What Are Solar Renewable Energy Credits?
As of 2026, a Solar Renewable Energy Credit (SREC) allows a solar energy system owner to earn a credit for each megawatt-hour of electricity produced by their system.
The Basic Definition
An SREC is a government-issued ‘credit’ for generating solar energy, which can be sold to earn money based on the electricity generated by your solar panels. These credits are also known as ‘solar energy carbon credits,’ function like coupons that solar panel owners can earn and trade from the electricity they produce.
What This Means
This means that after installing solar panels, you can earn and sell solar energy credits to generate extra income. Doing so can help offset the initial costs of installing solar panels and increase the overall economic value and benefits of purchasing them. In some states, utility companies are required to produce electricity using renewable energy sources. Instead of investing in expensive renewable energy infrastructure, these companies can buy Solar Renewable Energy Credits (SRECs) from individuals who have installed solar panels.
How Do Solar Renewable Energy Credits Work?
SRECs provide a win-win situation for both solar panel owners and utility companies, promoting the transition towards a cleaner and more sustainable energy future. Here's how SRECs work:
1. Generation: A solar system produces SRECs at the rate of one SREC per megawatt-hour (MWh) of electricity.
2. Certification and Tracking: SRECs have unique certification numbers, ensuring that the energy produced isn't duplicated or misrepresented. This tracking is managed regionally, promoting transparency and accountability in renewable energy.
3. Market: SRECs are tradable, and their price fluctuates based on availability and demand.
4. Compliance: Utility companies purchase SRECs to meet state-set renewable energy goals. Failing to meet these goals can result in fines, underscoring the importance of SRECs.
How To Generate Residential Energy Credits From Solar Panels
For each 1,000 kWh of electricity your solar panel system generates, it will generate one SREC. According to the experts at Solar United Neighbors, to estimate the number of SRECs your system will produce in a year, you can multiply the size of your system by 1.2.
A step-by-step guide to generating SRECs (Solar Renewable Energy Certificates)
1. Install a Solar System: Before you can generate SRECs, you need to install a solar photovoltaic (PV) system at your home or business.
2. Certify Your Solar System: Register your solar system with the appropriate state regulatory agency to ensure it qualifies to generate SRECs. This often involves verifying that your system meets specific technical and performance standards. However, many solar installation companies will take care of this for you. SREC companies can also do this registration for you. SRECTrade is a well-known company that are experts in managing and transacting environmental incentives.
3. Generate SRECs: SRECs are generated based on the amount of electricity your system produces. In most markets, one SREC is issued for every 1,000 kilowatt-hours (kWh) of electricity produced.
4. Track and manage your SRECs: Once your system produces electricity, SRECs are tracked using state or regional tracking platforms. These platforms verify the production data and issue SRECs accordingly.
5. Sell SRECs: You can sell your SRECs directly on the SREC trade market, through an aggregator, or with a broker. In addition to supply and demand, prices depend on the state’s Alternative Compliance Payment (ACP) rate, a penalty rate utilities must pay if they fail to meet their renewable energy targets.
6. Tax Considerations: The income from SRECs may be taxable, so it is important to know the tax implications in your jurisdiction.
How often are SRECs paid out?
If you install solar panels or other renewable energy technologies, you may be eligible to receive yearly payments for SRECs. The amount you receive depends on the energy your system produces and its size.
How Much Are Renewable Energy Credits Worth?
SRECs are traded on the market like stocks. The value of Solar Renewable Energy Credits (SRECs) depends on several things, like how the government regulates them, and how many people want to buy them. In some places in the US, the market for SRECs is really active, which means investing in solar power can be more financially rewarding.
The availability and specifics of SRECs and related incentives can significantly influence the financial benefits of installing solar. Each state tailors its approach to local energy goals and market conditions.
See below for state-specific information on how homeowners can sell and use SRECs.
Selling Solar Renewable Energy Credits
Each state has a system where solar energy producers can earn SRECs for the electricity they generate, which they can then sell to utility companies. This system encourages the adoption of solar power by providing a financial return on investment beyond the savings on electricity bills.
