What Is an SREC? Solar Renewable Energy Credits Explained
SRECs can be a source of income for homeowners with solar panels in certain states.
With so many incentives available for solar panels, keeping track of them all can feel complicated. From tax incentives to net metering, there’s a variety of policies that solar owners can take advantage of. One of the least understood, but potentially lucrative, ones are Solar Renewable Energy Certificates, or SRECS.
SRECS (pronounced “s-recs”) allow homeowners to earn credits for the solar energy they’re producing. The homeowner can then trade those credits to utility companies on a SREC market to earn extra income. (It sounds complicated, but it is all automated; you don’t actually have to go to a market and make trades.) SRECs are only available in states with Renewable Portfolio Standards (RPS), and payouts can differ by state and SREC market. An expert solar installer can help you learn more about the SREC options in your area, and how they affect your solar investment.
Here’s everything you need to know about how SRECs work, which states have them, and how SREC markets can fluctuate, which can affect how much you can earn from your SRECs.
In this article:
- What is an SREC?
- How do SRECS work?
- The role of SRECS in Renewable Portfolio Standards (RPS)
- SREC markets and how much you can earn
- How to participate in SREC programs
- Estimating how many SRECs your system will produce
- How to sell your SRECs
- Conclusion
- Frequently asked questions
What is an SREC?
Extra income sounds great, but what are SRECs, exactly? SRECs are financial incentives that let you earn credits for the total amount of solar energy you’ve produced.
To answer your first question: No you don’t get an actual certificate you can hang on your wall. Each “certificate” just represents 1 mega-watt-hour (MWh) of solar energy that you’ve generated. When utilities buy SRECs to meet their renewable energy requirements, you can earn cash income from the energy generated by your solar panels. The more solar energy you produce, the more SRECs you can get.
Only certain states use SRECs. So, we’ll cover which states have SREC markets and where being adjacent to a market allows you to participate in SRECs below.
What’s the difference between SRECs and RECs?
SRECs are a type of Renewable Energy Certificate (REC), which is a market tool for trading and tracking renewable energy generation that goes onto the grid. Energy on the grid doesn’t all come from one source, and RECs let energy purchasers track where renewable energy came from and how it was produced.
As we said above, one REC represents 1 MWh of electricity from a renewable energy source from a specific property, such as a wind farm or hydroelectric plant. SRECs are set up the same way, 1 MWh equals one credit, but they’re specific to solar energy.
So, while all SRECs are RECs, all RECs are not SRECs, because RECs can represent energy produced via other renewables, such as wind or hydro.
What’s the difference between SRECs and RECs?
| REC | SREC | |
|---|---|---|
| Energy source | Any renewable source (wind, solar, hydro, etc.) | Solar only |
| Geographic scope | National, tradeable across most state lines | Tied to specific state or regional markets |
| Who can earn it | Any renewable energy generator | Homeowners and businesses with certified solar systems |
| Tracking system | Varies by region (e.g., NAR, WREGIS) | Regional systems like PJM-GATS, NEPOOL-GIS |
How do SRECS work?
We know your solar array can earn you one credit for every 1,000 kWh (1 MWh) of solar electricity it produces. So, for example, if your home solar system produces 7 MWh of energy a year, you’ll earn 7 SREC credits.
Credits are bought and sold on SREC markets monthly, quarterly, or annually. Every state is different, and how often you’re paid for your credits differs, too.
Before you can earn those SREC credits, your home system must be certified and registered with the regional authority.
Certification and tracking
Some installation companies will register your system with the appropriate agency for you, or you can work with a SREC broker, aggregator, or other exchange program. These services handle the trading aspect of your SRECs for a fee. Some aggregators will also manage your system’s certification as part of their services. Some SREC companies include:
SREC markets are similar to other regulated commodities markets in the United States: Registries and tracking systems play an important role in SREC markets, maintaining the integrity and effectiveness of trading renewable energy credits.
Depending on where you live, you might be certifying and registering your system with a broker, exchange or aggregator, or with a regional entity. For example, PJM-GATS is the Generation Attribute Tracking System (GATS) that manages trading of RECs in the Pennsylvania, New Jersey, and Maryland (PJM) region. The New England Power Pool Generation Information System, NEPOOL-GIS tracks and certifies RECs in New England. These centralized systems handle tracking and maintain certification for SRECs for the interconnected grid in your region, not just your state.
Because of these regional systems and interconnects, you might still be able to trade SRECs in an adjacent state even if your state doesn’t have a SREC market.
