Solar Renewable Energy Certificates, also known as SRECs, are certificates that are specifically generated for every megawatt-hour (MWh) of electricity produced by your solar energy systems. A renewable energy certificate (REC) is used in the market to represent the rights of renewable electricity generation, including environmental, social, and other non-power attributes.

Homeowners and businesses who have solar systems in states with SREC markets can decrease their electricity costs by selling the SRECs linked to their systems’ output in the SREC market. These SRECs will then be used by utilities, ultimately benefiting everyone involved. However, in doing so, homeowners and businesses limit themselves from making claims regarding the utilization of solar power or reducing their carbon footprint.

Characteristics of SREC are:

  • 1 SREC = 1 MWh of solar electricity
  • A 10 kW facility generates around 12 SRECs annually
  • Facilities must be certified by a state to sell SRECs
  • SRECs are sold separately from the electricity
  • Value is determined by market supply and demand mechanics

Solar Renewable Energy Certificates Market

Numerous states have established SREC markets in order to stimulate the growth of solar energy. These markets mandate that electricity suppliers acquire SRECs from local solar systems as a part of their commitment to the state’s Renewable Portfolio Standard (RPS). Moreover, the requirement to include solar resources in meeting a part of the renewable portfolio standard is commonly known as a solar carve-out. By acquiring SRECs, electricity providers guarantee that their services comply with the required volume of solar energy set by the RPS.

The value of an SREC in these states depends on supply and demand. Electricity suppliers need to meet their solar RPS requirement or pay a compliance premium, which drives the demand. If any supplier falls short of the requirement they must pay a fine or a solar alternative compliance payment (SACP). This payment serves as a cap on the market.

Also See: What is Small-scale Technology Certificate (STC)?


Elliot is a passionate environmentalist and blogger who has dedicated his life to spreading awareness about conservation, green energy, and renewable energy. With a background in environmental science, he has a deep understanding of the issues facing our planet and is committed to educating others on how they can make a difference.

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