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Tesla now keeps all the SRECs [SREC = Solar Renewable Energy Credits]

wjgjr

Active Member
May 11, 2020
1,168
912
Silver Spring, MD
Yeah, I'm sure Tesla worked out that buying the SRECs was integral to them being able to continue offering their lower prices. It's unfortunate they're giving customers fewer choices, but the ROI is still so much lower when you can get the upfront investment cost down that low.
It's either that or related to the prior discussion of their inverters not yet being certified as revenue-grade. Especially in PA, which has lower SREC prices than MD, I tend to doubt Tesla gets much of anything out of it (when factoring in all the costs involved in registering and the cost of the upfront payment.)

But in either case, it is typical of Tesla to come down with few, simple (for them) rules. I see no reason why somebody shouldn't be able to opt out of selling the SRECs, even if Tesla tells them they are on their own to figure out how to register and meter the production. But Tesla clearly - at least for now - just doesn't want to deal with it. It sort of reminds me of how difficult it apparently is for those few customers who want to grid charge with solar (instead of taking the ITC.)
 
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willow_hiller

Active Member
Apr 3, 2019
3,088
14,093
Maryland
It's either that or related to the prior discussion of their inverters not yet being certified as revenue-grade. Especially in PA, which has lower SREC prices than MD, I tend to doubt Tesla gets much of anything out of it (when factoring in all the costs involved in registering and the cost of the upfront payment.)

I've got a pet theory that this might actually have something to do with Tesla's Bitcoin investment. They changed the policy on allowing opt-outs around the same time they purchased BTC. Selling solar systems for a relatively small upfront discount could be a cheap way of acquiring GWh worth of SRECs to offset any energy-intensive endeavors at Tesla, including verifying BTC transactions.
 

wjgjr

Active Member
May 11, 2020
1,168
912
Silver Spring, MD
I've got a pet theory that this might actually have something to do with Tesla's Bitcoin investment. They changed the policy on allowing opt-outs around the same time they purchased BTC. Selling solar systems for a relatively small upfront discount could be a cheap way of acquiring GWh worth of SRECs to offset any energy-intensive endeavors at Tesla, including verifying BTC transactions.
I suppose you never know with Tesla, but if they were doing that, you might think they would toss in a few bucks in the contract to claim credits from people in all the states who don't get any credit for their solar currently. And, if that is out because they want a government-backed program, I also got the impression some markets (like NJ) require credits be sold through the state and allocated to utilities (where in MD, at least, I do believe Tesla could buy SRECs.) And they would probably be better off buying credits from CA or other places that seem to have lower prices prices.
 
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Matt35

Member
Mar 17, 2021
62
27
NJ
I have only done the initial deposit with Tesla solar, but they were not allowing me to keep the TREC's for myself in NJ. But their system is coming in about $5k cheaper on the 8.16 KW size. And since the TREC credit gets the out of pocket cost up front down to $10k (and then ~$7500 after assuming tax credit), that gets it manageable for me to just pay it up front versus financing a more expensive system locally. So while I may get less total value on the TREC's and the tax credit from Tesla up front, it ends up being a wash when comparing to a higher purchase price and financing interest from a local option (even with the higher trec payback and higher federal credit). But if Tesla is keeping your credits and you can get a competitive price from a local company, AND you have the cash up front, it may be more profitable in the long run going local. I am just saying it depends on each person's situation, as Tesla crediting your TREC's up front may or may not be a bad option if it can help avoid taking a loan.
I ended up having to wait until later this summer when I purchase my model 3 so i can justify the larger system size with utility company. JCP&L will only allow up to 100% usage, but will allow a reasonable projected increase once car is in hand.
 
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SMAlset

Well-Known Member
Mar 4, 2017
9,003
9,727
SF Bay Area
Saw someone mention the Federal Solar Investment Tax Credit (ITC) above in thread so thought I would add this although not on SRECs. We purchased our system outright and it was installed in 2020. Our accountant knows to fill out IRS 5695 for us to get the 26% credit due us. The calculated amount of credit in Part I (2020 year form) then gets entered on your IRS 1040 form. If you filed your return already and forgot to factor in this, I assume you will want to file an amended return. This is owner’s responsibility not Teslas. Tesla informed us of the Federal ITC amount that could be claimed but that was it on their part. This again was outright purchase and not a leased system.

The Federal ITC was to have been reduced to 22% for tax year 2021 installs but was extended at the 26% rate through installs during 2022. Don’t forget to claim if your entitled.
 
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wjgjr

Active Member
May 11, 2020
1,168
912
Silver Spring, MD
Are you able to tell Tesla no i dont want to sell my SRECs?
There is a more recent discussion here:


The short of it seems to be that it may be difficult or impossible to opt out, depending on the specifics of your situation. It is possible some of the reason is tied to the use of the new Tesla-branded inverter, which may not have received certification yet,

Being in MD, if you are not aware, note that SREC prices are scheduled to drop significantly over the next several years (capping at $80 this year, then $60 for 2022 and $45 for 2023.) So, the value of them is starting to decline, and it may get to a point where, even with Tesla taking a good cut, it is easier just to sell them than to deal with the hassle yourself.
 