The role of SRECS in Renewable Portfolio Standards (RPS)
Why do utilities want to buy SRECs in the first place? Utility companies that operate in states with Renewable Portfolio Standards often need them to meet state policies.
Renewable Portfolio Standards (RPS) are goals or requirements for energy producers to provide a certain percentage of electricity to customers from renewable energy sources, including solar. Buying SRECs lets utilities meet the RPS percentage without actually producing clean energy themselves.
Solar carve-outs
Within their RPS, some states have policies that require utilities to use solar energy specifically, which is sometimes referred to as a solar carve-out
These states often mandate a SREC market as part of their RPS. By requiring utility companies to buy solar-generated electricity on the SREC market, these states also create an incentive for homeowners and businesses to install solar and earn income by selling SRECs.
In some states with RPS, solar-generated electricity is already abundant and affordable. Where the energy market is already favorable for solar, SREC markets aren’t needed to help utilities meet their obligations for renewable energy.
Compliance mechanism
Let’s say a utility company is in the process of winding down an old coal power plant and building out new utility-scale solar projects. These are big projects, and the schedules don’t always match the state’s RPS annual schedule for providing renewable energy. In the meantime, utilities can buy SRECs on the state marketplace to meet their RPS obligations — and avoid steep fees for being out of compliance with the RPS.
This is why you can’t sell SREC credits without first having your system certified and registered: The credits are an important element of this larger regulatory system.
SREC markets and how much you can earn
SREC markets are highly variable, but depending on where you live, you could be eligible to earn hundreds or even thousands of dollars in SREC credits from your solar array. In spring of 2025, for example, the lowest price was in Ohio, where SRECs were priced at $2.50. D.C. had the highest price at $415.
In some states, you could get a monthly direct deposit from your SRECs. Others pay for the entire year in a lump sum. Either way, SRECs are a factor worth considering in the total financial picture of a home solar energy system.
State-by-state program overview
| State | Program | Current price | Status |
|---|---|---|---|
| Delaware | RPS solar carve-out | $150/MWh SACP ceiling (statutory max; market trades below this) | 10% solar carve-out within a 40% RPS by 2035 |
| Washington, DC | RPS solar carve-out (SREC-I) | ~$360/MWh market price (2026 vintage); $460/MWh compliance-fee ceiling | Highest SREC values in the country; 4.30% solar carve-out for CY2025 |
| Illinois | Illinois Shines (Adjustable Block Program) | $60.90/REC for 0–10kW systems (Group A, PY2025–26, down from $73.71) | Not a traditional SREC market — IPA-administered, prices reset annually |
| Maryland | RPS solar carve-out (Tier 1) | $50/SREC SACP ceiling (2024 compliance year) | Carve-out ramps on a statutory schedule; Brighter Tomorrow Act adds a multiplier for some residential systems |
| Massachusetts | SMART 3.0 (replaced SREC program in 2018) |
Sources: Delaware DNREC / 26 Del. C. §358; DC Public Service Commission RPS Report to Council; Illinois Power Agency; Maryland Energy Administration; Massachusetts DOER / MassCEC; New Jersey Board of Public Utilities; PUCO / Ohio Legislative Service Commission; Pennsylvania PUC (Alternative Energy Credit Pricing report, updated 9/16/2025). Again, these can change rapidly!
State-by-state program overview
As of 2026, states where solar RECs are monetized for residential PV systems include: Delaware, District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, Ohio, and Pennsylvania. However, Massachusetts and New Jersey are now under SMART and SuSI (ADI/SREC-II), and Illinois pays fixed REC prices via Illinois Shines, not a spot SREC market.
Also, in some areas of Indiana, Kentucky, Michigan, and West Virginia, residents can participate in Ohio’s SREC market (with the usual disclaimer that it’s subject to registry rules and ongoing eligibility updates).
California has a market for trading credits, including solar, called the Tradable Renewable Energy Credit (TREC) market. Solar credits can be traded on TREC, but the market isn’t specifically set up for SRECs alone.
Virginia has a mandatory RPS under the VCEA, and solar RECs (often referred to as SRECs) are monetized via utility compliance, though rules differ from PJM states with classic ‘SREC spot’ markets.
As always, these can change quickly, please contact a local installer to see what’s available right now.
Program variations
With the energy market in flux and new clean energy projects coming onto grids at a rapid pace, some older SREC programs are evolving.
