Solar Renewable Energy Credits (SREC)
In Delaware, the Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators. To comply with the RPS, Delmarva must purchase Solar Renewable Energy Credits (SRECs) each year.
SRECs are credits generated by a solar system based on the electricity produced by the system. One SREC is generated for every megawatt hour (MWh), or 1,000 kilowatt hours (kWh), of electricity generated by a solar system. SRECs represent the “green” and renewable value of the electricity generated by a solar system. It is important to note that SRECs are sold separately from the electricity a system produces.
The value of an SREC is determined by the market subject to supply and demand constraints. SRECs can be sold to electricity suppliers needing to meet their solar RPS requirement.
The DESEU supports the RPS standard and therefore supports the SREC market with programs.
Annual SREC Procurement Program
In 2011, the Delaware legislature amended the solar portion of the state Renewable Portfolio Standard (RPS) to switch the burden of acquiring SRECs away from the power providers to the electric distribution companies in Delaware. This amendment drastically reduced the number of buyer participants, effectively making Delmarva Power, the largest electric distribution utility in Delaware, the de-facto long term buyer for the majority of the DE SREC requirement. In response, Delmarva Power proposed the implementation of an SREC procurement program, called the SREC Delaware Procurement Program that provides long-term contracts to SREC sellers on a competitive basis.
Delmarva, which has selected the DESEU to operate the program, plans to run at least one solicitation each year in order to fulfill its long-term SREC needs.
The SREC Delaware Program holds an annual procurement for customers who what to participate in the Program. Each procurement is unique and divides solar properties into tiers based on their attributes, such as system size, interconnection date, and ownership type. Each procurement is bid-based — meaning that the lowest bids are accepted in each tier.
During each procurement there is a two-week window when applicants can submit bids. Each bid includes information about the system, and the price that the applicant would be willing to accept per SREC. At the end of the two-week window, the Program Administrator verifies that each bid is valid. All valid bids are ordered from lowest price to highest price, and the lowest price bids are accepted until the given tier is full. Winning bids are awarded a multi-year contract to sell their SRECs under the program.
Solar properties that have been built with either Delaware labor or Delaware manufactured parts may be granted an SREC bonus of 10% for each qualification. For example, a property that qualifies as having been built with Delaware labor may be granted the equivalent of 10% SREC bonus for every SREC produced. A property that is certified as having been built with both DE parts and labor is qualified for a 20% bonus for every SREC produced, etc. The Delaware Public Service Commission will certify that a property meets the qualifications for each bonus.