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How do SRECs work?
All about solar renewable
Last update: Dec. 2015
SRECs are credits that
homeowners in a
few northeastern states get from having a solar PV
system that makes electricity, which they can then
sell for cash. You probably don't live
in one of these states, so you probably don't qualify to get
these credits, but you might be able to get rebates for
installing solar from your utility, city, or state, and you
might qualify for a federal tax credit.
Once you know how
much you can get in credits or rebates, use
my solar PV cost calculator to find
out how much it will cost to have your system installed.
In most cases, it will be less than you're paying for grid
How do I get my SRECs?
Thomas, a reader in Maryland, shared with us how he
actually gets and sells the SRECs he earns from having rooftop
Every couple of months I log into my utility company's
I enter the monthly production values for my solar
photovoltaic system on the generation page.
One month after I enter enough production to get to 1MWh
[1000 kWh], I am issued an SREC which exists completely
When I notice the certificate in my inbox I place a sale
notice on an SREC exchange like flettexchange.com
noting the quantity of SRECS, the sale price and the
production state. There are several exchanges all of
which have different terms regarding fees and other
details. (Mine charges $2.50 for a sale.) The
SREC price floats with the market and varies by exchange and
state. Some exchanges offer the ability to purchase an
annuity where you get paid a fixed price per SREC regardless
of market fluctuations.
When the exchange has found a buyer I either get a check
in the mail or an ACH deposit in my bank account for the
sale price minus any exchange commissions.
The price of SRECs is trending downward, and that will
continue. They started at around 70¢/kWh, are
as I write this in Dec. 2015, are expected to go down to 5¢/kWh
by 2023, and should keep going down after that.
That's because the supply of SRECs is going up (as solar becomes
more popular), and demand is going down (as utilities, which are
the buyers of the SRECs, can pay ever-decreasing
penalties in lieu of buying the SRECs).
Why do we have SRECs?
We have SRECs because lawmakers wanted a market-based
way to promote solar energy. Here's how it
works: certain state legislatures told utilities that a
minimum amount of electricity used by their customers has to
come from solar. The utilities have three ways to comply
Install their own solar photovoltaic systems, and/or
Buy SRECs that their customers generate from rooftop
Pay a fine ("ACP") if they didn't do enough of #1 and
#2. The price of these fines is set
to go down year after year, making SRECs less valuable
With or without SRECs, solar PV systems are now cheaper than
grid energy in most cases. See my solar
price calculator for more.