The SREC Program has revolutionized the economics of solar.
Posted by
Wally Cole on Sat, Feb 04, 2012 @ 09:00 AM
The Solar Renewable Energy Credit (SREC) Program launched by the Department of Energy Resources (DOER) has revolutionized the economics of solar for homeowners and businesses in Massachusetts. Recently the program made some excellent enhancements that make it even more attractive. The income flow from selling your SRECS is now much more predictable, making the multi-year ROI on a solar project investment even more attractive.
Thomas Astore, CPA and Partner at Rodman and Rodman, CPAs, has penned this terrific summary of the recent positive changes. His firm is the most solar-savvy accounting firm in Massachusetts and many of Blue Selenium Solar's clients depend on their specialized Green Team for an objective evaluation of the cash flow, tax benefits, and ROI of their renewable energy project investments. He can be reached at 617-965-5959 at www.RodmanCPA.com. Here's his article:
FUTURE OF SREC CAP RATES NOW MORE CERTAIN
Since the inception of the SREC program, there has been uncertainty over how to value SRECs into the future. While the original wording of the Act allowed the state to adjust the cap by up to 10% of the current value each year, this left a lot of room for speculation. On December 28, 2011 the Massachusetts Department of Energy Resources (DOER) announced a ten year rolling schedule that would set the SREC rate each year for the next ten years. The schedule begins to adjust the cap rate down by 5% each year beginning in 2014. The current schedule runs through 2021, and will include the rate for the next year in late January, and each year annually after that.
With this new schedule, calculating the rate of return on a solar project now contains more certainty as to what the return will be on each SREC. This is a big benefit to project developers and financers as now instead of an unpredictable 10% adjustment, there is a known 5% decrease each year.
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