This is an exciting time for those of us in the energy field. A growing sense of environmental consciousness, along with some very generous State and Federal incentive programs, have made this the perfect time for New Jersey residents and business owners to consider Renewable Energy Systems, specifically by adding solar electric panels to their businesses and homes. For those reasons, getting the word out to our community about the environmental and economic benefits of solar energy has never been easier! We have assembled some terms and “lingo” currently being used within the renewable energy arena.
Glossary of Renewable Energy Terms
Photovoltaic (PV): An array of cells that have the ability to change solar radiation into direct current electricity.
Investment Tax Credit/Grant (ITC): A tax deduction provided to an individual or corporation by the federal government towards the installed cost of a renewable energy system. The current tax credit is set at 30% of the total installed system cost.
Modified Accelerated Cost-Recovery System (MACRS): A method of accelerated asset depreciation provided under the United States income tax code. Corporations are permitted to depreciate renewable energy producing assets on a six year timeframe.
Solar Renewable Energy Certificate (SREC): A tradable certificate which is generated for each 1,000 kilo-watt-hours (kW-hrs) of electricity produced by a grid-connected solar electric system and represents the clean energy benefits generated. Each SREC generated and received by the generator can be sold independently or through a broker to an electric utility provider. The value of each SREC is dependent upon several variables, including the state in which the SREC was generated and the set price of the Solar Alternative Compliance Payment. In New Jersey, the current trading value of one SREC for September 2009 is approximately $650.00.
Solar Alternative Compliance Payment (SACP): A payment that is required by an electric utility provider to a state if the supplier fails to generate the required amount of electricity from a renewable source as defined by the local Renewable Portfolio Standards (RPS).
Power Purchase Agreement (PPA): A legal agreement between a solar electric producer and a host power purchaser. The PPA provider secures funding for the project, maintains and monitors the energy production, and sells the electricity to the host power purchaser at a contractual price for the term of the contract.
Engineering, Procurement and Construction (EPC): A form of contracting arrangement which provides that the contracting party will design, procure all necessary materials, and construct the project. EPC agreements are the most common forms of contracts in the energy industry.
Net Metering: An electricity policy for an individual, company or corporation who owns a solar electric facility, allowing a no-cost method of effectively banking excess electricity production for future credit creating an offset between a User’s electrical usage and the Photovoltaic (PV) system’s production. The purpose of net metering is to design a system which produces the same amount of electricity as the consumed amount of a user so there is no transfer of electricity from the local grid.
PJM Generation Attributes Tracking System (GATS): An online system maintained by PJM (Pennsylvania, Jersey, Maryland) Interconnection which is responsible for tracking and recording electrical attributes across a multi state region. GATS acts as a clearing house where renewable energy certificates are recorded, certified and traded amongst various parties including solar electric producers, brokers and electric utility providers.
New Jersey Clean Energy Program (NJCEP): A state funded program which promotes the concepts and technologies of energy efficiency and use of alternate energy sources. The goal of NJCEP is to spur alternate energy development and energy efficiency practices in efforts to reduce the statewide demand and use of nonrenewable energy sources.
Renewable Energy Incentive Program (REIP): A program maintained under the NJCEP, which is designed to provide incentives that reduce the initial cost of installing various alternate energy systems. The REIP is part of New Jersey’s efforts to reach its Energy Master Plan goals of creating 30 percent of its own electrical demand from renewable sources by the year 2020. The program uses financial incentives to system owners, who install qualified clean energy generation systems within the State.
Renewable Portfolio Standards (RPS): State policy that requires electric providers in the state to have a minimum percentage of electricity production through renewable sources by a certain date. In New Jersey, the state goal is to generate 22.5 percent of the electrical demand from renewable energy sources by the year 2021. Now is the opportunity to be leader in the growing green energy movement.