What Are Solar Renewable Energy Credits & What Are They Worth?

Of all the incentives that are available to homeowners who install solar panel systems, solar renewable energy certificates (SRECs) are some of the most beneficial. Yet, they can be complicated to understand.

Our team at Solar Bear Orlando explains solar renewable energy credits and how they can provide sizable income for owners of solar systems in eligible markets.

What is an SREC?

Solar renewable energy certificates (SRECs) are a performance-based incentive that allows solar owners to earn additional income from solar electricity generation. You can earn one SREC for every megawatt-hour (MWh) or 1,000-kilowatt hours (kWh) of electricity that your solar panels generate.

SRECs exist because of state regulations known as renewable portfolio standards or RPS. These regulations require utilities to produce a specific percentage of their electricity from renewable resources. To meet these requirements, utilities purchase renewable energy certificates (RECs) that serve as proof that they have produced renewable energy themself or paid someone who is producing renewable energy for the right to count it as their own generation.

SREC markets only exist in states with a solar carve-out. As the name suggests, the policy “carves out” a set portion of a state’s renewable portfolio for solar technology, and mandates that a set amount needs to be met by solar energy.

Keep in mind that only seven states have SREC programs in place as there is no solar carve-out, and unfortunately, Florida is not yet one of them. We are hopeful that it will be adopted soon in our market.

States with SRECs include:

  • Maryland
  • Massachusetts
  • New Jersey
  • Pennsylvania
  • Ohio
  • Virginia
  • Washington, D.C.

Making Money with SRECs

Some states with solar carve-outs have an established SREC market to facilitate the sale of SRECs. Most often, if you live in a state with an SREC market, you don’t sell your certificates to the utility company directly, rather, you’d work with an aggregator or broker to monetize your SRECs. 

The value of SRECs varies from state to state and depends on these factors:

Supply and Demand

Buying and selling SRECs is a lot like investing in the stock market. The price of an SREC changes over time depending on the supply and demand in a state’s market. An oversupply of SRECs leads to lower prices, while an undersupply results in higher-value SRECs. Simple.

Alternative Compliance Payment (ACP)

Alternative compliance payments (ACPs) are payments that the utility companies have to make if they don’t meet the specific renewable energy goals set by the state.

ACP values are set by the state and help drive the prices for which SRECs sell.

How Much Can be Earned Selling SRECs?

A 10 kilowatt (kW) solar panels system produces about 10 to 13 MWh of electricity per year, earning about 10 to 13 SRECs annually.

What Happens to My SRECs if I Move Out of State?

If you sell your home that is equipped with a solar system, you may be able to retain the rights to sell your system’s SRECs even after you move. It is most common to transfer the SREC rights to the new homeowner. Many homeowners use this as a negotiating chip when trying to sell their property for more money.

Florida Solar

If you are ready to join the solar revolution here in Central Florida, call our team at Solar Bear Orlando at (727) 471-7442 for a consultation! We are ready to help you start generating power from the sun!