For many years, many Maryland residents have been able to take advantage of the sky high value of DC SRECs as they are connected to the DC PEPCO feeder line, even though they live on the other side of the District Border. This party appears to be coming to an end following recent reports to Honeydew.
Understanding SRECs
Before diving into the details, let’s briefly explain what SRECs are. Solar Renewable Energy Credits are tradable certificates that represent the environmental benefits of generating electricity from solar energy. SRECs serve as a means for utilities and other entities to meet their renewable energy goals and compliance requirements. Solar system owners can generate and sell these credits, providing an additional revenue stream for their solar energy production.
Front of the Meter vs. Behind the Meter
Front of the Meter Projects
- Front of the meter solar projects can describe utility-scale, wholesale generation, or community solar systems. These are typically large-scale installations that feed electricity directly into the utility grid. These projects are owned and operated by utilities or independent power producers (IPPs). The generated electricity is sold to customers, and the associated SRECs are typically owned by the utility or IPP. The revenue generated from selling the electricity and SRECs forms a significant part of their business model.
Behind the Meter Projects
- Behind the meter solar projects, also referred to as customer-sited, distributed generation, or net energy metered (NEM) systems, are installed on residential, commercial, or industrial properties. These projects are situated on the customer’s side of the utility meter and are primarily intended to offset the customer’s electricity consumption. The electricity generated by behind the meter projects is consumed on-site, reducing the need for grid-supplied electricity. Solar system owners can earn SRECs for their clean energy generation and, in some cases, participate in net metering programs to receive credits for excess electricity fed back into the grid.
Changes in DC SREC Eligibility
Currently, some Maryland solar energy system owners located near the Maryland-DC border have been able to take advantage of higher-priced DC SRECs. There have been recent changes to the eligibility criteria that impact both front of the meter and behind the meter projects:
Front of the Meter Projects
- Some front of the meter solar projects in Maryland are now being rejected from receiving DC SRECs. This is likely due to the additional strain a community solar type of project adds to a local distribution system.
Behind the Meter Projects
- Behind the meter projects in Maryland may also soon be facing changes in eligibility. It is expected that after this year, behind the meter projects will no longer expected to be accepted for DC SRECs. However, front of the meter projects built in the 2023 are expected to be grandfathered into the DC SREC program
Pricing Differences between MD and DC SRECs
There are significant pricing differences between Maryland (MD) and DC SRECs due to varying market dynamics and supply-demand factors. Namely, DC charges a much higher fee to electric suppliers for failing to meet their renewable energy goals. This pushes up demand for DC SRECs. The other major factor is space. Given that DC is a dense urban environment of only 68 square miles, it is unable to rapidly deploy solar PV, thus keeping the supply of SRECs low. Currently 1 Megawatt hour (MWH or 1,000 kilowatt hours) of solar energy in Maryland is worth only $58/MWh. That same MWh of solar energy production in DC is currently trading at $420; over 600% greater that MD.
Conclusion
The evolving eligibility criteria for DC SRECs have implications for Maryland solar energy system owners, particularly those near the border. Please reach out to us if you are unsure of whether your project will qualify and we can help resolve the issue.