18 August 2009

Value of Solar Credits

| trevar
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Having decided to install solar panels, I am now struggling to determine whether the offer I’ve been made for my Renewable Energy Certificates (RECs) is a reasonable one.
My understanding of the system is that the value of RECs is determined by your zone and market forces, and of course the market forces are the tough bit. One website tells me that in our zone (3), for a 1.5Kw system, your RECs should be worth $7,750, based on $50 per certificate, but specifies that the value of the RECs changes according to market conditions. I’ve been offered $38 per certificate.
So, has anyone else had a value placed on their RECs?

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Sure James, the entire thread was about RECs – no one had mentioned anything else, so your original comment could only be read in the context of RECs (and the stuff about printing your own is still nonsense – James-T-Kirk Certificates aren’t worth anything, because no-body is required to surrender any James-T-Kirk Certificates).

But keep backpedalling, if you do it fast enough maybe you’ll generate some real RECs of your own?

The selling your RECs and the electricity turns black is just not correct, but it is a common misconception. The ATA article is poorly thought out.

The creation of a REC just means that renewable electricity has been generated, or is deemed to be generated over a given period.

When a liable party (a big generator) goes to prove that they have generated enough renewable electricity in the previous year, they surrender their RECs to ORER.

There are two ways that they can obtain the RECs they surrender – one, they can generate them themselves using their own RE generation, or they can prove that they encouraged or supported generation elsewhere – the RECs your solar system created. The amount of RECs remain the same, and the same amount of RE generation is created.

Its true that if you withhold your right to create RECs, or do not transfer this right to a third party, you will force the generation of more RE electricity. But when you sell them, it doesn’t make your electricity black, it just means your generation is going towards meeting the target.

If you sell your RECs then your solar electricity is no longer green
do some googling and you will find that you selling your RECs just lets a big polluter pay a bit of money to offset there emissions. It also reduces the viability of other large scale green electricity schemes
for starters you can try the ATAs renew mag article – http://www.ata.org.au/wp-content/uploads/105_recs.pdf

Its worth thinking about the reasons you installed solar panels. if the environment was part of your reasoning then think carefully before selling your RECs

I know something about RECS and solar power. It is slightly misleading to advertise the solar credits prices at $50 per REC (1MWh, not kWh of electricity generation).

They were worth about $50 each retail for small quantities only about 7 weeks ago, and in recent times they have dropped to around $37.00, and they are back up at $38 now.

A few things – ORER doesn’t set the price, the market does (ORER maintain the rules and the database), but unless you have noticed otherwise, it isn’t the most transparent market, although I believe the ASX is setting up a spot and futures market.

– the market price is is looking like it will remain lower, rather than go higher, and the reasons for this are that the liable parties that are required to surrender RECs have a healthy bank of them, perhaps for the next couple of years, maybe even with the new RE target. But maybe don’t make a decision too soon – see what happens when the RET is passed, because i suspect there might be a rebound almost as quick as the downfall we have seen in the last few weeks. Mind you, I wouldn’t expect $50 ever again. The price sounds on the money for right now. Don’t wait too long though: You have 1 year after installation to create RECs from a PV Small Generation Unit.

Markets are markets, and with an opaque market, combined with very poor policy settings who knows what will happen.

Which leads me to $50 solar credits. Who knows what they are going to be, but probably not that number. The $50 price advertised is a scam perpetrated by the government to sell their policy. Solar companies advertising this price (and they always have fine print about ‘assumptions’) are probably also misleading their customers, because for one the price is not a given and two, they tend to quote the price for the number of RECs available from installations in zone 1, which is a bit tricky.

James-T-Kirk7:56 am 19 Aug 09


The legislation I was referring to was the work to support the solar credits scheme. I am very much aware that the REC legislation has been in place for quite a while.

The basis of my entire comment was that the REC system appears to be quite volatile, and subject to market forces. Hence my offer to enter the ‘market’ with my own certificates, which may, or may not be ‘worth’ anything.

Thanks caf and cityjuz; very helpful. I had searched all over for the information in that document from ORER, and found most of it, but to have a single document is much more helpful.

I thought you might like to know that Solar Shop Australia are offering to purchase RECS from their customers at $50………could be worth checking out their website, getting them to visit you, get a quote and maybe even get them to do the job if their offer to you is good……provided you haven’t already locked in with the other company?

Their website is: http://www.solarshop.com.au

They are a national company who have been around for a long time but are only just opening up in Fyshwick at the moment.

I’ve seen their cars getting around and have heard some good things about them

Saw something I knew about and couldn’t resist 🙂
James-T-Kirk, Caf is right – the Mandatory Renewable Energy Target (MRET) has been in place since 2001. What is currently being reviewed by parliament is an increased Renewable Energy Target (RET). Something called ‘solar credits’ are worked in to this legislation, a multiplier on the number of RECs that you get meant to smooth the transition from the Solar Homes and Communities Plan (Solar rebates) that were recently ended.

Mikal, as to your initial question- a Renewable Energy Certificate = 1 kW hour of green electricity. The zone that you are in will affect how many RECs you get, but not their actual value. You are absolutely correct that they were worth around $50 a few months back, but today day trading prices were around $37.50.
RECs are traded in a free market- the price being determined by supply and demand.

The legislation that has just passed the house and is about to be put before the senate increases the targets almost five fold in 2020. The REC price may go up when this legislation is passed, however, as with all free markets, nothing is ever certain.

I totally agree with caf – if you want to get more information check out the ORER website.


If anyone would like to become more informed on how RECs work in Australia, this document is a good start.

You have no idea what you’re talking about, James-T-Kirk. Tradeable Renewable Energy Certificates (RECs) were put in place by the Renewable Energy (Electricty) Act 2001.

…and by the way, there was nothing inherently wrong or dodgy about private-bank currencies – they were effectively a cheque from the bank made out to the bearer for a certain quantity of gold.

James-T-Kirk1:09 pm 18 Aug 09

On the basis that the legislation hasn’t been passed yet, I am pretty comfortable with printing up and selling my own specialised JTK-Rebate Certificates. If you need any, let me know – I will ship em out for $1 each! (excluding postage)

Reminds me of the old west – every bank issuing their own currency!!!

If you don’t trust your installer about the value of the certificates why should you trust them about the quality of the panels and inverter and their cost. And the reliability of the installation. And the commonsense of the whole idea.

The whole solar PV electricity industry including homeowners using the feed-in tariff scheme are ripping off the rest of us who will have to pay for it.

is the offer from a plumber? if so i wouldn’t take it… if thats what you have been advised by ORER (department passing on rebates)then i would take it… i think you will find that there is a maxumim time limit on claiming these rebates and such…

I think the other point to be made is — independently value your RECs before signing up for an install. If you’re relying on the price quoted by the installer, then you’re in trouble.

VYBerlinaV8_the_one_they_all_copy9:42 am 18 Aug 09

Sell you RECs, put the money into an actual investment if that’s your issue. Despite the fact that RECs change in value, they don’t generate an investment yield.

As best as I am aware, there is nothing solar specific about the RECs you’ve been given. You get them for hot water systems, and other things as well. I’ve been getting quotes for a solar system recently, and have been consistently told that there is a REC surplus in the market at the moment. I’m told that 12 months ago they were worth about $50, but are not worth around $38.

So, I’d say that you’re being offered the current market price. You can always hold on to the RECs until the market improves if you want.

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