SREC and SuSI Incentive Program for New Jersey residents
Jameson Harmon
SREC (Solar Renewable Energy Certificate) and its successor, the Successor Solar Incentive (SuSI) Program, are initiatives in the state of New Jersey aimed at promoting the generation and use of solar energy. Here's a breakdown of the two programs:
SREC (Solar Renewable Energy Certificate) Program:
Purpose: SRECs are created for every megawatt-hour (MWh) of electricity produced by a solar generator. These certificates can then be sold or traded, allowing utilities and other entities to buy them in order to meet their renewable energy obligations.
How it Works: If a homeowner, business, or any other solar generator produces 1 MWh of solar energy, they earn one SREC. This certificate can then be sold in the open market, where its price is determined by supply and demand factors.
Regulatory Context: New Jersey utilities are obligated by the state's Renewable Portfolio Standard (RPS) to produce a certain percentage of their electricity from renewable sources. Instead of generating this renewable power themselves, utilities can purchase SRECs to meet these requirements.
Economic Incentive: By allowing solar producers to sell their SRECs, New Jersey provided a significant financial incentive for individuals and businesses to install solar panels. The revenue from selling these certificates helped offset the cost of the solar installations.
Successor Solar Incentive (SuSI) Program:
Purpose: As the SREC program began to wind down (each SREC program generally had a finite life span and target), there was a need to establish a new framework that would continue to support the growth of solar energy in New Jersey.
How it Works: The SuSI program is a bit different from the SREC approach. Instead of market-based SREC sales, SuSI provides fixed incentives based on a solar project’s size and type. This approach aims to provide more predictability and stability in the solar incentive landscape.
Components: The SuSI program has two main components:
Administrative Solar Incentive (ASI): A fixed incentive paid per kilowatt-hour (kWh) of electricity produced by certain eligible solar projects.
Competitive Solar Incentive (CSI): A competitive solicitation process for larger solar projects where incentives are determined through a bid process.
Economic Incentive: The SuSI program ensures that solar remains an attractive investment in New Jersey by providing direct financial support to solar projects, making it more predictable for developers and reducing the uncertainty that comes with fluctuating SREC prices.
Both SREC and SuSI represent New Jersey's commitment to renewable energy and the state's efforts to transition to a more sustainable energy future. They serve as models for how states can use economic incentives to drive renewable energy adoption.