Why Washington, DC Loves SRECs: A History of Solar Incentives

Washington, DC is a shining example of how solar power can thrive. A big reason behind this success?  Solar Renewable Energy Certificates (SRECs). But what exactly are SRECs, and why were they created? Let’s dig into the history of solar incentives in the District.

SRECs were born from a simple idea: to encourage renewable energy by giving it tangible value. The electricity grid has traditionally relied on fossil fuels. But traditional energy doesn’t actually pay for all their environmental damage. 

That’s where SRECs come in! SRECs help cover that actual cost by supporting investments right here in the District. These certificates represent a specific amount of clean energy produced (1,000 kilowatt hours). People who own their solar systems are able to sell SRECs as soon as their array generates enough clean power. Utilities and other entities that need to meet renewable energy requirements can buy SRECs to offset their carbon footprint, making clean energy more financially viable.

Washington, DC boasts a vibrant solar market, and that climate win owes a lot to SRECs. These certificates are the currency of DC’s commitment to clean energy, but the journey to their present-day success wasn’t always straightforward. Let’s dive into their history:

The Early Days: Setting the Stage

• Late 1990s: Environmental awareness gains momentum across the US. Recognizing this shift, DC starts exploring renewable energy mandates.
• 2004: The Renewable Energy Portfolio Standard (RPS) Act passes. This law lays the foundation for SRECs, requiring DC utilities to gradually increase their share of electricity generation from renewable sources.

SRECs Enter the Picture

• 2005: While the RPS creates goals, it needs teeth. SRECs are introduced as a market-based mechanism to help achieve those goals. The concept is simple: one SREC equals one megawatt-hour (MWh) of solar-generated electricity.
• 2008: DC’s SREC program officially launches! Now, solar system owners can earn SRECs, selling them to utilities or other entities obligated to meet renewable energy targets.

Challenges and Refinements

• Early Fluctuations: The nascent SREC market experiences some initial price volatility, creating uncertainty for potential solar investors.
• Policy Adjustments: DC listens and learns. Over time, the program is adjusted to stabilize the SREC market and provide solar producers with clearer incentives and revenue predictability.

SRECs Solidify DC’s Solar Commitment

• 2018: The CleanEnergy DC Omnibus Amendment Act is a watershed moment. It greatly expands the RPS targets and solidifies the SREC program’s future, making solar an even more attractive option.

The Results? A Thriving Market: High SREC prices and robust demand incentivize both residential and commercial solar installations, boosting local jobs and reducing carbon emissions.

Several reasons why the DC SREC market is likely to remain high for the foreseeable future:

• Aggressive Clean Energy Goals: Washington, DC boasts some of the nation’s most ambitious renewable energy goals. The CleanEnergy DC Omnibus Amendment Act of 2018 increased the Renewable Portfolio Standard (RPS) to 100% by 2032, and the Local Solar Expansion Amendment Act of 2022 increased the solar carve-out to 15% by 2041. These targets will continue to drive demand for SRECs.
• Strong Solar Alternative Compliance Payments (SACP): The SACP is essentially a penalty that utilities must pay if they don’t meet their RPS requirements. DC’s SACP is substantial, ensuring utilities strongly prefer buying SRECs over paying penalties. This keeps the SREC market well-supported.
• Limited Solar Development Sites: Washington, DC is a densely populated urban area with limited space for large-scale solar farms. This creates a supply constraint, which naturally supports higher SREC prices.
• Initiatives Promoting Solar Accessibility: DC’s focus on programs for community solar and affordable solar for low-income communities ensures broader access to solar power. This expands the market, fostering continued SREC demand.
• Growing Environmental Awareness: DC residents and businesses are increasingly conscious of reducing their carbon footprint. This trend supports solar adoption, keeping SREC prices strong.

Want to learn more about how SRECs can benefit you? Contact Uprise Solar today to see if solar power with SRECs is the right fit for your home or business! Call us at (202) 280-2285 or fill out the form below to get in touch.