SREC Solar: What They Are and How They Work

1. SREC Solar: What They Are and How They Work Have you ever considered earning money from your solar panels besides lowering your electricity bills? If you live in a state with an SREC solar market, you may be able to earn income by selling solar renewable energy certificates, or SRECs. Are you curious about SRECs, renewable energy credits and how they function? In this article, we will go over all the details concerning SRECs, including their description, generation process, trading procedures, and possible earnings. 1. What is an SREC? SREC, or Solar Renewable Energy Certificate, is a financial mechanism that indicates the positive impact of producing solar power. Your solar system generates one SREC solar for every 1,000 kilowatt-hours (kWh) of electricity. For example, if your solar system produces 5,000 kWh of electricity each year, you will receive five SRECs. You should understand that your solar panels produce electricity and SRECs separately. This means you can use all of the solar panel electricity you generate while still collecting SRECs. You can also sell your SRECs to utilities or other buyers who need to meet their renewable energy obligations. 2. What's the difference between SRECs and RECs? SRECs and RECs are certificates that show the positive impact of generating renewable electricity. However, there are significant differences between the two.

2. •SREC solar is only connected to solar energy, whereas RECs can come from a variety of renewable sources, including wind, hydro, biomass, and others. •SRECs are only available in states that have adopted a solar carve-out policy. This policy includes a specific requirement for solar energy in the Renewable Portfolio Standards (RPS). •On the other hand, RECs are accessible in any state with an RPS, which requires utilities to generate a particular percentage of their electricity from renewable sources. •SRECs are usually more valuable than RECs because solar panel energy is more expensive and less abundant than other renewable sources. The price of SRECs depends on the supply and demand of the market as well as state regulations. RECs have a lower and more stable price because they are more widely available and less regulated. To recap, SRECs and RECs are both methods to promote renewable energy and reduce your environmental effect; but, SRECs are more specialized, limited, and profitable than RECs. 3. What is the purpose of SRECs? SRECs are in existence to help utilities fulfil their renewable portfolio standards (RPS), which are state regulations mandating utilities to generate a specific portion of their electricity from renewable sources. Over 30 states have implemented renewable portfolio standards. Apart from generating renewable energy themselves, utilities have the option to purchase renewable energy certificates (RECs) to meet these standards and avoid penalties. SREC solar is a type of REC that utilities can purchase to comply with their state's renewable portfolio standards. This is important because only a few states require a certain portion of renewable energy to come specifically from solar power, which is known as solar carve-outs. 4. In which states the SRECS solar are available? Not all states have a renewable portfolio mandate, and those that do may not include a solar carve-out. The following states have active SREC markets: Here's a table displaying the key features of SREC programs across different states. The data is sourced from DSIRE and World Population Review. The table consists of the following columns:

3. •State: The name of the state with an SREC market. •RPS Target: The required percentage of electricity sales from renewable sources by a specific year, as per the state's Renewable Portfolio Standard (RPS). •Solar Carve-Out: The mandated percentage of electricity sales from solar sources by a certain year, as part of the RPS criteria. •SACP: The Solar Alternative Compliance Payment, which is the penalty that electricity suppliers must pay per megawatt-hour (MWh) if they fail to meet their solar RPS obligation. •SREC Price: The average price of an SREC in the state market, as of February 2024. •SREC Lifetime: The duration for which an SREC can be utilized for compliance after its generation. Let me break down the information about the table in simpler terms: Think of it like this: if the RPS target and solar carve-out are higher in a state, there will be a greater demand for SRECs. This increased demand leads to a higher price for SRECs. Similarly, if the SACP (solar alternative compliance payment) is higher, electricity suppliers are more likely to buy SRECs instead of paying the penalty. This also drives up the price of SRECs. Furthermore, if the SREC lifetime is longer, SREC owners have more flexibility to sell their SRECs when the price is favourable. This increases the potential value of the SRECs. 5. How can your SRECs be sold? Selling your SRECs can be an easy process, but it will differ depending on where you live and the specific protocols in place in your state. Here are the main steps you can take, but be sure to conduct some research particular to your location to ensure you're following the right process. A. Register for your state's SREC program. Once your PV solar system is installed in your home, you must register with your state's SREC tracking system. The specific system used will vary by state, so consult the Database of State Incentives for Renewables and Efficiency or conduct an online search for details on your state's program.

4. Make sure you only register on official.gov websites. In certain situations, your solar installation company can handle the registration for you. B. Generate solar power from your home After registering, you'll need to wait until your solar power system has generated at least one SREC. This typically takes around two to three months for a standard system. C. Find a buyer for your SREC: This stage can be extremely involved, depending on your current status. Homeowners in SREC states typically locate brokers or collectors online to assist them sell their SRECs. Some well-known choices include SREC Trade, Sol Systems and many more. You can also register to sell your credits by posting on the GATS (Generation Attribute Tracking System) bulletin in the majority of SREC states. This bulletin might also help you understand the supply and demand in your area. D. Negotiate a selling price. After locating a buyer, you may need to negotiate a price based on supply and demand. Brokers can help you determine the highest fair market price to ask for. E. Complete the transaction: To complete the transaction, you will need to use your state's SREC transfer program. Whether you engage with a broker or a platform that handles SREC transactions, the process should be rather straightforward. There isn't a perfect time to sell SRECs since prices fluctuate regularly. Demand is usually highest in April and May when companies need to show they have met the RPS goals during the late spring or early summer compliance periods in most states. It is best to track SREC solar values throughout the year and sell when the price is at its highest. Ideally, seek to sell when the price is near to the ACP, though timing the selling can be difficult. Remember to sell your SRECs before they expire, even if it means offering a reduced price. Conclusion:

5. To summarize, SREC solar allows solar panel owners to make money by selling certificates for their solar energy production. Understanding the market and specifics of SRECs allows homeowners to optimize their financial returns while also promoting renewable energy. SRECs are worth more than standard RECs, particularly in jurisdictions with solar requirements. Want to save money and the environment with solar? Find out more about our residential solar services here. Alternatively, use our solar estimate tool to receive a quote in minutes.