Bsilberberg

New Member
Apr 21, 2021
4
0
Baltimore

Not in Maryland, no. They're telling customers now that selling SRECs is required if you want to go with Tesla: Tesla now keeps all the SRECs [SREC = Solar Renewable Energy Credits]
why on earth would i go with tesla then? if their 16.32 kw system generates 19.584 SRECs per year, at 77.50 = 1517.76 per year, over 20 years that's
$30,355.... and they are only going to give me $2,774 up front for them? I am clearly missing something here.
 

jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
8,223
9,070
Riverside Co. CA
why on earth would i go with tesla then? if their 16.32 kw system generates 19.584 SRECs per year, at 77.50 = 1517.76 per year, over 20 years that's
$30,355.... and they are only going to give me $2,774 up front for them? I am clearly missing something here.

Thats up to you to determine tesla difference in initial price vs others, coupled with the de escalating scale that was posted by @wjgjr .
 

willow_hiller

Active Member
Apr 3, 2019
3,088
14,093
Maryland
why on earth would i go with tesla then? if their 16.32 kw system generates 19.584 SRECs per year, at 77.50 = 1517.76 per year, over 20 years that's
$30,355.... and they are only going to give me $2,774 up front for them? I am clearly missing something here.

You need to account for the decreasing price of Maryland SRECs over time, the transaction costs, as well as the risk-free (interest) rate.

For a system generating 19 MWh per year, the present value of the next 25 years of SRECs is worth just under $9,000.

1619019489735.png
 

wjgjr

Active Member
May 11, 2020
1,168
912
Silver Spring, MD
You need to account for the decreasing price of Maryland SRECs over time, the transaction costs, as well as the risk-free (interest) rate.

For a system generating 19 MWh per year, the present value of the next 25 years of SRECs is worth just under $9,000.

This is the correct answer, though it is also worth noting that I am guessing this is the best-case scenario with SREC always equal to the SACP (Solar Alternative Compliance Payment.) And a July 1 PTO (which seems earliest possible at this point if the project has not started) probably drops it to more like $8,000, with further significant drops should it be the end of the year. That said, even if it was more like $6,000-$7,000, with delayed PTO or different assumptions for the interest rate, it seems like the offer from Tesla is more unreasonably low than most.

The bigger news for MD it that it appears there is a bill awaiting the governor's signature that would increase the SACP for 2023 and beyond, per Flett Exchange | Maryland Bill Will Raise the Price Cap for MD SRECs. It is not huge increases, but it is pretty decent for about 5 years in there.

The bill (SB65) can be found here, with the current status of "to governor." Legislation - SB0065
 

Bsilberberg

New Member
Apr 21, 2021
4
0
Baltimore
You need to account for the decreasing price of Maryland SRECs over time, the transaction costs, as well as the risk-free (interest) rate.

For a system generating 19 MWh per year, the present value of the next 25 years of SRECs is worth just under $9,000.

View attachment 655682
but what reason do you have to decrease it 7%? that is a random number no? nor do i see anywhere the "cost" of an SREC which is around 77.50 so i am told. so the end of 1 year, is i generated 19.584 SREC's i got $1517.76... after 5 years, thats $7,588.8 the law passed below, said
1619028942991.png

Flett Exchange | Maryland Bill Will Raise the Price Cap for MD SRECs

So what am I missing?
 

jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
8,223
9,070
Riverside Co. CA
but what reason do you have to decrease it 7%? that is a random number no? nor do i see anywhere the "cost" of an SREC which is around 77.50 so i am told. so the end of 1 year, is i generated 19.584 SREC's i got $1517.76... after 5 years, thats $7,588.8 the law passed below, said
View attachment 655761
Flett Exchange | Maryland Bill Will Raise the Price Cap for MD SRECs

So what am I missing?

So are you saying that this post by @wjgjr is incorrect information?

Being in MD, if you are not aware, note that SREC prices are scheduled to drop significantly over the next several years (capping at $80 this year, then $60 for 2022 and $45 for 2023.) So, the value of them is starting to decline, and it may get to a point where, even with Tesla taking a good cut, it is easier just to sell them than to deal with the hassle yourself.
 

willow_hiller

Active Member
Apr 3, 2019
3,088
14,093
Maryland
but what reason do you have to decrease it 7%? that is a random number no?

SREC broker fee. It's technically possible to register for SRECs and sell them yourself, but it's a bureaucratic and difficult process. The only SREC broker I know that operates in Maryland is SRECtrade: SRECTrade | SREC Markets | Maryland | MD

Yes, the price is presently $77.50, but SRECtrade takes about 7% in fees. The last SREC I sold in April netted me $72.07.

