What Are SRECs - Solar Renewable Energy Credits?

What Are SRECs - Solar Renewable Energy Credits?

SREC stands for Solar Renewable Energy Credit/Certificate. SRECs are a type of incentive for installing solar systems that enable homeowners and small businesses to sell certificates awarded for producing renewable energy to their utility provider.. A homeowner can earn one SREC for every 1000-kilowatt hours produced by their solar system and the value of an SREC depends on state-specific laws. In some locations, a single SREC can be worth hundreds of dollars

SRECs have become a common talking point when it comes to solar, as they represent an opportunity for homeowners with rooftop solar systems to make a considerable amount of money selling their SRECs back to their utility providers. However, SREC programs and the SREC market can be complicated and they are not available in every state.

What Is the Purpose of Solar Renewable Energy Credits?

SRECs came about as a result of many states adopting renewable portfolio standard regulations (RPS). These regulations are state laws that require a certain percentage of a utility provider’s energy to come from renewable sources, like solar. The goal of RPS regulations is to promote and advance renewable energy. You can review California’s Renewables Portfolio Standard here.

Utility providers must prove that they have met RPS regulations by providing renewable energy certificates. To obtain these certificates, they must either produce the renewable energy themselves or purchase certificates from other people, such as home and small business owners. In doing so, they pay for the right to claim those credits as their own. Some states have created what are called “solar carve-outs,” where a certain amount of the renewable energy quota must be met by solar.

Where Can I Sell SRECs?

Generally speaking, SRECs can only be sold in the state where you live. SRECs are sold through online platforms like Sol Systems and SREC Trade. Not all states have an SREC market and in those that do, SREC prices fluctuate, much like the stock market. Sol Systems releases current pricing on a monthly basis and you can view their April 2021 pricing here.

The top SREC markets are in New Jersey, Massachusetts and Washington, D.C. There is the possibility of cross-listing your SRECs with other states, but not all markets are open to out-of-state SRECs.

Currently, California does not have an SREC market, meaning that it does not currently have a solar carve-out program. However, California does have a tradeable renewable energy credit (TREC) market and RECs are tracked by the Western Renewable Energy Generation Information System (WREGIS). The California Public Utilities Commission approved the TREC market in 2010. To learn more about WREGIS and how it works, view their FAQ handout here. In some cases, homeowners and small business owners with rooftop solar systems may be required to register with WREGIS by their utility provider.

Many solar advocates are hopeful that the California TREC market will further encourage more people to convert to solar and pave the way for an SREC market in California.

Selling Surplus Energy Back to PG&E

While California does not currently have an SREC-specific market, you do have the option of selling surplus energy produced by your solar system back to PG&E. At the end of your billing cycle, PG&E will pay your surplus energy at the current market value. PG&E tracks your energy usage and the energy that is returned to the electrical grid through their SmartMeter™. At the end of the year, they determine if you’ve returned more than you used and issue you a payment accordingly.

To learn more about PG&E’s surplus energy buyback program, click here.