Due to the overwhelming success of the first Massachusetts ‘RPS Solar Carve-Out’ Program, a second phase of the program known as ‘SREC II’ is expected to be formally launched later this quarter. For Massachusetts businesses with large under-utilized roof or land areas, the SREC II program can provide a lucrative way for companies to ‘go green’.
By way of background, an SREC is a Solar Renewable Energy Certificate and it represents the renewable attributes of one Megawatt-hour (MWh) of solar generated electricity. Massachusetts requires its investor owned utilities to buy a certain number of SRECs annually in order to meet the state’s Renewable Portfolio Standard requirements. The purchase of these SRECs provides additional revenue to businesses and property owners with solar energy systems. When packaged into multi-year contracts (also known as strips), SRECs can provide highly visible and predictable cash flow streams that can be readily financed.
Key Design Features of the SREC-II Program are:
- The SREC financial incentive differentiates between various market sectors and is particularly attractive for roof mounted systems on large commercial buildings (i.e. 30,000 square feet or larger).
- The SREC incentive is reduced in value over time, providing the best benefits to those businesses that enter the SREC Program early.
- The SREC revenue combined with attractive Federal tax credits and depreciation, plus new and existing State and Local Incentives, make solar a very compelling investment for Massachusetts businesses and property owners who also want to demonstrate leadership and position their companies at the forefront of their Industry.
Whether your business is interested in owning a solar PV system, leasing one, or simply purchasing low-cost solar energy with no capital outlay as part of a ‘Power Purchase Agreement’ (PPA), the revenue provided by the new SREC-II program is a key economic driver that makes going solar a compelling business case.