What are SREC’s? Solar Renewable Energy Credits (2024)

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Solar power system owners in certain markets can make a good amount of money from Solar Renewable Energy Certificates (SRECs), but they might find them a bit tricky to grasp. These certificates aren’t as widely accessible as other solar perks like the federal solar tax credit, because their availability and rules change depending on the state and the utility company.

Earning extra cash through SRECs shows one of the many ways solar power can pay off financially over time. By installing a solar energy system, you not only cut down your electric bill but also tap into additional financial benefits like SRECs.

What’s an SREC?

An SREC is a way for you to make more money from the solar energy your home produces. For every 1,000 kilowatt hours (or one megawatt-hour) your solar setup generates, you get one SREC. This system is in place thanks to state rules called renewable portfolio standards (RPS), which make utility companies get a certain part of their power from renewable sources. To meet these standards, utilities buy SRECs or RECs, which are proofs that renewable energy was produced. SRECs are just the solar-specific form of these certificates.

Differences between SRECs and RECs

Both SRECs and RECs can be bought and sold, allowing the transfer of rights to count renewable or solar electricity. SREC markets, where these solar certificates are traded, only exist in states with specific policies favoring solar energy.

Not all states have SREC markets because the rules around renewable energy and solar-specific standards vary by state. Only about 30 states have an RPS, and less than 10 of those have a policy specifically supporting solar energy, thus having active SREC markets.

How to Sell SRECs

If you’re in a state with an SREC market, you generally won’t deal directly with utilities to sell your SRECs. Instead, you’ll go through an aggregator or broker, who will help you get the best value for your SRECs. The price of an SREC can differ a lot from one state to another and depends mostly on supply and demand, as well as on what’s called an alternative compliance payment (ACP). This payment is what utility companies might have to pay if they don’t hit their renewable energy targets, and it helps set the top price for SRECs.

How Much Money Can You Make From SRECs

A typical 10 kilowatt solar panel setup can produce 10 to 13 SRECs a year, which could significantly boost the financial benefits of going solar in certain areas. In Virginia, after tax incentives and rebates, you can make anywhere between $500 – $650 per year. So not only do you save on your electrical bill you get paid on top of that! 

Pre-selling SRECs: Pros and Cons

You can choose to pre-sell your SRECs for a set price, which can make budgeting easier and help pay off any loans for your solar system. This option provides a stable income from your SRECs and protects you from market fluctuations, but it might also mean you’ll make less money in the long run compared to selling your SRECs over time.

The decision to sell or pre-sell your SRECs should be based on a careful look at your state’s SREC market and how much financial risk you’re willing to take.

Where are SRECs Available?

SRECs are not available in every state. Only states with a renewable portfolio standard and a specific solar carve-out have active SREC markets. Some of the states with such markets include the District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania, Ohio, and Virginia.

How Can 8MSolar Help You with SRECs

If you live in the state of Virginia 8MSolar can help explain how to go about selling your SRECs to gain even more return on your investment from your solar panels. If you live in the start of North Carolina where SRECs are not available we recommend advocating for them from your state and local governments. 8MSolar is pushing these initiatives forward in North Carolina and helping make it easier for those in Virginia. Call us today and let us help you figure SRECs out! 



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