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Solar Renewable Energy Credits (SRECs) Explained

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. 

The team over at 1bog created this video that explains SRECs and how they can yield financial benefits to owners of solar panels.

Last modified: February 17, 2017

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Another post about New Jersey Solar and SRECs in general (and TRECs)

Solar TRECs

As I’ve posted before, the economics for solar in New Jersey are crazy. With relatively pricey power costs, a good state rebate, and the Federal tax credit, solar makes strong financial sense in New Jersey by itself, even without the SRECs. But the SRECs and TRECs take everything to a new level. They help get solar to where it should be by making the financial benefit so strong you can’t overlook it.

What’s an SREC?

SREC stands for “Solar Renewable Energy Credit”. Think of an SREC as a coupon. Every time your solar power system finishes generating one megawatt of power, it spits out one of these coupons. If you have a nicely oriented, non-shady roof and 5kW of solar panels up top, you’ll generate about 7 of these SRECs a year. You can then redeem each coupon for cash at whatever it happens to be worth at the time. Now, here’s the tricky part… what it’s worth at the time… is weird… and how you “redeem” it… is weird.

What’s a T-REC?

TRECs are simply SRECs with a different letter in the front to confuse you. All that’s different is that the ‘T’ stands for “tradable”. This potentially means money for homeowners who start trading the RECs their systems produce. Eventually, even California will have TRECs.

What’s an SREC worth?

Short answer: Depends what state you’re in but in NJ, about $700. If the New Jersey utilities don’t meet certain renewable standards, they are penalized. Therefore, they gladly buy SRECs at any rate under what they would be penalized for (surprise, the penalty is about 700 bucks). In 13 other states, the worth of SRECs are all over the map. The good news is, if you own a solar system outright, you are already generating SRECs (woot.). They may have a shelf life (and so you may not be able to monetize all the ones you’ve created), but once they are available to trade in your area, you can reap some cash.

How do I get money from my SRECs?

Two options.

  • Option 1: Trade them on the open market (which may or may not be possible).
  • Option 2: Sell them to an aggregator.

Option 1: Register your solar system with WREGIS-Western Renewable Energy Generation Information System, and then trade them yourself on the open market. Online marketplaces will become more and more prevalent and there are a few that exist already. I hesitate to link to these because I am not sure which ones are the best to use. I’ve been getting into this more lately and will have better input to update this post. But for now it’s a considerable amount of work and option two is what most people opt for.

Option 2: There are companies that make a business trading these and there will be more coming. They will pay you cash for SRECs under a contract, where they basically purchase all the SRECs that your solar system will generate for a number of years. I’ve seen 1-year, 5-year, 7-year, and more contracts for this. SRECs only have a current day value, so the aggregator is making a guess as to what they will be worth. If it’s a 1-year contract, you can probably nail down the spread they are taking (difference between what you could get trading it yourself and what they will pay you for it) and… it’s probably worth it. In multi-year contracts there is more speculation about their future value, so it’s really impossible to say what’s a better deal, it’s just about risk. You’d be paying them for not having to take the risk on what they are worth in the future.

Last modified: June 4, 2018

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Profit from your roof space: find local deals on solar, eliminate your power bill, and join the solar revolution.

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RECs & SRECs & Green Tags, Oh My!


Today, I’m going to attempt to explain “REC” “SREC” aka “Green Tags.” I say try because these can be really, really…really complicated. They’re also worth money, so again, I’ll try, but the truth is that these things are variable in every State.

First the simple: What do all of those letters mean?

  • “REC” “SREC” and Green Tags are all different short handed names for the same thing.
  • REC stands for Renewable Energy Certificate. Sometimes the “C” stands for Credit.
  • SREC (Sometimes spelled S-REC) stands for Solar Renewable Energy “Certificates” or “Credits.” As for Green Tags, I have no idea where that nickname comes from, but it’s the same thing as the others.
  • RECs, SRECs Green Tags or whatever you want to call them can be derived from other kinds of renewable energy, such as wind. So they don’t just count for solar, but that depends on your state. For sake of simplicity, I’m going to call them SRECs, and the “C” will stand for “Credit.”

What kind of “credits” are we talking about, Solar Fred?

  • I’ll tell you one thing. It’s not a “carbon credit.” That’s something entirely different. Don’t get me started on carbon credits. Dogs will howl if I get started on those things. Let’s stick with SRECs.
  • It’s not a Feed-in-Tariff (FiT), either.
  • SRECs are in fact a “credit” for the amount of clean solar energy that your solar panels produce. Dirty utilities in some states need a certain amount of these credits in order to comply with the State’s Renewable Portfolio Standards (RPS).
  • How do utilities get these credits? Generally, two ways: They either build solar or wind farms and/or they pay you for the clean power your solar panels produce.
  • And how much cash is that credit worth?
  • That answer is complicated, but let me keep it simple: It depends.
  • Currently, it depends largely on your state, sometimes your utility, the laws that have been passed in regards to the RPS, and how much the SREC is worth on your local SREC market. The SREC market is similar to a stock market…in some states. Supply and demand determine the price.
  • This means that 1 SREC in Connecticut will not be the same price as an SREC in New Jersey, and visa versa. In fact, depending on the State and market, that SREC could be worth, say, $50 one month or $200 another month–in the same state. Again, think Wall Street.
  • Other things to keep in mind if you still have a mind and reading this:
  • Your solar or wind system must be tied to grid to get SRECs. This is not a program for off-grid homesteaders.
  • Now it gets really complicated, because every state is different. With some states, utilities have their own special SREC programs. Some states allow you to sell your SRECs directly to the market. Some utilities will give you a lower upfront State solar rebate if you decide to keep your SRECs instead of selling them to the utility at a set price for a certain time period. Entire states, like New Jersey, let you to keep your SRECs and let you sell them at a scheduled SREC auction…or to a middleman who does this for you. Some SRECs are guaranteed a steady per kilowatt rate that your panels produce for a certain amount of time, say a 3 year period. The exceptions and variables are numerous. But wait, it gets worse!

When you sell your SRECs, you are selling the “environmental benefit” of your solar panels to someone else, like the utility, who by law needs clean power. Think Vampire. You’re selling the “green soul” of your solar panels. Your panels become the Solar Undead.What does this mean in practical terms?

  • In effect, it means that you personally can no longer claim to have green power on your roof. Yes, I know that the panels are clearly on your roof, but as far as the law is concerned, you as a home owner (or a business owner) cannot advertise or claim to produce clean green solar power energy. You’ve sold that right when you sold your SRECs.
  • You think I’m lying or purposely trying to confuse you, but it’s all true! And because I’m writing generally across these 50 United States, I can’t be specific.
  • The good news is that I will eventually get to robust SREC States like New Jersey and Connecticut and try to break these programs down for you.
  • In the meantime, you can also check your utility’s website, your State’s website, or, a database of solar incentives across the 50 states.
  • Of course, you can also easily get this info from a local installer by getting a free quote.  They might even be able to explain it better than I can, ’cause, you know, they live in the state and should know.
  • That’s enough for now. Stick the fork in. Solar Fred is done.

Last modified: January 15, 2019

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