What Can SRECs Mean For the Solar Thermal Market?

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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 IGSHPA Geothermal 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 cwilliams@heatspring.com

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

12 Comments

  1. I agree with Chris 100%. The PV may be “sexy”. But the fact remains, it is still in its infancy. I suspect within the next 5 to 10 years this industry will change drastically and the cost per watt will be pennies before an ordinary person can afford to install on his/her home.

    The main advantages of solar PV are : water heating for all the above said purposes, home heating using radiant floor heating/base board heaters, dehumidification (see Noalaire.com)and solar assisted A/C (solakool.com. The soon to be released actual solar thermal A/C being developed by a NASA scientist should make the solar thermal supply between 70 to 90% of all the energy needed for a home or an industry using large amounts of hot water.

  2. Couldn’t agree more! Solar thermal is a HUGELY under used resource that should be adopted much more, unfortunately pv has the top of mind right now. We’ll see if this changes!

    Chris

  3. Chris – thanks for this article. As a resident of Massachusetts, I’ve seen the power SRECs can have on the market. It’s the engine that is driving MA from 5MW of installed solar just a few years ago, to 400MW by 2020. If thermal started to qualify for this program it would be a huge deal.

  4. I meant “the main advantages of solar thermal over PV”. Sorry for typo. We are working with a company that makes PCM (phase change material) which can be used in a tank to extend the amount of energy stored. This will revolutionize the whole solar thermal energy application.

  5. In North Carolina, we have seen at least one utility buy solar thermal RECs from a large, credit-worthy solar thermal developer/installer. I believe they had to get a special ruling from the Utility Commission to confirm that solar thermal RECs met the Utility’s RPS obligations.

  6. Now we are talking. We agree with you. Solar Thermal has the potential to replace our aging nuclear and dirty coal plants. Utility scale dry concentrated tower,parabolic and dish technology is ready to go with off the shelf components right now. What are we waiting for?

  7. thejvallstar on

    Outstanding. I am new to the Renewables Industry and am hooked by the allure of the PV market. What holds back a PPA provider from using both Thermal and PV technologies in an installation?

  8. The reason is simply demand. The utilities, who are purchasing the SRECs, cannot purchase solar thermal SRECs even though you can easily track how many MWhs a solar thermal produces. It’s mainly just a legislative issue.

    Chris

    • Once again the Government getting in the way of energy reduction in America. If people would research solar thermal for domestic hot water we could save millions of KWH annually not to mention the natural gas. We need to reduce or energy usage first, then look at PV as a second option.

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