Solar Renewable Energy Credits (SREC)


What is an SREC?

An SREC is a credit you can earn from your state for energy produced by your home solar system.

You can earn a single SREC when your solar panel system produces 1,000 kWhs of electricity. If you were to get 5,000 kWhs of solar energy in a year (a fair estimate for an average-size 5 kW system), you would earn five SRECs. Each SREC you earn can then be sold back to utilities.

Tip: An SREC is separate from the electricity your home solar system produces. That means you can use all of your solar electricity and still receive SRECs.

How much is an SREC worth?

It depends. SRECs are a tradable commodity, so their sell price is determined by market supply and demand. An increase of SRECs will decrease prices; a shortage of SRECs will increase prices. Prices can range from less than $50 to more than $300 per SREC. Higher prices benefit you, but there are controls in place to ensure a (somewhat) stable market.

One major factor that facilitates an SREC market is a solar alternative compliance payment (SACP). An SACP is essentially a fine paid to the state by utilities if they do not have enough SRECs to meet state requirements.

Tip: For an example of SREC prices, you can see bid prices for New Jersey from SRECTrade. You’ll notice prices are increasing year over year for the Garden State.

Renewable Portfolio Standard & SRECs

SRECs exist in states with a renewable portfolio standard (RPS). An RPS requires a state to produce a set amount of energy from renewable energy sources (wind, solar, etc.). The map below shows states that have an RPS (shown in a darker blue) with percentages for renewable energy and deadlines for those percentages.

Source: DSIRE & U.S. Department of Energy

Tip: If a state’s RPS has specific requirements for solar energy, it’s often referred to as a solar carve-out.

If you want more details on your state, you can check the database of state incentives for renewable energy (DSIRE) website for RPS information and other state policies.

Setting up SRECs

In order to sell an SREC, your home solar system must be certified and registered. The process for registering your home solar system will be specific to your state, so be sure to review all the requirements before installation. In fact, it’s likely you’ll have to register the home solar system before you even begin installation.

In order to find how to register, you can search for more details on DSIRE. Registration varies by state, and some government websites include info on SREC registration.

Next steps

If you still have questions about SRECs, you can spend more time on the DSIRE website, search your state’s government website, or see if there is a state profile on the solar energy industries association (SEIA) website.

You can also speak with your solar installer to see if they have any advice on how to register your future home solar system for SRECs.

Even if there is some additional work to register for SRECs, it’s another way to make or save money with a home solar system.

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