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Solar Renewable Energy Credits SRECs

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What is an SREC?

In SREC states, the Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators. The SREC program provides a means for Solar Renewable Energy Certificates (SRECs) to be created for every megawatt-hour of solar electricity created.

1 SREC = 1,000 kWh of solar electricity = 1 MWh of solar electricity
A 10 kW DC solar capacity generates approximately 12 SRECs per year

The SREC is sold separately from the electricity and represents the "solar" aspect of the electricity that was produced. The value of an SREC is determined by the market subject to supply and demand constraints. SRECs can be sold to electricity suppliers needing to meet their solar RPS requirement. The market is typically capped by a fine or solar alternative compliance payment (SACP) paid by any electricity suppliers for every SREC they fall short of the requirement. The sale of SRECs is intended to promote the growth of distributed solar by shortening the time it takes to earn a return on the investment.

Once the installation of a solar system is complete, the system must then be certified by the state(s) in which it is eligible to sell SRECs and then must create an account with the tracking platform used by that state. Once registered, every month, the tracking platform will issue SRECs based on the generation of your system. In some states, estimated generation is used for systems under 10kW, while all other systems are required to submit generation on a monthly basis. One SREC is created for every 1000kWh of electricity created. For example, a 10kW system can generate approximately 1 SREC per month. However, it is up to the solar installation owner to decide how to manage the SRECs that are produced.

Many states will certify solar electric systems from out-of-state and allow the SRECs from those facilities to count towards the RPS. SRECs are currently only available in states where a Renewable Portfolio Standard (RPS) exists with a specification for solar power. In other words, it only exists in states which have made solar energy an option to meet renewable energy requirements. 30 US states have a Renewable Portfolio Standard, but not all of those have a provision for solar power.


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SREC markets currently exist in the following states:

  • Ohio SRECs
  • Pennsylvania SRECs
  • New Jersey SRECs
  • North Carolina SRECs
  • Massachusetts SRECs
  • Delaware SRECs
  • Maryland SRECs
  • Washington D.C. SRECs
  • SRECs in these states are eligible to sell in other states: IL, IN, KY, MI, NY, TN, VA, WV, WI

How much is an SREC worth?

The value of an SREC is determined by market supply and demand forces, which ultimately depend on the number of solar installations qualified to produce SRECs, and the number of qualified system that actually sell those SRECs. SREC demand is also determined by a state’s Renewable Portfolio Standard or RPS solar requirement, i.e. what percentage of electricity in the state must be produced by a renewable energy source.

Here are a few examples of spot prices for SRECs in September 2010 (note that long-term SREC contracts will have slightly lower pricing):

  • District of Columbia $290
  • Maryland $326
  • New Jersey $625
  • Ohio $300
  • Pennsylvania $300

How does a residential solar system get SREC certified?

In order to produce SRECs, a home solar system must be certified by state regulatory agencies, which usually means public service commissions or public utility commissions. Once that’s done, the system must be registered with a trading platform (your solar installer can help you with this). SRECs are then issues based on an estimate table or actual meter readings depending on state regulations. One SREC is created for every MWh of electricity.

How to turn an SREC into money?

1. Sell them to a middle man. They group together SRECs like yours and sell them, usually to utilities. The benefit here is that they take on some of the risk for estimating future value of the SRECs, they pay you up front, as well as handle all the administration work. Of course, they will charge a fee of 3% or more of the SREC value, but that can be worth your time and peace of mind. Usually, if this is an option your solar installer will already have a relationship with one of these companies.

2. Register your SRECs and trade them on the open market. Right now this is available in very limited places, and requires being a very savvy consumer.

Think of these two options as the difference between mutual funds and trading individual stocks. One’s safer and easier with a more consistent but limited benefit.


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