SREC (Solar Renewable Energy Certificate)
A tradeable certificate representing 1 MWh of solar electricity generated — homeowners in eligible states can sell SRECs for significant additional income.
Solar Renewable Energy Certificates (SRECs) are market-based incentives operating in states with Renewable Portfolio Standards (RPS) that specifically require utilities to source a portion of electricity from solar. Each SREC represents proof that 1 megawatt-hour (1,000 kWh) of electricity was generated by a solar system.
Utilities that fail to meet their solar quota must purchase SRECs or pay a penalty (Solar Alternative Compliance Payment, or SACP). Homeowners sell SRECs through brokers or exchanges. SREC prices vary dramatically by state and market conditions: New Jersey SRECs have traded between $200 and $350; Massachusetts SRECs (called ADAders under SMART program) often pay $200–$400. A 10 kW system producing 12 MWh/year in a $200 SREC market generates $2,400/year in SREC income — often doubling the financial return.
SREC programs exist in New Jersey, Massachusetts, Maryland, Ohio, Pennsylvania, Washington D.C., and several other states. SREC value is separate from net metering credits — both can be earned simultaneously on the same system.
Real-World Example
The New Jersey homeowner's 8 kW system generated 9.6 SRECs annually; selling them at $210 each generated $2,016/year in additional income on top of $1,344 in net metering bill savings.