Many major US cities have made strides in harvesting renewable energy, thus, making it easier for residents and businesses to go solar. State solar laws aim to boost solar markets, create jobs, enhance local economies and reduce emissions. According to the Lawrence Berkeley National Laboratory, about 60% of the total growth in renewable electricity generation is a result of state Renewable Portfolio Standard (RPS) policies.
The future of energy security
To date, 29 states and Washington, DC stand behind solar development by having passed RPS requirements. The RPS requires utility companies to supply a specified amount of electricity from renewable resources – wind, solar, geothermal and biomass. These standards are integral to state efforts geared towards diversifying its energy mix and driving clean energy growth. A supplier who cannot meet these policies could pay fines, a.k.a. alternative compliance payments (ACP).
Increasing Renewable Portfolio Standards is the answer
As of October 2016, America’s capital Washington DC increased and extended its RPS production target from 20% by 2020 to 50% by 2032. The act includes that 5% of solar must be sourced by 2032. This puts DC on par with other green state leaders like New York, California, and Oregon in terms of growing solar markets. Electricity companies that don’t comply with DC’s new policies will pay a penalty; the ACP is now $500 for every megawatt-hour (MWh) of solar not met, but is set to decline after 2023 to $50 per MWh by 2033.
The state of Maryland increased its Renewable Portfolio Standard generation earlier this year to 25% by 2020 (from 20% by 2022). At least 2.5% of solar must be sourced by 2020. This expansion act in DC and Maryland not only makes it even easier for residents to go solar, it helps grow solar and other renewables in these locations too, contributing to a larger economic and environmental impact.
Other benefits of RPS:
- It decreases the payback period of a solar system investment
- Lowers the cost of obtaining electricity generated from renewable energy sources
- Boosts the amount of renewable energy electricity that utility providers must supply from renewable energy sources
- Higher ACP rates increase the price of Solar Renewable Energy Credits (SRECs), which greatly adds to a solar owner’s revenue
Get a higher SREC value
Did you know that utility companies pay you for having a solar panel system? That’s where Solar Renewable Energy Credits (SRECs) come in. SRECs are tradable “certificates” which represent 1 megawatt-hour of energy produced. Higher SREC prices are the result of a state’s penalties (ACP) for failing to meet Renewable Portfolio Standard requirements. But, if the penalty is less than the cost of SRECs, it will be less valuable. Simply put, the best market for SRECs are those that have the highest ACPs for electricity suppliers to purchase from solar homeowners. Depending on the price offered by your state (and its standards) cashing in on your SRECs along with other renewable incentives can pay for nearly 80% of your system. DC SREC prices currently lie in the $450 range – which means it’s a hot commodity right now (follow SREC markets by state here).
There’s a good reason why so many states are choosing Renewable Portfolio Standards – the substantial benefits are a win-win-win.