SRECs: What are solar renewable energy credits?

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. 

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.

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:

*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.