Spruce Power, a Denver-based owner of distributed solar energy assets, has signed a multi-year, multi-million-dollar agreement to sell its Solar Renewable Energy Credits (SRECs) in New Jersey. The deal, with a Fortune Global 50 investment-grade energy company, is expected to generate approximately $10 million in fully-hedged revenue through 2029.
The move is part of Spruce Power’s strategic initiative to monetize its SREC portfolio and enhance cash flow.
Capitalizing on renewable energy assets
SRECs are a big part of renewable energy programs in states like New Jersey. One SREC is generated for every megawatt-hour (MWh) of electricity produced by a certified solar energy system. These credits are like a green currency that energy companies can buy to hit their state-mandated clean energy goals.
By selling its SRECs in advance, Spruce Power is guaranteeing a steady stream of income. Spruce CEO Chris Hayes said the deal is a “low cost, low risk” way to make money without needing a ton of extra capital. He sees it as proof of the company’s skill in getting the most value out of its assets while protecting against market swings.
Expanding the SREC Strategy
Spruce believes its New Jersey partner will use the SRECs to meet its clean energy requirements. The deal is a launching pad for Spruce Power’s broader strategy.The company is already looking for similar opportunities in other states, especially in the Northeast and California, where there’s a big appetite for these types of credits.
Spruce also offers services to other solar owners through a program called Spruce PRO. These services include financial and asset management operations, customer service support, and environmental commodities trading. This new agreement shows that Spruce is not just good at managing its own assets but also has the expertise to help others do the same.
