This is a great question that so many of our Virginia customers are asking. We're hopeful that Solar Renewable Energy Credits (SRECs) will be made available in Virginia soon, but there are a few details that are not yet clear. Here is where the situation stands.
For a quick overview, as you may know the Virginia Clean Economy Act was passed in the VA General Assembly in 2020. The Act was passed as House Bill 1526 and Senate Bill 851. This opened up the possibility of a VA SREC market by instituting a state Renewable Portfolio Standard (RPS), which is a 100% clean energy goal for VA by 2045 in Dominion's utility territory and 2050 in AppCo's utility territory. The RPS includes a solar carveout, which is the percentage of the 100% clean energy goal that will be allocated to customer-owned solar projects; currently set in the law as 1%.
If the utility does not meet the 1% goal, it will have to pay a fine, which is set at $75 per Solar Renewable Energy Credit (SREC). Instead of paying that fine, the utility would rather fulfill its obligation by purchasing SRECs from solar consumers for a price somewhere less than the $75. This creates a commodity-type market for SRECs, and gives them value.
What's Happening Now
The Virginia State Corporation Commission (SCC) sets the rules for the Virginia Clean Economy Act (VCEA)'s RPS and solar carveout, which will affect the value of the VA Solar Renewable Energy Credits. Details are still being worked out, and we have no guarantee that this process will result in the market opening this year. However, most people watching the process and those helping to shape it are optimistic that we will see VA SRECs in the late fall.
A few sticking points are the definition of Distributed Generation (ie, customer-owned and sited renewable energy) in the VCEA, and the relatively small size limit of 1% for the solar carveout. As the VCEA is written, large solar and wind projects up to 1MW in size can qualify for the carveout, as can anaerobic digestion (or pig waste) from factory farms—these kinds of SRECs could fill the 1% limit on the carveout very quickly, which would cause the market to close until it can be extended by subsequent legislation in the General Assembly.
Why is the VA SREC Market Important?
On the individual customer level, SRECs are great because they help Virginia solar homeowners and small businesses recoup their investment more quickly.
In the bigger picture, SRECs are important because they accelerate the transition to clean energy for the whole state. A new UN report warns that climate change is nearing a tipping point beyond which recovery will be impossible, so time is of the essence. The VCEA is intended to address the climate crisis by mandating that Virginia do its part.
Additionally, if SRECs are used correctly to incentivize DG, these small-scale customer-sited projects provide tremendous value by reducing costs for energy consumers and utilities and strengthening existing infrastructure.
More DG solar also means more jobs for Virginia. In fact, the Solar Foundation found that Distributed Generation creates 80.6% of all solar jobs nationally, and Virginia Commonwealth University’s Center for Urban and Regional Analysis found that deploying 2,500 MW of distributed solar over the next ten years will result in over 29,500 jobs and over $7.1 billion in total economic impact, including generating $860 million in federal, state and local taxes.
The bottom line is that when people have incentives to go solar it simply happens faster, and this is critical as we near this climate tipping point. This acceleration is easily seen as you cross the border into Maryland or DC where there are SREC markets and many more homes have solar on their roofs than in Virginia.
Solar advocates maintain that to create a viable, high-value SREC market, it's important that the SCC reserve the solar carveout in the VCEA exclusively for net metered, customer-owned and sited solar, defined as "behind the meter." Many advocacy groups are also focused on extending the 1% limit on the solar carveout, but this will require further legislation in the next General Assembly.
In the meantime, we will let you know any updates to the process. Again, according to SREC Trade the market may open up later this year, but it's still unclear what the credits will be worth. Our guess is somewhere between $30-60, but don't quote us!
SREC Trade is currently signing Virginians up for the PA market in hopes that this registration will transfer when the VA market opens. Our advice is to sit tight. We'll help all VA customers sign up as soon as the market opens, and avoid the extra paperwork and hassle.
We'll also keep you updated as advocates work to improve the RPS and the solar carveout so you can add your voice. Our prediction for now is that we'll have something soon, but it may take some extra time to create a long-term, healthy, high-value SREC market for the Commonwealth.