States with active SREC markets include:
- Ohio
- Illinois
- District of Columbia
- Virginia
- Maryland
- Colorado
The SREC market is open to homeowners via platforms like SRECtrade or local electric utilities. Prices are subject to market conditions and can vary annually based on the state’s renewable energy goals, solar capacity installed, and other regulatory changes. If you are considering investing in solar energy or trading SRECs in these states, monitoring the current market conditions and state-specific regulations is advisable.
You can see below how the SREC programs differ by state.
Illinois SRECs
The Illinois SREC credit has evolved with recent legislative changes, transitioning to a newer system under the Illinois Shines program, which is part of the Adjustable Block Program (ABP).
- Program Name: Illinois Shines (Adjustable Block Program)
Illinois SREC PricesIllinois does not use the traditional SREC market anymore. Instead, it offers up-front, lump-sum payments for the estimated production of solar energy over a 15-year period. This payment is determined by the capacity of your solar system and the REC prices set by the Illinois Power Agency (IPA).
How much are SRECs in Illinois?
Under the Illinois Shines program, payments are made to solar system owners based on the expected output of the system. The prices for these SRECs were set during the program's inception and are subject to adjustments based on program demand and funding. The program aims to encourage solar development while providing a stable and predictable incentive structure for solar investments.
The program has different pricing blocks, which adjust as capacity goals within each block are met. This typically results in a lower payment rate for later applicants as more solar capacity is installed. It’s essential for participants to apply early in the program phases to maximize their incentive potential.
This forward-looking approach contrasts with traditional SREC markets, offering a more predictable return on investment for solar system owners in Illinois.
Ohio SREC
Ohio has an active SREC market driven by the state’s Renewable Portfolio Standard (RPS), which requires that 8.5% of electricity be generated by renewables by 2026. The state also implements a Solar Alternative Compliance Payment (SACP) system, where utilities must buy SRECs or pay a compliance payment if they fall short of the RPS goals.
- Program Name: Ohio's Renewable Portfolio Standard
Ohio SREC Prices
Ohio’s SREC prices have been relatively low compared to other states, generally ranging around $3.50 to $4 per MWh.
District of Columbia (D.C.) SREC
D.C. has one of the most robust SREC markets in the United States. The CleanEnergy DC Omnibus Amendment Act of 2018 significantly strengthened this market by increasing the District’s renewable energy mandate to 100% by 2032 and expanding the solar mandate from 5% to 10% by 2041.
- Program Name: Washington DC Renewable Portfolio Standard
D.C. SREC Prices
Washington DC has one of the most lucrative SREC markets, with prices ranging significantly, often $440 per MWh due to high RPS requirements and limited geographic area for solar installations.
Maryland SREC
- Program Name: Maryland's Renewable Energy Portfolio Standard (RPS)
Maryland SREC Prices
As of the latest data, prices are listed at approximately $55 for 2024 per megawatt-hour (MWh), though this can fluctuate based on supply and demand dynamics in the market.
Virginia SREC
Virginia's SREC market is relatively new, established under the Virginia Clean Economy Act.
- Program Name: Virginia's Voluntary Renewable Energy Portfolio Standard Program
Virginia SREC Prices
Virginia’s market is less active compared to others, with prices typically listed around $45 per MWh, as of 2024. Virginia also has specific solar carve-outs which can influence SREC prices periodically.
Colorado SREC
With the Colorado Portfolio Standard, Colorado became the first U.S. state to establish renewable portfolio standards (RPS).
Program Name: In Colorado, Xcel Energy’s Solar*Rewards program incentivises participants to transfer their RECs to Xcel Energy.
Colorado SREC Prices
According to recent data, the price per kilowatt-hour (kWh) generated by small systems (up to 25 kW) varies depending on the program capacity and market conditions. The most current pricing can be obtained by reading the program’s latest updates.
Consult with a solar energy expert who understands the local SREC market dynamics for detailed guidance tailored to your specific state and situation.
Florida SREC
Florida does not have its own SREC market at this time. However, solar owners in Florida may qualify to participate in the North Carolina SREC market. For more details, visit the SRECTrade website here: SRECTrade Website