The 7% fee is separate from the rate at which the SREC prices will decrease. Lower on that same page you'll find the Market Requirements table, which gives the penalties that Maryland utilities pay if they don't generate enough solar (so utilities being rational actors will bid for SRECs up to the penalty price, but they have no incentive to pay more).

1619030594160.png
 

wjgjr

Active Member
May 11, 2020
1,168
912
Silver Spring, MD
but what reason do you have to decrease it 7%? that is a random number no? nor do i see anywhere the "cost" of an SREC which is around 77.50 so i am told. so the end of 1 year, is i generated 19.584 SREC's i got $1517.76... after 5 years, thats $7,588.8 the law passed below, said
View attachment 655761
Flett Exchange | Maryland Bill Will Raise the Price Cap for MD SRECs

So what am I missing?
To go into a little more detail on SRECs (in MD, in particular,) an SREC (Solar Residential Energy Certificate) is awarded to an owner for every 1 MWh of energy generated. That SREC can be sold to a utility help them satisfy their requirement for green/solar energy under the Renewable Portfolio Standard (RPS.) If a utility fails to reach the RPS number, they pay a penalty - the SACP (Solar Alternative Compliance Payment.) The RPS and SACP are fixed by law, with the RPS generally increasing over time and the SACP decreasing (though the pending bill I noted temporarily changes that.) But, the main point is that one would never expect the SREC amount to exceed the SACP amount because there is no reason to pay more for an SREC than they would pay to the state via the SACP.

In 2021, the SACP is $80, which is why the current price of an SREC is in the high $70 range. But, next year, the SACP drops to $60, so it is reasonable to assume an SREC will fetch at most in the high fifty-dollar range. All of that information can be seen here: SRECTrade | SREC Markets | Maryland | MD

The 7% number is the fee SRECTrade takes for brokering the sale. There are other options with different fee structures.

The pending legislation increases the SCAP for a number of years, allowing for a greater maximum payout. However, because it also reduces the RPS, there is a greater risk that more SRECs will be available than utilities need, which could depress prices. So the overall effect is unclear.
 

willow_hiller

Active Member
Apr 3, 2019
3,088
14,093
Maryland
nor do i see anywhere the "cost" of an SREC which is around 77.50 so i am told.

That was just a screenshot of the top assumptions of my spreadsheet. I'll attach the full thing if you want to change the assumptions yourself. It's a bit faulty in that it assumes you'll accumulate SRECs throughout a year and sell them all at the end of each year, but you can expand it to factor in monthly production and sale if you want to take the time to do that.
 

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  • SREC present value.zip
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Bsilberberg

New Member
Apr 21, 2021
4
0
Baltimore
But looking at this site Flett Exchange | Maryland Bill Will Raise the Price Cap for MD SRECs which shows your refferenced chart, it says the the cost of SREC's should not be effected by the SCAP's decreased number. but again time will tell i guess. I just dont know where you found any "scheduled" drop in SREC's because i cant find that anywhere.
1619114017658.png


Also my problem is that yes we can sell them our selves, but NOT if we buy solar through Tesla. I tried to do that yesterday, and their own terms and conditions before placing your order already gets you signing over the credits.

1619114162957.png

which the REC agreement (https://www.tesla.com/sites/default/files/Schedule_B_Renewable_Energy_Credit_Agreement.pdf)
1619114224920.png

which it also makes ME required to maintain it in good working condition, or TESLA can come after me for any lost of value due to REC Credits not gotten. So not only is it sketchy to not allow me to keep them and wave their "fair" 2600 upfront discount for letting me sell them my credits, but if i dont keep the system working... they can come after me for loss of expected REC credits..... Not sure how this is "fair" / legal.
 

jjrandorin

Moderator, Model 3, Tesla Energy Forums
Nov 28, 2018
8,223
9,070
Riverside Co. CA
It also sounds like, as of next week, you wont be able to get solar from Tesla at all without powerwalls. No idea what your plans are related to powerwalls, but given the hesitancy you have above, it sounds like you should also be investigating other companies to provide you quotes.

California didnt have RECs available to us as end customers when I got my system (and I am just hearing about them now being "possibly" available but at much lower values etc). If Tesla "requires" turning them over, and one doesnt want to do that, I am not sure why that person would still consider tesla as a vendor.

Said another way, if I had the concerns that you do, @Bsilberberg , and tesla "required" turning over the RECs, they would simply be crossed off my list and I would look elsewhere.
 

h2ofun

Active Member
Aug 11, 2020
2,175
336
auburn, ca
It also sounds like, as of next week, you wont be able to get solar from Tesla at all without powerwalls. No idea what your plans are related to powerwalls, but given the hesitancy you have above, it sounds like you should also be investigating other companies to provide you quotes.

California didnt have RECs available to us as end customers when I got my system (and I am just hearing about them now being "possibly" available but at much lower values etc). If Tesla "requires" turning them over, and one doesnt want to do that, I am not sure why that person would still consider tesla as a vendor.
We have choices, if one does not like a vendors terms, go to another vendor.
 

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