What Can SRECs Mean For the Solar Thermal Market?
I love solar thermal. It’s a simple, reliable, provides solid returns and can have a significant impact on reducing business costs for heavy hot water use facilities; hotels, car washes, laundry mats, food processing plants, you name it. Unfortunately in the past few years the solar pv industry has taken the lead to both geothermal and solar thermal in the hearts and mind of consumers and politicians alike. The growth of the solar pv industry when compared with geothermal and solar thermal is evidence enough.
However, Maryland has created solar thermal renewable energy credits (SRECs), similar to solar pv SRECS, that will allow Maryland based solar hot water owners to produce and sell up to 5 SRECS per year. Although 5 SREC limits the program to smaller installations, this is a huge step for the solar thermal industry.
Why will SRECs help grow the solar thermal industry?
There are two main types of incentives, ones based on installed cost (tax credits, rebates, etc) and the others based on production (feed-in tarrifs, srecs). Incentives based on production are best because they provide cash flow for the life of the system but also ensure that the installer will maximize output of the system for the lowest possible price. Solar thermal has traditionally been seen as an energy efficiency measure that was simply offsetting the use of another fuel (electric, natural gas, heating oil) and not as a source of energy in its own right. By creating SRECs, solar thermal image is now being changed into a source of energy and not just an efficiency measure, a key ingredient for investing a financing systems.
By creating SRECs solar thermal systems will generate cash both in the offsetting of a fossil fuel source but in the production of BTUs that the system creates. This will make investing in solar thermal systems more attractive to heavy water users and it will also incentive solar installers to maximize production at the lower costs. Also, the generation of SRECs will make it easier for financing of systems by PPA providers, further decreasing upfront costs needed and accelerating adoption.
What does this mean for solar thermal installers?
Right now, it depends where you are. The solar thermal SRECs are just being put into place in a select few states. What we’ll be waiting for is to see if the programs work and how effective they are. If they are effective other states will begin to adoption them, particularly states that have high oil or natural gas prices. Also, you’ll start to see solar thermal PPA companies start or established solar pv PPA providers expand their business into the thermal industry. My hunch is that solar pv PPA companies will not touch it because they can’t keep up with solar thermal demand. For now, we need to wait, but if all goes well the solar thermal industry should see huge growth with the development of thermal SRECs followed by PPAs.
Article by Chris Williams who works with HeatSpring Learning Institute delivering world-class IGSHPAGeothermal Training, NABCEP Solar Training, and BPI Certification training to professionals who are installing, designing or selling renewable energy systems. Cleantechies readers can received a $100 discount off all HeatSpring courses, both online and offline, with the code “cleantechies”. Chris can be reached directly at firstname.lastname@example.org