What are Solar Renewable Energy Certificates (SRECs)?

Homeowners who produce solar energy on their property can generate solar renewable energy certificates (often called SRECs or RECs) based on the amount of clean energy their solar panels generate. These SRECs can then be sold to companies or utilities looking to offset their own carbon emissions or to meet renewable energy targets. 

SREC marketplaces don’t exist everywhere, but are often available in states that have renewable portfolio standards (RPS).  While these programs vary widely in their implementation, the majority of states have some type of renewable portfolio standards and goals. 

To learn more about SREC basics, tune into this quick excerpt from Ian Ayers, VP of Aggregation at Sun Tribe Trading, an SREC aggregator based in Virginia, from the new Customer Contracts & Agreements course.

The SRECs are themselves like digital certificates, meaning certificates that are made on a computer that prove that a solar system made energy. 

So specifically one SREC, which means solar renewable energy certificate, mints when a system produces one megawatt hour (MWh) of energy or a thousand kilowatt hours (kWh) of energy. And so these SRECs have a create date. They’re minted – think of like a coin. It’s created on a certain date and it proves that system made a megawatt hour in that month or in that year. 

These certificates are created on registries, like tracking registries, who are responsible for minting these and doing the official accounting for their existence. An owner of a solar system – a residential solar system – anybody can register with one of these tracking systems that mint these SRECs and get an account and feed the tracking system the information it needs – namely, how much energy is being made each month. 

The tracking system will do the work of minting these SRECs once every one megawatt hour is reported.  And so an SREC, once it’s made, so then what? 

The SREC, so it’s essentially held by the owner, whoever has the rights, the title to having minted that SREC,  until it’s transferred  to another owner and eventually retired. So the lifecycle of our SREC, as it’s minted, it’s held, it might be moved around to a different entity, and then it’s retired by its final holder. 

The entity that retires that renewable energy certificate gets to count it or apply it towards some goal or make a renewable claim against that goal. 

Sometimes, it’s a state that’s made a law that says the state utilities need to procure so many SRECs to substantiate their progress toward a goal. If we didn’t have SRECs, there’d be no way to have an exacting measure of how much renewable energy is made at a particular time or place for a certified generator. So once an SREC is retired, it’s out of circulation and the process goes on.

So, that’s the technical answer, but to a lot of people they are just an incentive, a way to get paid for going solar.

If you’d like to learn more about SRECs, consider enrolling in the Customer Contracts & Agreements course.