Maryland SRECs: A Deep Dive into Solar Energy Policies
Table of Contents
Understanding Maryland SREC
Fundamentals of SRECs
Solar Renewable Energy Certificates (SRECs) are financial incentives designed to promote the adoption of solar energy. SRECs represent the environmental attributes associated with 1,000 kilowatt-hours of generated solar power. They are traded on markets like other commodities, such as wheat or gold. As a solar system owner, your system will create SRECs (solar renewable energy credits), which you can sell to electricity suppliers who need to meet their renewable energy requirements.
Maryland’s SREC Program
The state’s SREC program encourages solar energy adoption in Maryland by enforcing a Renewable Portfolio Standard (RPS) on electricity suppliers. These suppliers must purchase and retire SRECs to meet their compliance obligations or face penalties.
The state limits the eligibility of SRECs to eligible Maryland-sited solar facilities, including particular solar water heating systems. Notably, SRECs in Maryland have a three-year lifespan, meaning your generated SRECs in 2021 can be counted towards the 2021, 2022, or 2023 compliance periods.
As a solar system owner in Maryland, it’s essential to be aware that only individuals who own (rather than lease) their solar energy systems can sell SRECs in the Maryland SREC market.
Remember that while SRECs offer a valuable source of income for solar system owners, the price of a single SREC is flexible in Maryland, so the value you can receive from selling your SRECs may fluctuate over time.
Participation and Implementation
Role of Homeowners
As a homeowner in Maryland, participating in the Solar Renewable Energy Certificates (SRECs) program is an excellent way to finance your solar system and support the state’s renewable energy goals. When you generate solar electricity, you can earn SRECs, which you can sell to suppliers. The money earned from SRECs helps offset the initial cost of your solar installation and reduces your payback period.
Role of Utilities and Suppliers
Utilities and electricity suppliers in Maryland play a crucial part in the SREC program. They’re legally required to purchase a certain number of SRECs each year to meet the state’s increasing demand for renewable energy. Purchasing SRECs from homeowners, utilities, and electricity suppliers directly contribute to the growth of Maryland’s solar industry. Suppose they need to meet their annual SREC targets. In that case, they’ll have to pay a Solar Alternative Compliance Payment (SACP) as a penalty.
Role of the Solar Industry
The solar industry, including solar installers and equipment manufacturers, also plays a crucial role in implementing solar incentives through Maryland’s SREC program. The solar sector empowers homeowners to generate clean energy and earn SRECs by providing high-quality solar installations and equipment. Solar installers in Maryland benefit from the economic incentives created by the SREC market, leading to job creation and increased investment in the state’s solar sector.
In conclusion, the success of Maryland’s SREC program results from the collaboration between homeowners, utilities, electricity suppliers, and the solar industry. Working together, they help drive the growth of clean energy in the state and contribute to a more sustainable future.
Economic Perspective on Maryland SREC
Price Dynamics of SRECs
In Maryland’s SREC market, the prices of SRECs are influenced by the state RPS, which outlines the requirements and incentives for renewable energy production. SREC prices fluctuate as they are driven by supply and demand factors. The value of an SREC is flexible in Maryland, and it can change over time as the market goes through periods of undersupply and oversupply of renewable energy.
As a participant in this market, you should be mindful of the current and projected SREC prices as they serve as an incentive for solar energy generation. Each SREC represents one megawatt-hour of generated solar energy, which can help you gain money from the energy produced by solar panels and contribute to the state’s renewable energy goals.
The Impact of Supply and Demand
The balance between the supply and demand of SRECs plays a significant role in Maryland’s SREC market. Over time, the market can become either oversupplied with excess energy or undersupplied, depending on factors like new solar installations and energy usage. For instance, between November 2019 and October 2020, the average build rate of solar projects was 7.79 MW/mo, 23.4% less than the previous 12 months, which can lead to an undersupplied market.
SREC prices typically increase in an undersupplied market, whereas in an oversupplied market, prices may decrease. You should pay attention to both the supply and demand dynamics and the state RPS policies that influence the value of SRECs in the Maryland market. By understanding these factors, you can make informed decisions and take advantage of opportunities to benefit and maximize savings from your solar energy system.
Regulations and Policies
Role of Maryland General Assembly
The Maryland General Assembly plays a crucial role in establishing and updating renewable energy policies in the state. One example is Senate Bill 65 (SB 65), which passed into law without the signature of Governor Larry Hogan in 2021. This bill modifies Maryland’s Renewable Portfolio Standard (RPS) by decreasing the solar carve-out from 2022-2029 while increasing the solar alternative compliance payment (SACP) from 2023-2029.
Maryland Public Service Commission
The Maryland Public Service Commission regulates utilities and ensures they comply with the state’s renewable energy goals and standards. This includes monitoring the implementation of RPS and managing the solar carve-out and alternative compliance payments (ACP) for the solar renewable energy credit (SREC) market.
Renewable Energy Goals and Solar Carve-Outs
Maryland has ambitious renewable energy goals, which are reflected in its RPS. The Clean Energy Jobs Act (CEJA) of 2019 substantially increased the solar RPS in Maryland, reaching up to 14.5% by 2030. However, with the passage of SB 65, the solar carve-out has been decreased from 2022 to 2029 to address a significant shortage of SRECs in the market and to help stabilize SREC prices.
The SACP, which serves as a price ceiling for SRECs, has also been adjusted by SB 65. Before this bill, the SACP was set to drop to $45 per SREC in 2023, $40 in 2024, and $35 in 2025. However, SB 65 increased these price ceilings to $60 per SREC in 2023 and 2024 and $55 in 2025.
These regulations and policies set by the Maryland General Assembly and the Maryland Public Service Commission ensure that the state continues to work towards its renewable energy goals while balancing the solar industry’s and energy consumers’ needs.
Tools and Resources for SREC Participants
Understanding MWh and Kilowatts
When participating in the SREC market, it is essential to understand the difference between megawatt-hours (MWh) and kilowatts (kW). A kilowatt (kW) is a power unit, whereas a megawatt-hour (MWh) is a unit of energy. In solar energy, a solar system’s capacity is often measured in kilowatts. In contrast, the energy it generates is measured in megawatt-hours. An SREC represents the environmental attributes of 1,000 kilowatt-hours (1 MWh) of generated solar power[^1^].
Choosing an SREC Aggregator
To effectively participate in the Maryland SREC market, choose a reliable and reputable SREC aggregator. An SREC aggregator is an organization that helps solar system owners manage and sell their SRECs. They provide valuable market expertise and knowledge to help you navigate the complex SREC markets. Some well-known SREC aggregators in Maryland include SRECTrade and Knollwood Energy. Researching and comparing aggregator fees, services, and customer reviews is crucial to determining the best fit for your needs.
Solar Water Heating Systems Vs. Solar Systems
When considering a solar installation, it’s essential to differentiate between solar water heating systems and solar photovoltaic (PV) systems. Solar water heating systems heat your home’s water supply, while solar PV systems generate electricity. Both methods can help reduce energy costs and carbon footprint, but only solar electricity generation from PV systems produces SRECs. Solar water heating systems do not create SRECs, as they don’t have electricity. However, they may qualify for other renewable energy incentives and rebates in Maryland.
As an SREC participant in Maryland, take advantage of various tools and resources to better understand energy measurements, select a suitable SREC aggregator, and compare solar installation options. Learning about these aspects will set you up for success in meeting your renewable energy goals.