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Spiezle Blog

Got RECs?

Posted by: Frank Sherman

We do! Or, more precisely we did until we sold them this week. Back in 2010 Spiezle installed a roof full of little crystalline generators (AKA solar panels) that work all day to generate electricity with renewable energy attributes. These attributes take the form of Renewable Energy Credits (RECS, get it?). In our case they are SRECs.

We do not have a large solar array. Like most buildings are roof is taken up with mechanical equipment and such. But we have enough open space without shadow for a nice little system to operate. We generate enough kWh of electricity for give-or-take 12 Recs annually. It varies based on the weather and whether the system is cleaned. A REC represents 1 mega-watt hour (MWh) or 1,000 kilo-watt hours of electric generation. Our energy production is tracked and certified through PJM’s Generation Attribute Tracking System commonly referred to as GATS. According to PJM:

“Every specific MWh of electric generation is individually certified with a unique serial number. This serial number is the finger print to that particular MWh of generation that has occurred and is owned only by that particular generator for that particular MWh. This certificate becomes a commodity the generation owner can now sell to an interested buyer. Buyers can vary from electric utilities to middle-people, such as brokers or aggregators, to environmental firms or to non-industry companies looking to neutralize their carbon footprint.”

As a commodity, our RECs have value, and because they are a commodity the value of RECs varies over time. The market for RECs in New Jersey has improved so it was time to sell!

The Flett Exchange tracks the changing prices of renewable energy credits in the mid-Atlantic region. Their August newsletter is pretty bullish about REC prices. The four markets they report on; NJ, PA, MD, & DC have all improved over the past year. New Jersey REC pricing has improved from $100.70 in 2013 to $155.65 in 2014; a 54% increase in value. This is nowhere near the glory days of New Jersey REC pricing, but those days are gone forever. It is still better though than the dark days of 2012 when REC pricing was bouncing around $20. SRECs are a speculative market with folks selling future production at set prices to cover the cost of their investment. Others like Spiezle sell past production or opt to keep the renewable energy benefit as part of their commitment to reduce greenhouse gas emissions and their carbon footprint.

Either way, over time the benefit outweighs the cost. Too much emphasis is put on the first cost of installing solar versus cost savings and benefit over time. Yes it costs more to install solar, but the price of solar has dropped dramatically and the pay-back is much more reasonable than people think. In fact the cost of solar has dropped to the point where we will consider it as part of a base-building energy solution for new buildings. Lifecycle analysis works in solar’s favor, outdated attitudes towards the technology do not.

Like many of our clients, solar has value to us. Like many of our clients, we chose to monetize that value. In the future I hope we may decide to retire our SRECS towards reducing our greenhouse gas emissions. That has value too. At $155 per REC, the renewable energy we generate is worth about equal to what we pay for electricity. This cost parity has encouraged clients to reconsider solar investment. Economics are shifting to favor solar power generation. We have done our little part to build an infrastructure for the new solar economy. Have you?

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