Portfolio Energy Credits: How to make your PV system print money

Renewable portfolio standards are policies that promote clean energy adoption by setting goals for utilities and sometimes all kinds of other companies. To prove that it is generating enough energy from clean sources, a company has to use special certificates that are automatically created for every KWh or MWh of energy produced by a registered renewable source. These certificates may be referred to by different words, for example RECs or SRECs, but they are essentially the same thing. For the sake of simplicity we call them PECs throughout the article.

A very important part of this effort is a market for trading such certificates. All PECs have a unique serial number to prevent double counting by various electronic systems that offer tracking and trading functionality. These platforms allow you to store your certificates and sell them to companies that have to meet the government goals on clean energy generation. They won't be your only buyers though. There are quite a few companies with self-imposed goals that have to support claims like ‘made with 100% solar energy’.

At first glance, PECs may look similar to the Net Metering program. Net Metering and its variations like net billing essentially allow participants to sell their excess energy back to the grid, either at full retail price or at avoided cost rate. The credited funds are then used to offset forthcoming bills. While the details vary from state to state and among utilities, the principle is the same across the board: you send the actual energy produced by your system back to the grid and get rewards in exchange.

Portfolio energy credits (PECs) are different. They are not tangible, like electricity, but represent a right to declare that the holder has produced a certain amount of clean energy. They are automatically created by all participating systems upon generation of every KWh or MWh of renewable energy. An individual can choose to either store or sell them at market prices to utilities and other companies that need them to meet the goals set by the government.

Note that you don’t have to choose between the two: you can both participate in the Net Metering program and generate PECs. Keep in mind, however, that sometimes you have to choose between claiming an incentive or owning your PECs. Rebate programs and incentives are usually provided by utilities. Some of them might include a condition making you hand over all PECs generated by your system to the entity that provided the incentive or rebate.

Most of the states have adopted renewable portfolio standards, giving their residents and companies one more reason to produce green energy. Even if you live in a state that hasn’t yet adopted these policies, there is a good chance it will do so in the future. When that happens, you will almost certainly be able to join the program with your existing solar setup.

You can find an interactive regularly updated map on the National Conference of State Legislatures’ website. It shows the status of each US state and territory and contains all relevant information about their portfolio energy standards.

First of all, one should remember that the value of PECs is market-driven. As with any other asset, historic prices don’t guarantee anything in the future. Should the demand for certificates fall or the supply grow, the price will go down. Penalties that each state implements for not meeting renewable portfolio targets also affect the price of PECs: at some point a company will be better off financially simply paying the fine.

If we set aside minor details that vary from state to state, the whole process doesn’t look very complicated:

1. Register your system with the Public Utilities Commission or another organisation designated by the state’s authorities. The process usually includes filling out an application form and physical examination of your system.
2. Start generating energy with your solar array. PECs will be created automatically. You can monitor your certificates via the tracking platform used in your state.
3. Sell PECs via the very same platform or contact a broker like SRECTrade or SolSystems for that. Keep in mind that the life of PECs is limited – your certificates will typically expire in 5 years.

So, how much can you actually earn selling PECs? The answer will vary depending on the state and may significantly fluctuate with time, so do not forget that your future earnings are not 100% secure. Below we provide price information for 4 US states so that you could form a general picture. The calculations are based on the 2021 data and assume that you own a 10 kW solar panel system.

• Pennsylvania – $210 - $273 per year, with a single PEC selling for $21
• Maryland – $750 - $975 per year, with a single PEC selling for $75
• District of Columbia – $4,250 - $5,525 per year, with a single PEC selling for $425
• Ohio – $100 - $130 per year, with a single PEC selling for $10