How Do SRECs Work? by sadmin

Posted on Friday, February 4th, 2011

You may have heard about these things called “solar renewable energy credits” — or SRECs, for short. In states like New Jersey, Pennsylvania, Massachusetts, Maryland and a few others, homeowners and businesses who install solar panels get to sell the SRECs associated with the clean energy they produce.

Here’s more info from the New Jersey Clean Energy Program:

Each time a system generates 1,000 kWh of electricity, an SREC is earned and placed in the customer’s electronic account.  SRECs can then be sold on the SREC tracking system, providing revenue for the first 15 years of the system’s life.

Electricity suppliers, the primary purchasers of SRECs, are required to pay a Solar Alternative Compliance Payment (SACP) if they do not meet the requirements of New Jersey’s Solar RPS.  One way they can meet their RPS is by purchasing SRECs. As SRECs are traded in a competitive market, the price may vary significantly. The actual price of an SREC during a trading period can and will fluctuate depending on supply and demand.

In New Jersey, the SREC trading price (monthly weighted average) has been about $600 per SREC. At that price, a 7-kilowatt (kW) solar home energy system could reasonably generate around $4,800 in income over the course of the year. While the installation cost of a solar energy system can be significant, incentive programs like SRECs help buyers recoup their initial outlay in a shorter period of time.

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