You may have heard about companies purchasing so-called carbon credits over the years in order to offset their greenhouse gas emissions. This is a popular way to improve the image of a company or to be able to print a "carbon neutral" badge on a particular product, but green energy is more than just a trend, it can mean big profits and, in some cases, it's the law.
A Solar Renewable Energy Credit (or SREC) is similar in concept to the idea of a carbon credit, but varies in a few distinct and important areas. An SREC is created by a business or individual producing solar energy and the typical equivalent value is 1 SREC for every one megawatt-hour (MWh) produced. To put this into perspective, a typical home solar power system with an average of 5 hours of sunlight each day will generate between 400-1600 kWh of energy per month, depending on the size of the system, so best case scenario that's .053 SRECs generated per day. Keep in mind that you're not handing over your precious solar energy in exchange for an SREC, it's simply generated by the fact that you're producing green energy.
Let's back up a bit and talk about the reason SRECs are so important. Many utilities are now required to have a certain percentage of their energy be created by solar power, so in many cases, a utility will simply purchase the required amount in the form of buying SRECs, rather than purchasing and installing a large amount of solar panels and tying it into their grid. This works out well for owners of solar power equipment because, in addition to saving money on an electric bill and potentially earning money by giving energy back into the grid, sales of SRECs to a utility can provide an alternative source of income that can be quite high and ultimately cover the cost of the solar equipment itself.
There's no set value of an SREC, and it fluctuates depending on market demand and time of year, but typical prices of an SREC range from $200-$600 each. Think about the implications here for a homeowner with a solar energy system. Taking an average solar power output of 1000 kWh/day and an average price per SREC of $400, you're looking at an extra $400 per month in your pocket. This financial benefit alone should be enough to sway you if you're on the fence about a solar power system, especially considering if you have an average electric bill currently of $150/month and you purchase a 1kWh/month system that lasts for 25 years (which is the typical warrantee period) you'll earn approximately $144,000 over the life of your solar power system, and it will be much more as the price of SRECs and the cost of electricity continue to rise.
If you're interested in selling SRECs or finding out more information about how the trade process works, srectrade.com is a great resource for information and they also offer a brokerage service to help you get certified to start generating SRECs and then to help you sell those SRECs in bulk to utilities and other SREC buyers.
Where you can redeem SRECs
SRECs are currently only available in states where a Renewable Portfolio Standard (RPS) exists with a specification for solar power. In other words, it only exists in states which have made solar energy an option to meet renewable energy requirements. 30 US states have a Renewable Portfolio Standard, but not all of those have a provision for solar power
View map of RPS States
Which States currently have an SREC Market?
SREC markets currently exist in the following states:
- Ohio SRECs
- Pennsylvania SRECs
- New Jersey SRECs
- North Carolina SRECs
- Massachusetts SRECs
- Delaware SRECs
- Maryland SRECs
- Washington D.C. SRECs
Even among the solar-savvy, many people do not know what Solar Renewable Energy Credits (SRECs) are or what potential benefits they represent. As we’ve mentioned before, SRECs (or often simply RECs) allow generators of renewable energy to sell credits to businesses like utilities who need them to comply with government regulations. These credits accrue automatically to solar panel owners and often can be traded and sold like stocks on the stock market.