What are solar renewable energy credits

December 1, 2020 | 4min read

Solar Renewable Energy Certificates or SRECs are credits earned by solar system owners for every megawatt-hour of electricity produced by their system. SRECs are not offered in all states. In states where they are offered, a homeowner who receives SRECs for energy produced by their system is able to sell their SRECs to their utility company. The utility company is then able to use its accumulated SRECs to show that the company is complying with that state’s renewable energy requirements. In addition to potentially saving on your electrical bill, SRECs are another great benefit to going solar.

How SRECs help utility companies reach renewable energy goals

Some states that have renewable portfolio standards require utility companies in the state to show that they are buying some portion of their electricity from renewable sources. Utilities that can’t meet their renewable energy requirements on their own must buy SRECs from residential solar customers to make up the difference between the amount of renewable energy they can buy and the amount they are supposed to buy.

How a solar system owner earns SRECs

In states where solar Renewable Energy Certificates are available, the state has a partner agency that monitors energy produced by residential solar systems that are participating in the SRECs program. That agency will award a home solar system owner one SREC for every megawatt-hour of energy produced by their system. 

How much are SRECs worth?

The value of SRECs fluctuates, much like stocks fluctuate. If there is a lot of demand from utilities, then available SRECs will command higher prices. If there isn’t a lot of demand for SRECs, then the price they fetch will be lower. Based on information from SRECtrade the most recent prices for SRECs in the states that offer them were:

  • Pennsylvania – $38
  • Maryland – $78
  • Washington D.C. – $395
  • Ohio – $11
  • Delaware – $10
  • Virginia – TBD

As you can see, SREC prices can vary by quite a bit! New Jersey offers TRECs, which are awarded the same way SRECs are, but they are sold at a fixed price. TRECs don’t fluctuate in price the way SRECs fluctuate.

How do I sell SRECs that my solar system earns?

Utilities seek to buy Solar Renewable Energy Certificates from as few sellers as possible. As a result, you normally won’t be able to sell your SRECs directly to your utility company. Instead, you’ll work through an aggregator. These aggregators broker SREC transactions on behalf of individual system owners in exchange for a small fee.

Aggregators typically offer three options to system owners:

1. Term contracts. With term contracts, the system owner agrees to a fixed price per SREC over a certain amount of time. This option is the most popular because it reduces some of the pricing volatility of SREC markets and provides the system owner with a steady income over the contract term, typically 3-5 years.

2. Upfront contracts. Upfront contracts pay system owners an upfront, lump-sum payment for their SRECs. While this is an attractive option for system owners to get the cash-in-hand right away, it also typically offers the lowest price per SREC.

3. Spot market. With this option, the aggregator simply acts as a broker to sell the system owner’s SRECs on the open market at the then-current SREC price. This option offers the least certainty and the least commitment but the highest potential for upside depending on the individual SREC market’s pricing mechanics. Most aggregators do not require a contract for this option, allowing system owners to enter into a term or upfront contract at any time.

How many SRECs does a solar system earn?

The number of SRECs a system can earn will vary with its size and the region that it’s located in. In Maryland for example a 7-kilowatt system could earn between 8 and 10 SRECs per year. That could translate into between $632 and $790 in extra income for the solar system owner. SRECs are definitely worth it for home solar system owners to collect!

Freedom’s independent authorized dealers will help you get any SRECs you are eligible for

The only downside when going solar in a state that offers SRECs, there is often a ton of paperwork involved to ensure that you get the SRECs you deserve. But don’t worry, we have great news! When you go solar with Freedom Forever, our independent authorized dealers will help you with that paperwork so you don’t have to worry about missing out. Your new solar system systems power output will be guaranteed thanks to our 25-year production guarantee, so you’ll get 25 years of worry-free power production.

Ready to go solar? Call us at 800-685-1850 or click below to get started.