SRECs in Real Life – A Case Study

Welcome to the second installment of everything you need to know about SRECs. Last week we discussed the basics of SRECs – what they are, how you get them, and how they can affect your return on investment and years to pay off your solar system. If you didn’t have a chance to catch that blog click here.

We think that it may be easier to understand how SRECs contribute to your solar system by using some real numbers. So this week, we’ll be looking at an actual Rayah Solar customer, and how SRECs changed their bottom line.

Firstly, to customers that have already gone solar, do not fear. As we mentioned in the last blog, the State of Massachusetts guarantees your SRECs at the minimum value they have set for 40 quarters (or 10 years). This means that your SRECs were secured from the time your system was officially interconnected. So, from the movie The Lion King – “Hakuna Matata.”

Now, for those have not already gone solar or are still on the fence – let’s dive in. Meet Jill. Jill lives in Worcester with her family of 5 and relatively new to home ownership. Jill and her husband chose to purchase their panels and take advantage of the low-interest rates provided by the State’s Mass Solar Loan program. Take a look at their system specifications:

  • 15 SunPower 335 All-Black AC Panels w/ SunPower Equinox System
  • System Size: 5.03 kW DC
  • Estimated Annual Production: 5,729 kWh
  • Estimated SRECs: 4.58 Annually (80% of the estimated annual system production)

Jill’s 15-panel SunPower system is expected to produce 5,729  one-thousand-kilowatt hours, which translates to 4.58 SREC’s (remember, SRECs are based on how much your system produces. You get .8 SRECs for every one-thousand-kilowatt hours, which equals 1 MWh). Currently, the minimum value the State has placed on SRECs is $275, guaranteed for 10 years. So that’s $12, 550 cash back in their pocket!

4.58 SRECs x $275/SREC = $1,255
$1,255 x 10 Years = $12,550 SREC Revenue

Because Jill went solar with a $0 Mass Solar Loan, she will be cash flow positive every year, until she pays off her loan, in ten years. By the time Jill pays off her loan, she will not have only saved money but her system would have made money for her!

But what if Jill waited and made the decision to go solar too late and missed the SREC deadline? What would her savings look like then? Well, let’s do the math. The Massachusetts DOER (Department of Energy Resources) has not officially released the final parameters of the program that will be replacing SRECs (this has been termed the “SMART” program). However, the estimates are that the new program could reduce solar incentive value by 48%. For our math today let’s be conservative and make the assumption that with the SMART program, solar customers can expect to see a 40-percent decrease in solar revenue. We estimate the lower value to be around $171 per one-thousand-kilowatt hours. Using Jill’s system specs, the math now looks something like this:

$275/SREC x 60% (the remaining value after the 40% incentive decrease) = $165 estimated solar incentive value for the SMART program

4.58 MWh x $165 = $756

$756 * 10 Years = $7,560 Solar Revenue

Now let’s compare the 2017 SREC program to the new SMART program:

$12.550 (SREC II Program) – $7,560 (SMART Program) = $4,990 in lost value

That’s $4,990 in lost revenue just for sitting on the fence too long. And the more your system produces the more you lose out.

This goes for customers looking to lease their systems as well. The leasing model takes all of the incentives offered for going solar and channels it into an electric rate lower than your utility companies. SRECs are a great draw to leasing companies, as it provides a great return on their investment for your solar system. As the program changes, a decrease in the revenue produced from SRECs will result in higher leasing rates per kilowatt hour.

No one likes to leave money on the table. Especially money that requires no extra work or investment; money for something you are going to buy anyway. But if you wait until the SREC-II program deadline, that is exactly what you are doing. And please remember, this deadline requires that your system is installed and turned on to qualify which can take up to 90 days from the day you sign up. Simply put – you don’t have as much time as you thought you did.

Give us a call today – (617)564-3159.

P.S. We at Rayah Solar consider ourselves experts in the solar industry. However, we are also professionals, and as such we can only provide information and estimates based on information that is currently available to the public. These are the stories of real customers and their savings, and not a guarantee.

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