SRECs: What are solar renewable energy credits?
You can make substantial money with SRECs—but they're not available in every state.
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Solar renewable energy certificates (SRECs) can provide sizable income to solar power system owners living in eligible markets, but they can also be complicated to understand. Unlike popular solar incentives such as the federal solar tax credit (ITC), SRECs aren't available to everyone and vary by state and utility company.
The extra income you can earn from SRECs is just one example of how going solar can benefit you financially for years to come. When you invest in a solar energy system, you're signing up for additional monetary benefits like SRECs that go beyond saving on your monthly electric bill.
Let’s break down the basics of buying and selling SRECs, where active markets exist, and a few different ways to sell yours.
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Key takeaways
A solar renewable energy certificate (SREC) is a financial instrument issued at the state level that allows you to earn money for the electricity your solar panels generate.
You usually earn 1 SREC for every MWh of electricity you generate.
Utility companies purchase SRECs because they allow the utilities to count the associated solar electricity toward meeting their Renewable Portfolio Standard (RPS) requirements.
Washington, D.C. has some of the best annual earning rates for SRECs in the U.S.
Solar renewable energy certificates (SRECs) are performance-based solar incentives that allow you to earn additional income from your home’s solar energy production. As a homeowner, you can earn one SREC for every megawatt-hour (MWh), or 1,000-kilowatt hours (kWh), of electricity your solar system generates.
SRECs exist because of state regulations known as renewable portfolio standards (RPS), which require utilities to produce a specific percentage of their electricity from renewable energy sources. Utility companies must meet RPS requirements by earning or purchasing renewable energy certificates (RECs).
RECs prove that a utility has either produced renewable electricity or paid someone else who is producing renewable electricity for the right to “count” that electricity as part of the utility's own energy generation activities. An SREC is simply the solar-specific version of a REC.
Just as you can buy and sell RECs to transfer the right to count renewable electricity, you can buy and sell SRECs to transfer the right to count solar electricity.
SREC markets facilitate the sale of solar certificates, but they only exist in states with a solar carve-out. As the name suggests, this policy "carves out" a set portion of a state's renewable portfolio standard for solar technologies by mandating that electricity suppliers generate a certain amount of solar energy.
Because both RPS laws and solar carve-outs are state-specific policies, SRECs are not available everywhere. About 30 states have adopted an RPS, but fewer than 10 have a solar carve-out and an active SREC market.
If you live in a state with an SREC market, you typically won't sell your certificates to a utility directly; instead, you'll work with an SREC aggregator or broker (like SRECTrade or SolSystems) to monetize your SRECs.
The value of an SREC varies from state to state and primarily depends on the following factors:
Not every state has a renewable portfolio standard, and even those that do may not have a solar carve-out. Depending on where you live, a 10 kilowatt (kW) solar panel system will produce about 110 to 163 MWh of electricity annually, which translates to 11 to 16 SRECs. As shown in the table below, this can drastically improve the financial return of solar energy in some areas, but it can mean less than $100 in savings in others.
Below is a list of states with active SREC markets, along with the average system size in each state and how much you can earn:
State | SREC Price* | Annual Earnings** |
|---|---|---|
| D.C. | $437.75 | $4,377.50–$5,690.75 |
| Maryland | $58.25 | $582.50–$757.25 |
| Virginia | $39.25 | $392.50–$510.25 |
| Pennsylvania | $35.50 | $355.00–$461.50 |
| Ohio | $3.50 | $35.00–$45.50 |
| Delaware | $8.00 | $80.00–$104.00 |
*SREC price based on November 2024 selling values
**Annual earnings assume 10-13 certificates per year
Another option is pre-selling your SRECs. SREC brokers, solar installation companies, and solar financing companies often have options to pre-sell the rights to your SRECs for a lump sum. They can also offer a fixed pricing agreement to pay you an agreed-upon price for each SREC, regardless of what they sell for. When you enter into a fixed pricing agreement, the contracts typically last 3-15 years.
There are numerous benefits and drawbacks to pre-selling your SRECS. First, let's look at the benefits.
Advantages of pre-selling SRECs
Disadvantages of pre-selling SRECs
Before you decide whether to sell or pre-sell your SRECs, it's important to understand your state's historical and current SREC market trends. To find information on the most recent SREC sales across markets, we recommend using SRECTrade orSolSystems. Ultimately, your decision comes down to how much risk you want to take on versus how much you want to earn.
If you sell your solar home while there is an active SREC market in your state, you may be able to retain the rights to sell your system's SRECs even after moving. However, it's most common to transfer the rights to the SRECs to the new homebuyer and new solar energy system owner. Many homeowners use this as a negotiation tactic to sell their property for more money.
Most homeowners save around $60,000 over 25 years
- Vetted installers
- Unbiased advice
- Completely free
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