Extended Discussion: Solar Renewable Energy. Certificates (SRECs) SRECs typically are a significant component of the overall financial picture presented by a solar PPA project. Where the intent of the local government is to secure the lowest PPA price possible, the SRECs will almost always accrue to the system owner, functioning as an additional source of revenue that allows system owner to offer a more attractive energy price to the customer. Given this significance, and as previously discussed, the ownership of SRECs should be specified in any PPA. It is also important that SRECs are addressed in any provision governing compensation due to the system owner as a result of lost production caused by the customer. Whereas the value of the forgone electricity production or sales may be determined by the contract price (or the difference between the contract price and any alternative sale that is made), the value of an SREC can be more difficult to determine. If the system owner has separate contract to sell SRECs to another entity, that SREC contract price should be used to determine the lost value from outages. Where such a contract does not exist, the value is often determined by the “market price” for SRECs at the time the outage occurred (e.g., in the City of Cincinnati, OH PPA Section 6(f)) and Monmouth County, NJ PPA Appendix H). This general “market price” terminology is used in several PPAs we reviewed for this Toolkit, though none contained a description of how that market price should be determined. Given the opacity of SREC markets, arriving at consensus value could be challenging, and unfortunately there is no perfect method for doing so. The best solution may simply be to discuss the issue with the system owner and come to a broad agreement on the source or sources that should be used to establish a market price, such as the market price for the previous twelve (12) months in the applicable state or regional REC marketplace, and any additional parameters that should exist. It may be that both parties will be confident that an agreement can be reached if it is needed, and are therefore comfortable with the general “market price” language. Having said that, clarifying language may be desirable to one or both parties, so at the very least the issue deserves some consideration.
