SRECs in Massachusetts: Prices and program status

The Massachusetts solar renewable energy certificate (SREC) program is one of the most advantageous financial incentives for solar available at the state level. Massachusetts property owners who buy and install a solar panel system can earn hundreds (or even thousands) of dollars a year by selling the SRECs the system generates.

We describe the mechanics of the MA SREC program, explore prices for MA SRECs, and look to the future of the SREC program to help you make the best solar installation decision possible.

In July 2018, Massachusetts passed an updated renewable portfolio standard (RPS) that requires its utilities to produce 40% of their electricity from renewable resources by 2030. The original RPS required 1,600 MW of solar by 2020 through a "solar carve-out," so-called because it carves out a piece of the overall renewable target exclusively for solar.

Under this program, SRECs are used to track the electricity generated by solar projects. For the first ten years of a solar energy system's lifespan, one SREC is generated for every megawatt-hour (MWh) of electricity a solar energy system produces. For example, the average MA homeowner buying a 5-kilowatt system should expect to generate approximately 6 MWh of solar electricity annually.

Utilities 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 state's SREC market.

In Massachusetts, an SREC's price is determined by five primary factors: the SREC program design, supply, demand, the Solar Alternative Compliance Payment (SACP), and the Solar Credit Clearinghouse Auction (SCCA).

SREC I vs. SREC II

Massachusetts has two separate SREC programs: SREC I and SREC II. Homeowners who installed solar before 2014 were eligible for the SREC I program, which is the original SREC program in the state. That program reached its cap before 2014, leading the state to create a successor program: SREC II. Both SREC programs have advantageous pricing, though the value of SRECs tends to be higher in the SREC I program than in SREC II.

Supply and demand

Buying and selling SRECs is a lot like playing the stock market. In general, the price of an SREC depends upon the supply and demand in the market at the time. An oversupply of SRECs indicates lower prices, while an undersupply can lead to greater prices for your SRECs. In Massachusetts, however, SREC pricing is much less sensitive to supply and demand than in other SREC markets due to the SACP and SCCA.

Solar Alternative Compliance Payment

SACP represents the price utility companies must pay if they don't meet their specific solar goals mandated by the state. The state sets SACP prices to help drive the cost at which an SREC sells. As such, the SACP is effectively a cap on SREC prices. Utilities are not incentivized to buy SRECs at a higher price than the SACP: If SREC market prices are higher than the SACP, utilities will pay the SACP penalty price instead.

Below are the SACP prices for the next eight years for the SREC I and SREC II programs.

SACP prices in Massachusetts

Solar Credit Clearinghouse Auction

Massachusetts' SREC programs also include a "last-chance" auction called the SCCA. When it comes to selling SRECs, most solar shoppers work with a third-party aggregator or broker to manage the sale of their SRECs. These brokers allow you to have as much or as little control over your SRECs as you'd like. For example, you can set a minimum price you'd like your SRECs to be sold at so that the broker waits to sell until the market hits that price point. Alternatively, you can instruct your broker to sell an SREC as soon as it is generated so that you get the money as quickly as possible, whatever the market price is at the time. If you choose not to sell your SRECs on the spot market, your broker can sell them at the SCCA.

The annual auction allows aggregators and brokers to sell SRECs at a set, guaranteed price when there's an oversupply in the market. Similar to the SACP, the auction price is determined by the state. However, where the SACP is an effective cap on SREC prices, the SCCA represents a floor price. There is no guarantee that your SRECs will sell at this auction, but if they don't sell, they are re-minted, and you can sell them on the open market within the following three years.

Below are the SCCA prices for the next eight years for the SREC I and SREC II programs. Importantly, if an SREC sells at the final auction, the Massachusetts Department of Energy Resources (DOER) obtains 5% as a fee.

SCCA prices in Massachusetts

According to SRECtrade, one of the biggest SREC aggregators in the country, MA SREC II prices ranged from $260 to $281 between August 2020 and July 2021. In the SREC I program, the payout was slightly higher, with observed prices from $319 to $343.

Importantly, only individuals who own (rather than lease) their solar energy system are eligible to sell SRECs into the MA SREC market.

The SREC II program reached its cap in 2017. As a result, the state created a new solar incentive program known as the Solar Massachusetts Renewable Target (SMART). The state launched this program in late 2018. Property owners are not eligible for both incentives. However, if you were accepted into the SREC II program prior to the start of SMART, you are grandfathered into the program for the full 10 years.

Massachusetts is one of the best states in the U.S. for solar, thanks in no small part to the SREC program. Fortunately, even though the SREC program is closed to new applicants, you can still earn thousands in additional savings under the SMART program.

You can compare competing quotes from Massachusetts solar installers by joining the EnergySage Marketplace. Thanks to SMART, the average MA solar shopper on EnergySage will break even on their solar panel system in less than five years – one of the shortest payback periods in the United States.