What Is Solar SREC?

Are you interested in going solar and looking into the different financial incentives that are available? 

Many incentives are available to make going solar more attractive to homeowners. SRECs are one such financial incentive available in certain states and areas. 

You may have heard about renewable energy certificates (RECs). But what is an SREC, and how can this benefit those with a solar power system installed in their home? 

Below, we’ll cover what you need to know about SRECs, including how they work, options for selling them, and more. 

What’s the Difference Between SRECs and RECs?

According to the Environmental Protection Agency: “A renewable energy certificate (REC) is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation.”

A REC is issued per megawatt-hour (MWh) of electricity that’s generated and delivered to the grid coming from a renewable source of energy. 

Solar renewable energy certificates (SRECs) are a subcategory of RECs designed to incentivize the generation of solar electricity. 

How Do SRECs Work?

In some states, solar renewable energy certificates (SRECs) can help eligible homeowners earn money for the societal and environmental benefits of producing residential solar electricity. 

You can check your SREC eligibility by location in the Database of State Incentives for Renewables & Efficiency.

Unlike net metering programs, SRECs don’t pay you for the electricity you generate and sell back to the grid. Instead, SRECs are financial instruments sold in marketplaces and bought by individuals and businesses who wish (or are required to) support the production of renewable energy. 

If eligible, homeowners receive an SREC for each MWh (1,000 kWh) of solar electricity they produce with their photovoltaic system. The more renewable electricity you generate, the more SRECs you’ll earn as a result. 

How Do SRECs Make You Money?You can sell these SRECs to utilities, businesses, and communities via an REC marketplace. 

States that currently operate SREC markets are:

• District of Columbia
• Delaware
• Illinois
• Maryland
• Massachusetts
• New Jersey
• Pennsylvania
• Ohio
• Virginia

SREC prices are based on supply and demand and can vary widely by location and based on current market conditions.

For qualified homeowners, SRECs are one more way residential solar power can help you save and earn money. If you generate sufficient renewable electricity with solar, SRECs can help you achieve solar payback more quickly.

Who Buys SRECs? 

SRECs are purchased by various entities, including:

• Electricity suppliers and utilities. Many states and localities require utility companies to generate a portion of their electricity supply from renewable energy sources. These regulations are often called Renewable Portfolio Standards (RPS). Utilities can help meet their regulatory requirements by purchasing SRECs
• REC/SREC aggregators and brokers who resell the certificates in various markets
• Nonprofits supporting the growth of electricity generation
• Businesses who wish to support sustainability and offset carbon emissions. By purchasing SRECs, companies can claim a commitment to corporate sustainability goals. 
• Individuals and communities that seek to support renewable power and solar electricity generation.

What Quantity of SRECs Can a System Produce? 

How many SRECs your system can produce depends on the details of your local program and how much electricity your residential solar system generates. 

Eligible homeowners earn one SREC per megawatt-hour (1,000 kWh) of solar electricity they generate. 

The average 10kW solar panel array produces about 10 to 13 mWh of electricity per year, which is equal to 10-13 SRECs.

What Is the Value of SRECs?

How much money you can earn with SRECs varies not only based on how much electricity you produce but also on which market you sell them in and the SREC price at the time.

Using the above 10kW solar power system as an example, here’s how much you could make in several SREC state markets as of November 2023, based on 10-13 SRECs annually.

State	SREC Latest Bid Price*	Annual Earnings (10-13mWh)
Pennsylvania	$30	$300 – $390
Maryland	$58	$580 – $754
D.C.	$428	$4,280 – $ 5,564
Ohio	$4	$40 – $52
New Jersey	$209	$2,090 – $2717

*Source: SRECTrade

As you can see, even in neighboring states/districts like Maryland and Washington, the amount of money you can earn from SRECs varies enormously — over 600% more in D.C.

Fluctuations in SREC Pricing

The value of SRECs fluctuates based on supply and demand. Prices can vary wildly – from $4 – $428 per credit, based primarily on your location and the market you’re selling SRECs in. 

As utility companies are the primary customer for SRECs, the penalties they must pay for not meeting their mandated renewable energy goals largely dictates the certificates’ pricing. These fines are known as solar alternative compliance payments (ACP).

