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Solar Renewable Energy Credits (SREC)

Solar Renewable Energy Credits, or SRECs can be the most confusing part of going solar. Nevertheless they are vitally important to understand because they will be worth a significant amount of money over the life of your system.

What is a SREC?

Solar Renewable Energy Certificates (SRECs) are a solar incentive that allows homeowners to sell certificates to their utility. A homeowner will earn one SREC for every 1000 kilowatt hours (kWhs) produced by their solar panel system. An SREC can be worth as much as $300 in certain markets.

SRECs exist as a result of a regulation known as the renewable portfolio standard (RPS). Renewable portfolio standards are state laws that require utilities to produce a specific percentage of their electricity from renewable resources. Nearly 30 states and Washington, D.C. have an RPS, and eight states have a renewable portfolio goal.

To meet their RPS requirements, electricity providers must obtain renewable energy certificates (RECs), which serve as proof that they have either produced renewable electricity themselves or paid someone who is producing renewable electricity for the right to “count” that electricity themselves. Many renewable portfolio standards also have a solar carve-out, which requires that a minimum percentage of electricity sales in that state come specifically from solar power. In those cases, SRECs are used to account for solar electricity production.

SRECs are just like RECs, but specific to electricity that comes from solar panels. For every megawatt hour (MWh) of electricity that a solar energy system produces, a corresponding SREC is created. Just as RECs are bought and sold to transfer the right to count renewable electricity, SRECs can be bought and sold to transfer the right to count solar electricity.

States with SREC programs

Not every state has an active SREC market, and the value of SRECs varies from year to year and from state to state. Talk to your solar installer to learn more about the specifics of the SREC market in your state, or use the Database of State Incentives for Renewables & Efficiency (DSIRE) to conduct your own research about the financial incentives available to you.

How many SREC's will my system produce?

Once it has been certified and registered, your system will produce one SREC every time it produces a megawatt-hour (1,000 kWh) of electricity. As a rule of thumb, you can estimate the number of SRECs a system will produce by multiplying the size of the system by 1.2. For example, a 5-kilowatt system will produce approximately 6 SRECs each year.

What happwns to SREC's when I move?

If you sell your solar home while there is an active SREC market in your state, you retain the rights to sell your system’s SRECs even after moving. That means that, even if you sell your home, you could still receive income from the solar panel system you installed for years after. That being said, you also have the option to transfer the rights to the SRECs to the new homebuyer if agreed upon as part of the sale, which is very common. Many homeowners use this as a negotiating tactic when trying to sell their property for more money.

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