Your Guide To Solar Renewable Energy Credits (SRECs)

Solar for Homeowners | 3 min read
Your Guide To SRECs

One of the lesser-known benefits of owning a solar energy system is Solar Renewable Energy Credits (SRECs). SRECs may not be a household name, but they can drastically improve the financial returns of owning a solar system, which means putting more money in your pocket. They are a great addition to the electric savings and tax benefits you will gain with solar power.

If you’re new to the world of solar energy, you probably have a lot of questions about Solar Renewable Energy Credits (SRECs). What exactly are SRECs? How do they work? And perhaps most importantly, how much are they worth? Don’t worry, this blog post is here to provide all the answers you need and more. 

Here's what is covered in the blog:


What Are SRECs?

Graphic that explains how Solar Renewable Energy Credits (SRECs) workSolar Renewable Energy Certificates (SRECs) come from a program called the Renewable Portfolio Standard (RPS). RPS, which is enacted by 36 states in some form or another, is in place to develop the green portfolios of utility companies. This is how states meet their renewable energy production goals - like New Jersey’s 50% by 2030. SRECs are the carve-out of the RPS that forces a percentage of the green energy production required to be fulfilled by solar energy.

The owner of a solar system can receive 1 SREC for every 1,000 kilowatt-hours (kWh) or 1 megawatt-hour (MWh) of solar electricity produced by their system. That certificate can then be registered and sold - generating additional revenue for the system owner.

Note: SRECs are only available for homeowners and businesses that own a solar system. Therefore, you will not be able to receive them if your system is leased or under a Power Purchase Agreement (PPA).

National Conference of State Legislatures RPS Map Check out this map from the National Conference of State Legislatures to see the states that have enacted Renewable Portfolio Standards regulations.


Where Are SRECs Available?

Although the RPS legislation is enforced in 36 states, not all of them have a carve-out specifically for solar energy. Currently, there are five states plus Washington D.C. that have an SREC market. The SREC requirements in each of these states vary and as a result, the value of the credits varies from state to state.

One specific regulation that varies by state is the location requirement of the solar system. A few states require that SRECs come from solar systems within the borders of their state - New Jersey is one of those. In contrast, other states accept SRECs purchased from solar systems that are located outside of their state borders. This could potentially be a great benefit for solar owners in states without solar carve-outs, but on the flip side, these open-border policies will drive down the price of SRECs.

Here’s a list of the states that currently have an SREC market:

How Much Are SRECs Worth?

The value of SRECs is influenced by several factors, including the supply and demand dynamics of the market. The supply of SRECs is determined by the number of qualified producers, which refers to homeowners and businesses that own a solar system. If there is a high number of qualified producers, the supply of SRECs will increase, potentially driving down prices. On the other hand, if the number of qualified producers is limited, the supply of SRECs may be scarce, leading to higher prices.

The demand for SRECs is determined by the number of credits that utility companies need to purchase in order to meet their renewable energy production goals. Each state sets a specific target for the percentage of green energy that utility companies must fulfill through solar energy. If utility companies do not purchase enough SRECs to meet these targets, they are subject to fines known as Alternative Compliance Payments (ACPs). The ACPs act as an incentive for utility companies to buy SRECs rather than paying fines. However, if the ACPs are set at a lower amount than the cost of an SREC, utility companies may choose to pay the fines instead, resulting in a decrease in demand and prices for SRECs.

To give you an idea of the potential financial benefits, let's consider a 10 kW residential system, which is the average size for a home. This system can generate approximately 12 SRECs per year. In states like New Jersey, where the prices of SRECs are high, this could mean an additional $2,600 in your pocket annually. However, in states with lower prices, the earnings from SRECs would likely range between $60 and $1,000 per year.

For the most up-to-date prices of SRECs, we recommend visiting SRECtrade, where you can find comprehensive information on the current market rates. The chart below lists the prices as of July 2023. 

State SREC Price
Maryland $57.50
Massachusetts $265.00
New Jersey $216.00
Pennsylvania $42.00
Ohio $5.25
Washington D.C. $422.00

It's important to note that the prices of SRECs will fluctuate over time due to changes in demand and policy. Similar to participating in the stock market, it can be beneficial to work with a solar company that manages your SREC portfolio for you.

At Paradise Energy, we take care of the registration and selling process for our customers, helping them gain the best value for those credits. They just sit back and wait for the checks to arrive. 

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