The value (spot price) of an SREC changes as they are traded in markets similar to the stock exchange, based on the supply and demand (people building environmental projects vs. people wanting to buy the environmental benefit of the project). Ultimately the money paid to the seller of the SREC theoretically creates more liquidity for developers, thus funding more project development. This in turn creates more SRECs that can be sold. It’s allows people, companies, or groups that cannot develop their own project to participate.
Example 1:
An oil refinery may not have any better way to refine oil, but may want to show a commitment to the environment. The oil company may purchase SREC’s.
- Could also be forced to make changes via legislation.
The Vail Resorts in Colorado wanted to reinforce their commitment to the environment, and purchased wind powered credits that equal to 100% of it’s annual energy use.
Some might argue that this just lets companies keep polluting and paying a nominal environmental penalty “fee” for good press. It may in some cases, but it is also valuable. I would content that this pumps more liquidity into alternative energy project where SRECs exist. If I am a solar project developer, and I know a project is going to cost me $10, but I can sell the SRECs for $2, my project really only costs $8. Now I can take that other $2 and develop another smaller project.
We’re hopeful that one day Hawaii will offer SRECs’.
