Solar Renewable Energy Credits, or SRECs, are a type of solar incentive that help speed up the return on your solar investment. SRECs aren’t available in every state, but where they are, they’re a valuable source of extra income in addition to your monthly savings on your utility bill.
The way they work is pretty simple. For each 1,000 kilowatt-hours (kWh) of electricity your solar energy system produces, a renewable energy certificate is created. An average residential solar installation at Ipsun is about 10kW, so with a system of that size, you could generate roughly 12,000 kWh/year and create on average one SREC per month. Click here for more about how you can calculate your average SREC production rate.
Selling your SRECs is easy and profitable
SRECs are traded on an open market like commodities, so the values can fluctuate and will also differ from state to state. As soon as your system becomes operational you can begin accruing SRECs, but you must register with a broker who will help you with your transactions. It’s easier than it sounds, and we’re happy to help you get set up with our preferred broker, Sol Systems, as soon as your system is turned on. You can read all about the registration process here.
Generally, when your system generates a full SREC, that becomes available to trade the following month. If your system generates one credit per month, you will receive a monthly payment. Smaller, sub-10kW systems will probably generate fewer SRECs, so payments may not be as frequent. Newly issued SRECs become available for transacting on the 1st of each month.
Why are SRECs made available?
Many states have a Renewable Portfolio Standard (RPS) as part of their effort to mitigate climate change. An RPS requires the state to add a certain amount of renewable energy to the current “brown power” (usually a mix of coal, natural gas and nuclear) that’s available to utility customers on the electric grid.
If the RPS also has a “solar-carveout,” then a certain amount of the mandatory renewable energy must come from residential and small commercial solar owners. If the utility does not meet the standard set for renewable energy at a given time, they will have to pay a fine. To avoid this, utilities will instead purchase credits toward their requirement from individual solar owners in the form of SRECs. It’s a pretty clever way to incentivize individuals and small businesses to go solar and creates a win-win situation that helps renewable energy grow.
State payment amounts vary based on solar energy supply and RPS standards
Payment amounts vary in each state. Right now in DC, SRECs are trading for a whopping $435 each. This is due to the District’s aggressive renewable energy goals coupled with low solar supply. This creates a great incentive to go solar in DC.
In Maryland, SRECs are trading at a much more moderate, and typical, level. Current SREC prices are around $78, which is still a great payout especially when coupled with the savings realized on your utility bill.
Virginia’s SREC market is just getting started. On July 1st, 2020, the Virginia Clean Economy Act created the VA SREC market, but the program took quite a while to roll out. We’re so pleased that it is finally up and running, and we are now registering all our Virginia Dominion Energy customers for VA SRECs. They are currently valued at about $50, but are expected to fluctuate between $30-$60 over the near future. You can read more about how we’re registering our customers and what to expect from the VA market here.
Please reach out to us to talk about SRECs or any other incentives that may be available in your state or locality. We’d love to help you get an understanding of the various incentives that can help you go solar! Give us a call at (703) 249-6594 or click below to get in touch!