SREC: How It Works

Every 1000 kWh (1 MWh) of energy that your solar system produces results in the creation of an SREC, or Solar Renewable Energy Certificate. They are production-based incentives that symbolize the environmentally friendly qualities your solar installation produces. These SRECs, or state-recognized environmentally preferable credits, can generate passive income for solar system owners. The selling of SRECs is open to systems of any size.

States created a market for SRECs by requiring utility companies to use a specific proportion of clean energy each year. The Renewable Portfolio Standard (RPS) or Clean Energy Standard is what this is known as. Companies have the option of purchasing renewable energy credits from independently owned solar installations if they are unable to meet their minimum requirements on their own.

Since SRECs are subject to governmental incentives, the state, rather than supply and demand, sets the price per REC in the market. Varying states have different SREC market values, which can range from $4 to over $300 per SREC. You can view the available payment formats and the amount brokers are offering in your customized contracts.

SRECs have no impact on your electricity bill. SRECs, or “Solar Renewable Energy Certificates,” stand for the environmental qualities of the electricity you generate. Your power bill won’t change in any way. Net metering has no effect on selling your SRECs. You can sell SRECs and take part in Net Metering at the same time. This is because Net Metering involves producing excess energy, which entitles you to a credit from your power provider. If you use all of your production or return it to the grid for use by others, it has no effect on your ability to produce or sell SRECs because SRECs are merely the environmental attributes.

For residential homeowners, you certainly will want to take advantage of SRECs to maximize your savings. If you own a business, you may want to think about keeping your RECs since SRECs are seen as a way to support clean energy and go green. Then, business owners may promote the fact that their company is a leader in clean energy in the neighborhood and show their dedication to both their company’s sustainability goals and clean energy!

It varies! Systems based outside of that state are permitted to participate in some markets. The price is typically lower than the “in-state” price, although it is typically at a lesser tier or class of the market. When you setup an account with a broker, your system will be registered on the market with the greatest price that it qualifies for. Your system might not meet the eligibility standards for each state market. 

Once you have been installed and granted permission to operate from your utility company, you are then eligible to begin the application process for selling your Solar Renewable Energy Certificates (SRECs). You can either choose to complete the process yourself using vendors like SRECTrade‘s self-sign-up process, or your solar installation company can use third-party vendors, such as Carbon Solutions Group or Sun Tribe Trading. 

It’s likely your solar installer has a relationship with a company that registers your system to sell your SRECs and have them reach out to you shortly after installation. You can ask your solar consultant or solar installation company for more details.