. So, over the useful life of the array, Princeton will continue to get more bang for their buck until the solar array takes over for their power needs alltogether. And as this technology takes off, the value of SREC’s improves so everybody wins.

You don’t get into the Ivy League without having a few good ideas up your sleeve. And you don’t get to be a permanent fixture at the Princeton library without pulling your weight. If you do your homework, this is a good deal for all involved.