What is an SREC (Solar Renewable Energy Credit)?

If you’re lucky enough to live in a state with an SREC market, here are some details on how it works, from SREC prices nation-wide to how SRECs make you more money once you’ve installed solar power.

As you can see from the map below (courtesy of SRECTrade), most of the states with an SREC market are concentrated in the East. Those with an active market include Delaware, Massachusetts, Maryland, North Carolina, New Jersey, Ohio, Pennsylvania, and Washington D.C. Some states without an SREC market can still generate and sell SRECs to states that do. So how do SRECs work anyway?


How SRECs Work

The key thing to understand is that SRECs are added value on top of the electricity savings you’re getting from a solar array. They are vouchers that  you automatically earn when you produce solar energy for your home, to the tune of 1 SREC for every 1 MWh (1,000 kWh) of energy you produce.

Why do you earn SRECs for producing solar energy? Because states with SREC markets have government-mandated Renewable Portfolio Standard (RPS) requirements that state they must obtain a certain amount of electricity from renewable sources. This requirement gets passed on to utilities, who in order to meet these requirements end up buying some of this renewable energy from you in the from of SRECs.

Each SREC has a market value, and can be sold on an open exchange. Like any market, the value fluctuates depending on supply and demand, although some sates have set a price floor for their value.

In order to be a part of the SREC market, your solar array must be certified by the state after installation, and an account for tracking system output is generally set up to monitor energy production.

How much is an SREC worth?

That depends on your states SREC market. Prices for an individual SREC can and will fluctuate over time. In some places, like on the NJ SREC market, the value of an individual SREC started in 2010 at $693, but due to a massive influx of new solar installations the value has now dropped to about $145.


New Jersey SREC Prices Screenshot Courtesy SRECTrade

Despite the drop in value here, keep in mind that SRECs are additional income above and beyond your electricity savings and the other financial benefits of having a solar energy system for your home.

How much can I earn with SRECs?

Again, that entirely depends on the value of SRECs in your state. It also depends on the size of the solar array you install, since SREC production depends entirely on the amount of solar energy you produce. The easiest way to get an estimate on how much you might make with SRECs is to use the free home solar calculator here.

If you end up leasing a solar system, SRECs may be handled by the leasing provider. This can be beneficial, since you don’t have to deal with the hassle of SRECs, and their total value will be factored into the leasing arrangement and the amount you pay for the lease.

How can I get started earning SRECs?

Photo Credit: SREC Trade