Different states have different ACP structures, and utilities are unlikely to purchase SRECs if their price exceeds the maximum penalty they are subject to for not meeting mandated renewable energy goals.

How much money you receive for your SRECs also depends on the method you use to sell them. For example, you may be able to opt for a one-time lump-sum payment based on an estimated 15 years’ worth of production. This can be useful for achieving solar payback more quickly, but you will likely be selling at a discounted rate. 

Which States Have Active SREC Markets?

The following states have SREC markets and solar carve-outs. Make sure to double-check to see if anything’s recently changed!

• Illinois
• Ohio
• Pennsylvania
• Virginia
• District of Columbia
• Maryland
• Delaware
• New Jersey
• Massachusetts

If you live in one of these states, you might be able to benefit from the financial incentive of selling your SRECs. 

Even if you live outside these states, you may be eligible to sell SRECs through a broker like SRECTrade.

Guidelines for Selling SRECs

Utilities rarely buy SRECs directly. Instead, brokers typically buy and sell these SRECs. Similar to stock brokers, SREC brokers usually get a percentage-based fee in exchange for facilitating these transactions. 

PJM Region (Source: SRECTrade)

Below, we’ll cover how you can sell your SRECs if you are located in the PJM region shown in the map above. If you’re not in the PJM territory, your process may differ. 

Step #1: Registration – Enrolling Your System

Many companies that install solar power systems will handle SREC registration on your behalf. By registering your system with the relevant Public Service Commission and submitting it to the Generation Attribute Tracking System (GATS) administered by PJM, you should be eligible to produce SRECs. 

Within five to seven business days, GATS should issue you an approval, and your system can begin generating your credits. 

If your installer did not register your solar system, you can hire an SREC brokerage company to do it instead. 

Step #2: Selecting Your SREC Sales Method

Once your system is registered, you can sell your SRECs. There are three primary methods available you can use. 

Upfront Payment

You can sell your rights to all of the SRECs your system will ever produce in exchange for an upfront payment. You’ll receive a single lump sum payment at once and receive no further SREC payments for your system’s lifetime. 

You might choose this option because it reduces your out-of-pocket cost for your solar system. It also means you don’t have to worry about future SREC price fluctuations. 

However, it also means you’ll sell your SRECs at a significant discount on what you could make over the long term. 

SREC Contract

Another option is to sign a contract with an SREC aggregator that lasts for a fixed time period – such as three, five, or ten years. You can lock in a price for your SRECs and receive a check from the aggregator each time you earn one. The aggregator will sell your SREC and take a commission on the earnings. 

SREC contracts help protect you from market fluctuations. It allows you to forecast how much income you’ll receive from SRECs and make financial decisions based on that information. 

On the downside, SREC contracts don’t help offset the initial investment of going solar. With generous government incentives like the 30% Residential Clean Energy Tax Credit and eligibility for direct-from-manufacturing financing, this might not be a significant concern. 

Long-term SREC contracts pose more risk to the aggregator, and they discount their prices accordingly. 

SRECs On the Spot Market

Finally, you can sell your SRECs periodically as you earn them on the open market. Typically, you must sell your SRECs within three years of producing them. 

Selling your SRECs as you earn them maximizes earnings potential. But you should factor in the risk that prices will fall in the future, and you’ll need to be proactive in managing your SRECs.

Frequently Asked Questions

Final Thoughts

If you live in a state or area where you’re able to sell SRECs, it can be a worthwhile endeavor to get even more financial benefits from your investment in solar power. 

SRECs can be sold in several ways, allowing you to offset the initial investment of your installation or earn money over time, depending on how you choose to do it. 

While SRECs can have financial benefits, the savings you’ll enjoy on your electricity bills will likely far outweigh the earnings from renewable energy credit programs. 

If you want to get started with solar, EcoFlow has a wide range of options for you to choose from, including rigid, portable, and flexible solar panels. 

If you’re looking to benefit from SRECs, the high-efficiency 400W Rigid Solar Panel is ideal for rooftop installations and maximizing electricity generation. 

Browse EcoFlow’s solar panel offerings today and take the first step toward producing solar power for virtually any application.