How Solar Panels and Solar Power Work – The Basics
Solar electric panels also called photovoltaic panels or PV panels, are primarily used to power homes that are also connected to the existing power grid system. Solar panels consist of multiple solar cells that form modules. These modules are combined to form the photovoltaic panel.
The more solar panels your system has, the more you can reduce your reliance on power from the grid. You use the electricity you produce and draw any additional electricity your house needs from the grid.
To learn about the solar installation process and to view a video of solar panels being installed click here.
The Economics of Solar Panels
For most homeowners, it now makes good economic sense to run their homes on solar power. Solar Energy World gives homeowners the option to purchase their solar system or go with a PPA.
Purchasing Solar: If you own your solar system and it produces more power than you need, that electricity gets credited to you account and you receive a check back from your utility company. This is also known as net-metering. There are also tax credits and rebates that greatly reduce the cost of installation. In addition to individual state Solar Energy Grant Programs and the Solar Federal Income Tax Credit, Maryland residents who have installed a PV system and own their system can also earn and sell SRECs (Solar Renewable Energy Credits) to help offset the cost of their system.
Solar PPA: If you decide you do not want to own your system, you can choose a solar PPA (Power Purchase Agreement). You pay nothing for your equipment and installation to lock in an electricity rate that is lower than your utility’s. Essentially, you will not own your system so you will not be able to generate profits from SRECS or get money back from your utility but a PPA allows you to pay $0 to start saving 20% or more on your electricity costs right away. Many of our customers have found this to be the best option for them.
What are Solar Renewable Energy Credits?
A Solar Renewable Energy Credit (or SREC), is a tradable instrument that represents the environmental benefits of electricity generated from renewable energy sources. One SREC represents 1 megawatt hour of electricity.
Electricity is generated from fossil fuels. Fossil fuels emit carbon monoxide (CO), carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxide (NOx), particulate matter (PM), and volatile organic compounds (VOC). These emissions cause damage to our environment that increases global warming. In response to the damage that is caused, local, state and federal governments have required electricity distributors to take measures to reduce the amount of fossil fuel generated electricity and increase the amount of renewable energy within their energy mix. This is called the Renewable Portfolio Standard.
Energy distributors can meet their requirements by:
1. Investing in renewable technology directly, or
2. They can purchase the renewable attributes from owners of renewable energy sources.
Because of the second option, the Renewable Energy Credit market has evolved. Power generated by renewable energy sources (like your solar electric system) is tracked by a third party and given a certificate of production. Then, the SREC can be traded on the open market to allow utilities to meet their Renewable Portfolio Standard that are required to offset their carbon-emissions.
If you purchase a solar system from Solar Energy World, you own the Renewable Energy Credits that your system will generate. These SCRECs are similar to stocks traded through brokers – and they have financial value. Many solar companies (also known as aggregators) have an interest in purchasing your Renewable Energy Credits at a reduced rate.
Renewable Energy Credits are designed to provide solar owners with an economic incentive to investing in solar electric systems that improve the electric distribution grid. They represent the renewable attributes from your solar facility, bundled in minimum denominations of 1 megawatt hour of production. The additional income received from selling the solar certificates increases the economic value of your investment.
How it works:
Once the installation of your solar electric system is complete, the system will be inspected and certified by a third-party. After the inspection, a state certification number is generated and is used to register an account to create and manage Renewable Energy Credits.
Solar Energy World partners with an organization that offers a service to manage your account – and they make all this completely hands-free. The entire process is automated so clients can enjoy all the benefits with no effort.
Their mission is to provide the critical final component of the Renewable Energy Credit program by establishing a public marketplace connecting sellers directly to suppliers in an easy, transparent and equitable way.
Our solar consultants will walk you through this process so you’re able to take full advantage of the credits, schedule a free in-home solar analysis to learn more about Renewable Energy Credits.