SOLAR RENEWABLE ENERGY CREDITS
An SREC is a clean energy credit, issued in the form of a tradable certificate. Every time a solar system generates 1,000 kWh, the system owner earns one SREC. An SREC
can then be sold through various online entities, (flettexchange.com), creating income for the
owner - on top of the monthly utility savings!
One SREC is earned every time 1,000 kWh are generated, whether or not the energy has been used. So, if a system produces 1,000 kWh in the month of June, and the home consumes 1,000 kWh in June, the electric bill will be $0, and the owner will have earned one SREC.
The value of SRECs come from the regulatory compliance market; where states are required to produce a percentage of their electricity through solar sources. The percentage required rises each year. States like Pennsylvania and New Jersey have Alternative Energy Portfolio Standard (AEPS), which are the percentages that must be produced by renewable by the end of each year
(also known as Renewable Portfolio Standards, RPS). Utility companies must either produce their own solar energy, or buy it from other producers/owners
The value of SRECs can be somewhat unpredictable. Some states have an Alternate Compliance Payment (ACP),
which is a penalty the utility companies
must pay if they do not purchase the required amount of SRECs.
The value of SRECs varies from state to state. The value depends on each states AEPS, ACP, the current amount of solar in the state, and the rules for buying and selling SRECs in that state. For instance, New Jersey has closed off their market so that SRECs can only be bought and sold in New Jersey.
Because they have a smaller market to buy from, the value of their SRECs are higher.
To learn more about individual states SREC policies, click on the state below: