Back to Basics: Solar Renewable Energy Credits (SREC)
There are many factors that have made solar panels for your home more affordable in recent years, but Solar Renewable Energy Credits, or SRECs, are possibly one of the most important.
So what are they? Think of them like a stock. One SREC represents the monetary value of 1,000 kilowatt-hours (kWh) produced. That value changes every day based on how much energy is produced across the state, how much energy is being used, and what portion of that energy comes from renewable resources (which includes wind power generation, geothermal, biomass, etc.).
In an effort to combat the effects of climate change and dependency on foreign oil, federal, state and local governments require utilities to have a certain percentage of their energy produced from renewable resources. In Maryland, utilities are required to have 15% of all electricity generated to come from renewable energy sources by 2022, of which 2% must come from solar power. Those percentages are phased in over time, which means that each year utilities must either produce that energy themselves or purchase energy credits.
And that’s where the value of SRECs is determined. It is easier and less expensive for utilities to purchase credits than to build new energy production facilities. The less energy they produce from solar and other renewable, the greater the value of the SRECs. And as energy demand continues to grow, the value of those SRECs will also continue to grow. That means that the longer you keep your SRECs, the more valuable they will be.
How many SRECs your system earns each year will entirely be based on the size of the system. When we do a solar analysis, we help you calculate what the cost/benefit is, taking into account the SRECs your solar panel system will earn.
Take note: a solar thermal system (also known as solar hot water) does not earn SRECs! They can, however, help you dramatically lower your utility bills.
Also note: SRECs are not the same as net metering, which requires utility companies to give solar electricity owners a credit if their system generates more electricity than is supplied by the grid.
Prince Georges County Homeowner Reduces Carbon Footprint and Saves Cash
One of the systems we’re particularly proud of is a unique ground install in Bowie, MD. The Blackwells, the family who hired Solar Energy World, were facing a rather steep $7,550 annual electricity bill.
The Blackwell’s are the owners of a large single-family home built in 2006 in Bowie, Maryland. The two-story home sits upon an approximate 40,000 square foot lot. So, with available space, the Blackwell’s explored the use of ground mounted solar panels to reduce their energy costs.
Our solar analysis showed that the Blackwells that it pays to go solar. The family opted for a 10.32kW solar electric system that includes 48 – 215 watt ground mounted panels. After the federal tax credit, state grant and local property tax credits, the Blackwell’s expect their solar panel system to cost nearly 50% off of the total installation cost.
In addition to the government incentives, the Blackwell’s will be saving $2,471 per year on their electricity bills and earning $4,435 per year by selling their Solar Renewable Energy Credits; making their ground mounted solar electric system pay back in less than 6 years.
We also installed an Enphase monitoring system along with the solar panels. The monitoring system showed that in just the first 10-days of operation, the system produced 505 kilowatt hours; which could power 1,529 light bulbs, 505 computers and 15 homes for one day.
Powering up the Blackwell’s solar panel system also reduced their carbon footprint, with a carbon offset of 865lbs. Within the same 10-day period the offset equivalent of planting 10 trees, not consuming 45 gallons of gas, and not driving 26 cars for a day.
Not only that, but they look amazing. Check out these other pictures of the solar system or read the solar case study.
Back to Basics: Solar Tax Rebates and Grants
One of the factors that make solar energy panels affordable today are the widespread availability of solar tax rebates and grants. These financial incentives provide a significant amount of money to people who install solar panels, and can be used to cover a large portion of the costs.
There are basically three sources of solar tax rebates: federal, state and local. The federal government offers a variety of tax credits that you may qualify for when you install solar panels. Programs such as the Residential Renewable Energy Tax Credit can provide a tax credit of up to 30 percent for systems placed into service before December 31, 2016.
Here in Maryland, there are two different types of grants that you can receive based on the type of system you install. If you install a solar thermal system (also known as solar hot water), you can receive a grant for up to 30 percent of the cost up to a maximum of $2,000. If you install a solar photovoltaic system, the size of the grant you can receive is based on the size of the system you install. According to the Maryland Energy Administration, there are three different grant levels:
- $1.25/ watt for the first 2,000 watts of capacity
- $0.75/ watt for watts 2,001 – 8,000
- $0.25/ watt for watts 8,001 – 20,000
Your system must be under 20kW to be eligible; maximum grant amount is $10,000.
(Please note, as of August 23, 2010 the Maryland Grant Program has changed – the grant shown above are the old grant levels. To learn more about the updated grant visit our Incentives & Rebates page)
Locally, tax credits vary widely from county to county. Here in Maryland, only residents of Anne Arundel County, Harford County, Howard County, Montgomery County and Prince Georges County can receive some form of tax credit for installing solar panels. Check out this page on the Maryland Energy Administration’s website for a quick summary of each county’s program as well as links to more specific information.
When you add up all these tax credits and grants, you could install a solar panel system for about half of the initial cost. And that doesn’t even include the money you receive from Solar Renewable Energy Credits (more on those in a later post).
Want to estimate how much you’ll save by installing solar power? Check out our Solar Savings Calculator!