When Ben Benokraitis bought a solar-powered water heater for his Baltimore County home two years ago, the installation company told him he'd get about $800 a year in payments to help offset the cost.
That money would come from the sale of three Solar Renewable Energy Credits, or SRECs, his small system would create each year. His solar installer would broker the sales and send him a check.
But instead of the $1,600 he expected in the past two years, Greenspring Energy passed along $225.25 — payment for a single credit — before laying off its workers and locking the doors to its home office in Timonium at the end of January. Now Benokraitis has little hope of earning a cent for the other five credits.
Paul Wittemann, Greenspring's founder and president, confirmed in an email that the company "is not actively in business" but would not answer other questions.
Maryland and other states created the credits as incentive to encourage solar production, requiring electricity suppliers such as Baltimore Gas and Electric Co. to acquire a certain amount each year.
But, as Benokraitis discovered, there's little SREC regulation and few consumer protections when things go wrong.
"It's the Wild West," said Benokraitis, a retired engineer.
SREC trading operates a bit like a small-scale stock market, with online trading platforms and auctions run by companies. About 170,000 Maryland SRECs were traded last year, many of them sold for between $125 and $200.
Since the credits are state creations, no federal agency oversees SREC trades or market players such as brokers. As a result, these markets don't have the federal consumer protections that are placed on the securities industry, where broker-dealers must safeguard customers' cash and securities, submit to annual examinations and meet capital requirements to ensure they're solvent.
"There's really no regulations that cover renewable-energy credits right now," said Gabriel Phillips, CEO of New York-based GP Renewables & Trading. "They just don't recognize them as a security."
State regulations generally focus on such issues as ensuring that the credits are valid and aren't used more than once, said Natara G. Feller, an attorney who runs the Feller Energy Law Group in New York.
Maryland's Public Service Commission certifies that solar installations are eligible for SRECs, but the agency said its regulatory purview does not include payment problems. It directs such complaints to the state attorney general's office.
Karen S. Straughn, an assistant attorney general who heads the office's mediation unit, said she's heard from Greenspring customers but cautioned that recompense might not be possible.
"If there's no assets, it's difficult to collect," she said.
That may be the situation facing customers of Greenspring Energy, which was recognized in 2011 by Inc. magazine as the nation's fastest-growing privately owned energy company.
The company's last check to workers laid off Jan. 29 bounced, said Jeff Lambert, who was Greenspring's general manager until the firm's remaining 11 employees were let go. That led him to believe there's little or nothing left in Greenspring's accounts.
Lambert said he oversaw sales, not SRECs, and doesn't know the status of credit payments. He also said he's not certain why the business failed. Increasing competition might have played a part, he said, but "it's a booming industry."
"I feel for everyone," he said. "It's really a shame."
The Better Business Bureau of Greater Maryland received more than 40 complaints from Greenspring customers in the past year about unpaid SRECs and other issues, said spokeswoman Jody Thomas. Among those is a customer who said Greenspring never passed along a single payment, despite selling 12 SRECs.
Kevin Lucas, director of policy, planning and analysis at the Maryland Energy Administration — an agency responsible for energy programs, not regulatory oversight — said the Greenspring situation is the first time he's heard of SRECs going unpaid. Most brokers and aggregators "have a certain scale and operate in multiple states," he said.