What to know about SRECs in Washington D.C.

If you're considering installing solar in Washington D.C., the most important solar incentive to be aware of are solar renewable energy certificates (SRECs). D.C. is one of the few governments that offer this performance-based incentive to people generating solar electricity. Even better, the District's program is the most lucrative in the country: When you buy and install a solar panel system in D.C., you can earn thousands of dollars each year just from selling the certificates your system generates.

We describe how the District's SREC program works, explore current prices for SRECs, and discuss the future of the SREC program so that you can make a well-informed decision about going solar.

D.C.'s renewable portfolio standard (RPS) requires its utilities to produce 100% of their electricity from renewable resources in 2032. Fortunately for those who want to install solar, the RPS also has a "solar carve-out," which mandates that 5% of that renewable electricity target must come exclusively from solar power.

SRECs are a mechanism used to track the amount of electricity that comes from solar. As a solar panel system owner, you generate one SREC for every megawatt-hour (MWh) of electricity your solar energy system produces. So, the average D.C. homeowner buying an eight-kilowatt (kW) system typically generates about 10 MWh of solar electricity per year, equal to 10 SRECs.

Utilities like Potomac Electric Power Company (PEPCO) purchase SRECs to comply with the solar component of the RPS. The owners of solar panel systems–from individual homeowners to large-scale solar developers–can sell their SRECs to utilities through the local government's SREC market.

In D.C. specifically, an SREC has a useful life of three years: this means that SRECs you generated in 2021 can count towards 2021, 2022, or 2023 compliance periods. Only individuals who own (rather than lease) their solar energy system can sell SRECs in the D.C. SREC market.

The price of a single SREC isn't fixed in Washington D.C. – it varies based on supply and demand within the market and can change daily. For reference, in 2021, SRECs in D.C. sold for prices between $380 and $435.

So, what does this mean for you? As mentioned above, an average eight kW system will generate roughly 10,000 kilowatt-hours (kWh), or 10 MWhs of electricity annually. If you had a solar panel of this size in D.C. and sold your SRECs for $380 each, you'd earn an extra $3,800 a year – or an extra $19,000 in your first five years of solar power! This is a bonus towards the other incentives available (like the federal investment tax credit) and the savings you'll see on your electric bill over 25+ years. Not too shabby, right?

10 SRECs x $380 = $3,800 in year one

50 SRECs x $380 = $19,000 over 5 years

Of course, the future price of SRECs in D.C. largely depends on market conditions. Post-COVID, the market has experienced an oversupply of SRECs, leading to slightly lower prices than in previous years. Despite this, D.C. remains the most advantageous SREC program in the country thanks to its ambitious renewable energy goals and high alternative compliance payments (i.e., penalty fees utilities must pay if they don't meet the goals mandated through the RPS).

The odds of D.C. retaining this gold medal SREC status are pretty high: When the District updated its renewable portfolio standard to be 100% renewable energy by 2032, it also expanded the solar carve-out, calling for 10% of electricity sales to come from solar technologies by 2041. As a result, demand for solar electricity–and consequently, SRECs–should remain strong.

We talked a lot above about how much you can earn by selling your SRECs...but how do you sell them in the first place?

Similar to trading any other type of intangible commodity, most solar panel system owners sell SRECs through an intermediary known as an aggregator or broker. Three of the most popular platforms for EnergySage customers selling SRECs are SRECTrade, Sol Systems, and Knollwood Energy.

With most SREC aggregators, you can have as little or as much control over the sale of your SRECs as you'd like. Some people sell their SRECs as soon as possible, while others will hang on to them, hoping they'll increase in value during their useful life. Additionally, many aggregators or solar companies offer to pre-buy your future SRECs at a fixed price, allowing you the opportunity to lock in your savings. Before agreeing to sell the rights to your SRECs, it's important to understand the advantages and disadvantages–we discuss it in more detail throughout this article.

On EnergySage, you can compare multiple options side-by-side from local D.C. installers that consider the current incentives available – including SRECs! Sign up on the EnergySage Marketplace today to start receiving free solar quotes. Alternatively, if you want to start your process with an estimate of what solar would cost you, try our Solar Calculator.