ZRECs Sweeten Taste of Renewable Energy in CT

How is that real estate owner down the street making more money than you? She could be taking advantage of a ZREC.

Thanks to the Connecticut Green Bank, utilities in Connecticut are willing to pay you a fixed price for your renewable energy as a portion of their overall energy production. This means that as a CRE owner in CT, you can get into the power generation business, essentially becoming a mini-utility for 15 years.

Connecticut’s ZREC (Zero Emission Renewable Energy Credit) program was signed into law as an effort to expand clean energy generation “behind the meter”. “Behind the meter” means energy production that is located on the customer side of the the utility’s revenue meter, through on-site technologies like solar and wind.

The ZREC program requires Connecticut Light & Power (CL&P) and United Illuminating (UI) to purchase renewable energy credits (RECs) from Connecticut sources, as opposed to those out of state, fostering the growth of a more sustainable local economy. A REC is worth 1,000 kilowatt hours (the equivalent of one megawatt hour) of qualified zero emissions clean energy. By successfully participating in the ZREC program, once your building starts generating power, you sell the RECs to the utilities.

Participating in the ZREC Program

Customers who choose to participate in the ZREC program, agree to sell their ZRECs to CL&P and UI through a bidding process.

Because it's like free money for CRE owners, interest is high. The bids are submitted during an open period with a deadline and winners are chosen randomly among the applications through a lottery process.

Unlike in some states where the prices can fluctuate from year to year, winners receive fixed payments from utilities over a period of 15 years.

To qualify, the project must have the following characteristics:

• The clean energy installation must come from a Class I Renewable Energy Source to qualify for the ZREC (see description below)
• You must be a customer of Connecticut Light & Power (CL&P) or United Illuminating (UI).
• Any building can qualify (i.e. not just commercial, but residential as well).
• Must be no larger than 1,000 kW.
• No “double dipping” (i.e. project cannot apply for both the ZREC and LREC programs from the same meter or have already received a grant from the CT Green Bank (formerly CEFIA) and the Connecticut Clean Energy Fund. Note: The same site may have both LREC and ZREC projects if the meters are separate. Receiving C-PACE financing is not considered “double dipping”.
• The project can't be existing (must be installed after July 1, 2011)

What is a qualified “Class I Renewable Energy Source”?

For the purposes of the ZREC, which requires zero emissions, according to the language of Public Act 11-80, a Class I renewable energy source" means:

"Energy derived from solar power, wind power, ocean thermal power, wave or tidal power, a run-of-the-river hydropower facility provided such facility has a generating capacity of not more than five megawatts, does not cause an appreciable change in the river flow, and began operation after July 1, 2003."

ZRECs and C-PACE

When combined with Connecticut Property Assessed Clean Energy (C-PACE), the ZREC program is a match made in heaven not only for commercial real estate owners, but also for the local economy.

With no money out of pocket, a building owner can finance 100% of the cost of the clean energy system, and receive a triple benefit in the form of:

• Solar energy savings on the building’s energy bills
• Fixed payment for 15 years for the ZRECs
• Year 1 cash flow because of program requirement that the savings to investment ratio (SIR) of greater than one

Both programs have no up front cost, creating compounding effects to cash flow for property owners, while generating new job opportunities for qualified contractors in the State of Connecticut. For a longer list of C-PACE benefits and how CRE owners can leverage the program to address deferred maintenance and CapEx, read this article.

While the 2014's ZREC deadline has passed, CRE owners can prepare to apply for the 2015 round. Pre-qualification for the C-PACE program is done on a rolling basis and can be completed within as little as 48 hours.

For CT CRE owners, the pre-qualification process is voluntary and can be quite informative. If you think your Connecticut commercial building might qualify for C-PACE financing, a free pre-qualification evaluation can be provided to you by clicking the secure pre-qualification link below.