On the other hand, the SRECs provide for the market mechanism to set the cost of the solar subsidy electricity produced by solar energy. This system sets an aim for the manufacturing or consumption of electricity from renewable sources and the utility (the Load Serving Entity, more technically) is required to buy or pay off renewable energy (alternative compliance payments or ACP). Every 1,000 kWh of electricity produced is credited to the producer for an SREC. If the utility buys this SREC and retires it, they avoid paying the ACP. In principle this system delivers the cheapest renewable energy, since the all solar facilities are eligible and can be installed in the most economic locations. Unsurprises about the future value of SRECs have resulted in long-term contractual markets for SREC, enabling solar manufacturers to pre sell and hedge their loans.
Photovoltaic financial incentives vary from one country to another, including Australia, China, Germany, Israel, Japan, the United States and even the United States.
The government of Japan undertook a good subsidy program from 1994 to 2003 via its Ministry of International Trade and Industry. Japan’s actions resulted the world to installed photovoltaic ability with over 1.1 GW by the end of 2004.
In 2004, under the German Renewable Energy Law, the German Government launched the first large-scale tariff feed in which PV plants explosive in Germany grew. At the beginning, the FIT was more than 3 times the retail price or 8 times the industrial price. A flat rate contract lasting 20 years is the principle underlying the German system. The value of fresh agreements will be reduced annually to encourage the sector to take on reduced expenses to end customers. With over 1GW installed in 2006 and increasing political pressure to reduce the tariff to reduce the future strain on customers, the program was more effective than anticipated.
California endorsed the California Solar Initiative in 2006, providing a choice of investment or FIT subsidies for small-and medium-sized systems, as well as FIT for big structures. The FIT of the small system is 0.39 dollars per kWh (with far below the EU nations), and the alternative “EPBB” incentive is small, with an average price of perhaps 20 percent. Depending on how large PV capacity is installed, all California incentives are expected to decline in the future.
The Ontario Power Authority (OPA) started its Standard Offering Program (SOP), forerunner of the Green Energy Act, and the first renewable distributed projects of less than 10 MW in North America at late 2006. A fixed price of $0.42 per kWh was secured by the feed-in tariff over 20 years. In contrast to net metering, the entire power generated was sold at the rate to the OPA.
The solar system must first be approved by the government regulatory organizations or, normally, government service commissions or government utilities commissions and then recorded in the government approved registry to set up and monitor SRECs in order to generate SRECs. SRECs can be awarded by means of both estimates or real meter readings, depending on State legislation, once a solar system has been certified by a state agency and recorded with a register such as PJM-GATS or NEPOOL-GIS, for Massachusetts. In some instances, smaller facilities can use estimates, whereas current meter measurements for big facilities are needed.
In states other then the State in which they are situated, solar systems may be registered and many SREC aggregates will navigate on behalf of their clients through their certification process to ensure that the systems have the highest SREC values certified to ensure long-term price stability in the States with the highest SREC values.