Renewable Energy Certificates

14 Nov 2012 11:46 AM | Michelle Hickey

People with renewable energy systems or considering installing one and those who live in communities that have or recently voted for Municipal Aggregation of their electricity will be faced with a term that can be confusing - Renewable Energy Certificates/Credits, often referred to as RECs.

All energy production generates at least two outputs.  Traditional energy, coal and nuclear, generate electricity and pollution/waste.  Renewable energy systems, like solar arrays and wind turbines, generate two outputs as well – electricity and RECs.  The RECs are a mechanism developed by the EPA to encourage development of non polluting energy projects.  For every 1000 k Wh (1 MWh) of renewable energy produced, one REC is generated.

 

RECs are tradable, marketable commodities that are sold to companies, states, cities, or other entities that have established a Renewable Energy Standard or other commitment to renewable energy.  If you travel, you may have seen an option to “green” your travel by purchasing these credits or you may live in a community that offers a “green” energy option for your electricity usage.

The sale of RECs provides a revenue stream for solar and wind developers that contribute to the financial viability of a project.  Financing will often include a contract of 5-20 years for the RECs produced by the project.   REC pricing fluctuates due to supply and demand, but in areas where it is an effective mechanism to spur development, pricing is typically in the $100-$400 range.

A project can sell RECs as long as it is operational, so a wind farm that was built 10 years ago can continue to sell the RECs it generates.  These RECs provide additional revenue to the project developer, but do not support NEW development and are often sold cheaply.   We are already enjoying the environmental benefits of this project and they have already received the revenue to finance, so rather than purchase these “cheap” RECs, consider purchasing RECs from a project that needs the additional revenue in order to be developed.

Illinois has a Renewable Portfolio Standard to procure 25% of its energy from renewable sources by 2025.  RECs are the mechanism by which the state achieves this percentage.   Unfortunately, Illinois does not have an in-state preference, which means they don’t have to purchase RECs from Illinois based solar and wind projects.  This hurts the Illinois economy by supporting renewable energy development in other states rather than in Illinois and prevents the reduction of environmental and health problems created by our continued reliance on fossil fuel based energy.

So when purchasing RECs, buy Illinois and support new development!

Comments

  • 16 Feb 2013 9:32 PM | Anonymous
    We home owners with PV installations are disappointed that ISEA has not yet provided information, positive or negative, concerning negotiations for the sale of our 2012 SRECs. We are a month and a half into 2013. Please do make a statement.
    Link  •  Reply

Webinar Q&A

Q: There is a 2% limit on rate increases. Are you sure this is not a problem? The rate increase is in reference to the total procurement, so we do not anticipate it being an issue.


Q: I am a homeowner. Your invitation stated you may have some new information concerning Gov. Rauner's budget. That's what I'm particularly interested in. The proposed budget for 2015/2016, at this time has eliminated rebates and grants. ISEA’s position is that we will continue to advocate for the continuation of this program. There is also a legislative bill that has proposed an extension to this program through 2020 which we support and will continue to track.


Q: Can you provide an REC typical value for an average sized home with this proposed declining block program? I have a hard time explaining the value of RECs. Since Illinois has not had a REC price in the past, it’s difficult to estimate what the initial market value may be. The supplemental procurement will go a long way in establishing Illinois REC market prices. In the meantime, the Illinois Power Agency (IPA) will continue to research other markets to make the best decisions for the Illinois market. The goal, of course, is to install solar, and the purpose of the REC is to incentivize solar purchases and ensure pricing makes economic sense. As a reminder, there’s still a bit of the process left before we see what price RECs will have in Illinois. Once the legislation has been passed, and the REC price is published, we’ll update as needed.


Q: What recs are available for people who installed solar systems in 2014? If the system was energized prior to January 21, 2015, you qualify for the regular procurement event in September 2015.


Q: Does Exelon nuclear energy qualify as renewable energy with the 35% by 2030? It does not. Renewable energy is defined within the statute and includes wind, solar, and biofuels. More information can be found at http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=88&GA=99&DocTypeId=HB&DocNum=2607&GAID=13&LegID=88134&SpecSess=&Session=

It is important to note that the Clean Jobs Bill, not to be confused with other energy bills, is the only bill that focuses on renewable energy while producing 32000 jobs per year.


Q: Will clean energy that has already been produced from existing systems be considered for auction? No. The RECs will only be from the contract date of the accepted bid moving forward.


Q: If I plan to install more solar panels in 2015, are IL rebates still available, or is it dependent on Governor Rauner's budget proposal? The program for the 2014/2015 fiscal year is closed. So any future rebate availability will depend on the budget proposal. However, consider the procurement events of 2015/2016 as potential funding sources.  This scenario strongly highlights why we need to pass the Clean Jobs Bill (HB2607/SB1485) as it will provide a way to raise the status of renewable energy to equal that of all other forms of energy. Thus, any perceived dependence on rebates and grants will be removed.


Q: Evidently the 2014/20­15 rebates were frozen. Is that still the case? At this time, rebate decision letters have gone out, clarifying which will be paid and informing the owners that no further extensions will be granted.


Q: When will the specific process of solar customers contracting to be paid for future SRECs in place of the Illinois DCEO Rebate program be rolled out?­ The first supplemental procurement will be June 18, 2015. Aggregators are already available. We have a list of preferred companies here http://www.illinoissolar.org/SRECTrade-FAQ


Q: Once the REC schedule is defined, can you post some investment payback time scenarios on the ISEA blog, including the declining block ­ to let people know what is a realistic investment outlook?

We will try, however, we don’t anticipate seeing any information on this until early to mid 2016.



Copyright © 2009 - 2014  Illinois Solar Energy Association

Home   About Us   Events Calendar   Join ISEA   News   ISEA Blog   Employment

Powered by Wild Apricot Membership Software