In addition to reducing your electricity bills, solar panels also generate carbon credits (offsets) that you can choose to either sell or keep. Read on to learn what you should do with your carbon credits.
What are Carbon Credits?
Carbon credits are a mechanism used to reduce greenhouse gas emissions. Home or business owners earn them by voluntarily reducing their greenhouse gas emissions using solar panels or other renewable energy technologies. Once they are created, carbon credits can be sold on carbon markets if they are verified by a third party.
Carbon credits are created through processes that aim to reduce or remove greenhouse gas (GHG) emissions. Generating electricity from renewable sources such as solar panels, wind turbines, or hydropower creates carbon credits. The avoided emissions from displacing fossil fuel-based electricity contribute to the creation of these credits.
What can you do with your carbon credits?
In Alberta, you have 2 main options when it comes to what to do with your carbon credits. You can either sell them or choose to keep them. Selling them can happen in a few different ways so lets start with why you would want to keep your carbon credits.
Keep your carbon credits
As the owner of a solar panel system, you do not have to sell the carbon credits that you create. You can retain them which ensures that greenhouse gas emissions are reduced when you produce solar electricity. This is the most environmentally friendly option as it ensures that no emissions are created as a result of your solar panel system. Note that you will not benefit financially by retaining your carbon credits.
Who should keep their carbon credits: People who place high value on the environmental benefits of solar panels. If you want to do what is best for the environment and you are comfortable with the electricity bill savings your solar panels will create, this is the option for you. Sit back, relax and let your solar panels save the earth one sunny day at a time!
Sell your carbon credits
Since some organizations generate significant greenhouse gas emissions (heavy emitters) they must offset their emissions by purchasing carbon offsets. You can choose to sell the carbon offsets you make to these organizations. However, you cannot sell them just sell your carbon credits on your own directly to these heavy emitters. The legitimacy and quality of credits must be demonstrated through a third-party verification and certification process in accordance with Alberta’s Emissions Reduction Regulations. This helps ensure that the carbon credits represent genuine emissions reductions or removals. To do this, you must hire a carbon credit developer to complete the documentation required by the government to verify your carbon credits. Once the documentation is submitted and data verified, the project is logged in the Alberta Carbon Registries and the credits are created.
One such company that offers this service is called Re(Source) Energy who will add your solar panels to the Alberta Carbon Registry so your system can create offsets until 2032. Re(source) takes care of quantifying and serializing your offsets and will issue annual payments directly to you in exchange for 30 percent of the revenue from the carbon credits your system creates.
Who should sell their carbon credits: People who want to improve the financial savings created by their investment in solar panels. Although solar panels do tend to yield very reasonable paybacks in the range of 7-12 years, selling your carbon credits can lower the payback time.
How much would I make by selling my carbon credits?
The average sized (7.5 kW) solar installation in Alberta will earn the following in carbon credit payments over the next 8 years:
Grants and Rebates
Some grant programs and rebates provide a one time payment to homeowners that install solar panels in exchange for ownership of their carbon credits indefinitely.
For example, in the Change Homes For Climate Terms and Conditions, the City of Edmonton gets ownership of your carbon credits indefinitely if you choose to accept the solar rebate.
“The Applicant agrees to [indefinitely] convey ownership to the City of Edmonton, or its successors, all environmental attributes and environmental products that are created or otherwise arise from this project in any jurisdiction, including but not limited to renewable energy certificates, solar renewable energy certificates, or carbon offset credits.”
For reference, a 7.2 kW solar array would be eligible for a rebate of 2,880 from the Change Homes For Climate program. We expect that carbon credit sales would add up to the grant amount in year 9 of electricity production. Depending on the size of the solar system, this threshold point often happens between year 7 and 10.
What happens to my carbon credits if I accept the Federal Greener Homes Solar Grant?
Nothing! The Greener Homes Grant is a no-strings-attached grant, meaning that you retain your carbon credits.
I still don’t know what I should do with my carbon credits?
Reach out! We are happy to answer any questions or help you make your decision.