I thought I understand how SREC's work, but......

[kevcor620]

Hi All. Kevin from Massachusetts here. I'm a newbie (system hasn't even been installed yet). I purchased an 11.44 kw system from Direct Energy Solar last week with a 90 day installation guarantee. In researching SREC's, I thought it was a pretty simple premise. The state sets an RPS, and if the utilities do not produce that % themselves, they can avoid paying the SACP by purchasing SREC's at auction. It is also my understanding that each SREC represents 1,000 kwh of produced solar power. So it seemed pretty simple. But now I'm hearing that those people who got into SREC I program are getting higher prices for their SREC's than people in SREC II. So this is what I don't understand.....If an SREC represents 1,000 kWh of solar power, and the utility company purchases these to comply with the RPS, then why is there a price difference between SREC I and SREC II? If they both represent 1,000 kWh, why does one have more value than the other? Any help understanding this would be deeply appreciated. Thank you

[Amy@altE]

SRECs are auctioned off by wholesale distributors. Supply and demand dictates their price, and the price has been dropping. Your installer should be doing all of the leg work for you for it, no one has EVER said SRECs are simple.

[kevcor620]

Thank you Amy. I do get that SREC's will fluctuate based on supply and demand. What I don't understand is why SREC I carries a higher auction value than SREC II, when both certificates represent 1,000 kWh of solar production. Ugh...

[sensij]

Here is a link with some discussion on the structural differences between the -I and -II programs.

If you read the official program overview, more reasons for the difference in pricing become clear. There is a schedule of guaranteed payments that may be made to a project owner if they are unable to sell the SREC-II independently, and likewise, the penalty for emitters for failing to buy SREC's is also capped. These values basically bound the market, and will be different for SREC-I vs SREC-II.