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Hey guys, installing a 17MW system in NJ using GPE. Just signed my contract last week and I'm trying to figure out what my best course of action is as far as SREC's. I know the current value is ~$200.00 and the estimated value of TREC's will be ~$91-$95 . My installation is estimated to complete around the estimated time of transition. This means I can try and push for an early install and lock in 10 years of SRECS or delay and lock in 15 years of TRECs. Does anyone have any suggestions?
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Without knowing any thing else just doing the math suggests that $200 x 10 is greater than $95 x 15, assuming the annual output is the same each year. Unless there is some other assumption, if it were me i would try for an early install before the transition.9 kW solar, 42kWh LFP storage. EV owner since 2012 -
It's a little more complicated because SRECs are expected to decrease in value over time. What I would do is set up a quick model where the price of an SREC stays at a constant percentage of the SACP, which is basically a cap on the possible price of an SREC. The SACPs can be found here: https://legiscan.com/NJ/text/S4275/2018.
Current SREC pricing is at $223 on flett exchange less a commission of $2.50 so $220.50. I just sold one today so I can confirm that price. You can find higher pricing elsewhere but you get higher commissions as well. The current SACP for energy year 2020 is $258 putting the SREC value as a percentage of the SACP at 86% (223/258). Run that 86% down for all future years. If you get the permission to operate prior to 6/1/2020 then Energy Year 2021 (runs from 6/2020 - 5/2021) will be your first year and Energy Year 2030 will be your last year. Just as note, the SACP for Energy Year 2030 is $158 which would put SREC pricing for that year at about $136. Compare the pricing under the two scenarios and if you want to be conservative you can knock the SREC price down to 75% of the SACP.
Also, the ten years is complete energy years. So my understanding is that if you don't get the permission to operate until after 6/1/2020 then I think your first full year wouldn't be until energy year 2022 which would give you an additional year of SRECs. But I'm not 100% sure of that. My permission to operate was in 7/2016 so my understanding is that Energy Year 2017 doesn't count for me since it wasn't a full year. Of course, I still have 15 years of SRECs from the old rule.
I also used GPE from a recommendation on this site. They were solid. Just curious, what price are you paying per watt and did you mean to say you're installing a 17 KW system as opposed to 17 MW? 17 MW would be really large. Just curious where pricing is in NJ these days.
I hope that helps. Let me know if you have any other questions and good luck.Comment
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Welcome @dandlewood!
There are many NJ members here and most/all also used GPE. I have have a 12.2kW system from GPE w/PTO in June 2017, so like, NYHeel, I'm locked into the old 15yr SREC plan. I've been counting 2017 as one of my years, but if it's not all the better.
Fiscally, I think NYHeel gives a pretty good estimate. Of course future REC pricing is truly anybody's guess -- like the stock market. I forget, are the SREC's going to be devalued by 20% (aka only 0.8 SREC's / MWh) or is that the TREC's? Or is it neither and the 0.8 SREC's are only for the transitional period?
Not knowing anything about your demographics, do you really expect to live in your home for more than 8-10yrs such that 15yrs (theoretically) of TREC's might prove out in the long run? Most people don't. Of course, there are always exceptions.
Anyway, if it were me, I'd be more inclined to go with the SREC which is a proven commodity. SREC pricing has been pretty stable over the last 5 yrs in NJ. I'm not sure whether I think SREC pricing will decrease or increase going forward. Strictly speaking, the amount of available SREC's will become scarce as new production is shifted to TREC's. But solar REC's on the whole will continue to increase as the installed PV base continues to grow.
That said, the folks at GPE are pretty knowledgeable and seem honest to me. I would speak with them about it. You might also call Flett (https://www.flettexchange.com/contact) as well and see if they will talk with you. They always seem very interested in NJ politics.Comment
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A general observation is SRECs were used to "prime the pump" for solar and tended to be very generous. The cost for renewable is rapidly dropping and offshore wind is going to really make a big impact. The source for the money ultimately in most areas is from the electric ratepayers pocket via a system benefit charge or some other euphemism. These SBCs or whatever they are called are going up year by year and the ratepayers are unhappy thuse the regulators are trying to sunset the overly generous subsidies. My hunch from up in NH is grab the SRECs. Note my SREC price in NH is around $30 due to utilities "owning the PUC" so be aware they can go way down in price.Comment
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Thanks for all the info. Sorry for the confusion, I meant kw, not mw. My price per watt is at roughly 2.71 per watt (Before incentives). This is with 10 year financing in place. The initial deal was substantially worse with a large mark up for financing. So far, GPE has been a pleasure to deal with and have answered all my questions promptly. Just had my analysis done today and am expecting my layout completed by the end of week or early next week.
It's really interesting that the general consensus seems to be to lock in the SREC. I thought that the volatile nature of the SREC market would hedge answers the other way. The market in other states is about 70 to 80 percent lower. I will have to do more research on the SACP, I think that will help solidify my decision.
I plan on being in my home for a long time (I have young children and want to keep them in this district). The next time I move I plan to downsize when the kiddos are older and/or independent.
FWIW, the TREC plan will have a mulitplier on value, and that's what hurts. i.e. home owners can only recoup 60% of the value of a TREC. so even though the value will either be 152 for 15 years or 189 for 12 years (the first 3 years @ 65), net metered home owners will only recoup 60% of the value.
The main value is that the price is locked, so you know what you're getting.Last edited by dandlewood; 03-03-2020, 05:29 PM.Comment
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I had this exact same uncertainty as I was going through my process with GPE. See here: https://www.solarpaneltalk.com/forum...to-sign-up-now
I started in Aug 2019 and got PTO last month. Was very worried about NJ hitting the 5.1% threshold and missing out on 10yrs of SRECs before my PTO. The transition program didn't seem clear and also had a large haircut for residential systems as you note above.
Unfortunately it's hard to know how close NJ is to the 5.1%...it could be any day or several months from now.
For my IRR modeling, I did what NYheel suggests above. Started with the SACP for the next 10 years, then applied a discount to that for an assumed SREC price (in my case I assumed SREC = 80% of SACP).
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Haven't read up on this in a while, but looks like they're sticking with the June 2020 forecast of reaching the 5.1%, updated couple weeks ago. I'm just now reading about the new TREC. Way too much information for me lol.
https://pvoutput.org/list.jsp?sid=69875Comment
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And here's my model to calculate the NPV/IRR for NJ including the SREC math: https://docs.google.com/spreadsheets...gid=1441802643
The yellow cells can be edited.Comment
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@dandlewood I'm not sure what stage you are at with GPE currently, but now that it's March, unless you installation is scheduled very soon (or already in progress) it's highly unlikely you'll get PTO by June (at least based on my experience).Comment
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