For example, in Massachusetts, the SREC market is still active, but homeowners with new solar arrays haven’t been able to join the SREC program since 2018. (Homeowners who joined the program previously can still sell their credits on the market.) The state has transitioned to the Solar Massachusetts Renewable Target (SMART) program, which instead offers solar incentives to homeowners from the utility company based on how much solar energy you produce.
Another example is New Jersey’s legacy SREC, which recently closed. The state now uses the SuSI program, you can find more information here.
As you can see, the details around SRECs can change frequently, so it’s important to talk to your solar installer to make sure you have the most up-to-date information.
Market prices and variability
SREC prices vary dramatically from state to state. For example, recent SREC prices in Ohio have been under $3. By comparison, SREC prices in the District of Columbia are above $400 per credit, making D.C.’s incentive one of the best in the country.
Like any traded commodity, SREC prices are subject to market demands. As more clean energy comes onto the grid, the price of SREC credits is dropping in some states. Demand is lower where utilities can more easily meet Renewable Portfolio Standards (RPS). (Many states that have an RPS in place don’t have a SREC market because electricity from solar is already abundant and cheap.)
In addition to supply and demand, Alternative Compliance Payments, or ACPs, can also play a role in SREC pricing. If a utility can’t meet the requirements of the state’s Renewable Portfolio Standard, it could opt to pay ACPs instead. ACPs serve as a cap on SRECs, because utility companies will choose to pay whichever is cheaper. If a state’s ACP is set at a low price, SRECs will get priced even lower.
How to participate in SREC programs
Eligibility for SRECs varies by state. When you check your local SREC program, make sure your system is meeting any size, location, metering, and connection requirements for your state. Your solar installer will be able to provide this information, also.
For example, D.C. doesn’t allow systems larger than 5 MW, and systems larger than 10 KW must have a revenue-grade generation meter. Pennsylvania’s SREC program has no size limitations. Neither does Delaware, but systems must be connected to the state distribution system to qualify.
Estimating how many SRECs your system will produce
How do you calculate how many SRECs your solar system might generate? It all comes down to how much your system produces. An expert solar installer can model a solar system for you and show you how much electricity you can expect it to produce over a typical year.
Learn more about your home’s potential solar production, and your potential savings, with just your ZIP code.
Factors influencing earnings
Your earnings from SRECs can vary quite a bit. In addition to shifts due to supply and demand, ACPs, and your individual state’s SREC pricing, your system size and location can also affect your SREC income. In northern climates, the sun is at a lower angle in the winter months, which can reduce the efficiency of your system. Having fewer daylight hours in winter contributes to this efficiency loss. If your system is producing fewer KWh in the winter, you’ll also earn fewer SREC credits.
Tax implications
Income from SRECs will likely be taxable, but it is a complex issue that lacks clear IRS documentation. Remember: SRECs are basically traded commodities. Most SREC aggregators and brokers will send you a 1099-MISC form with your SREC earnings each year. However, it’s best to consult with your tax professional about the possible implications for your individual situation.
How to sell your SRECS
Selling your SRECs isn’t difficult once you’ve set everything up. Your system needs to be certified and registered, and if you’ve worked with a broker or aggregator to complete those first steps, there won’t be much more for you to do. The aggregator or brokerage company purchases the SRECS and sells them to the utility company for a small fee. If you’re selling your own SRECs, you’ll have to pay attention to your market and deadlines to sell your credits.
Step 1 – Register your system
Registration and certification of your home solar system for SRECs must be done with the local authority before you can begin earning SREC credits. If your installer doesn’t handle certification, you may consult with a SREC aggregator for certifications and registration of your system.
Step 2 – Sales options: pre-sell contracts vs. spot market vs. lump-sum
You may come across several options for selling the SRECs you’ve earned if you use a broker.
Pre-sell contracts let homeowners enter into a contract to sell their SRECs at a fixed price, sometimes over an extended period of time. Some pre-sell contracts can extend 15 years into the future. Pre-sell contracts guarantee a price to the homeowner, creating a fixed amount of income despite fluctuations in the SREC market. However, the pre-sell price could be lower than what the current market is paying.
Selling SRECs on the spot market offers no guarantees on price or income. Sales are based on the going rate for SRECs, which could be high or low.
Lump-sum offers pay out a sum based on the projection of how much your SREC credits will be worth over an extended period. Illinois’ SREC program pays out a lump sum to homeowners based on a 15-year projection of their SREC credits.
Conclusion
If you live in a state that offers them, SRECs can help you get even more return on your solar investment — and that’s on top of any tax incentives you’re already getting. Whether you’re earning $2 or $20+ (or $400!) per credit, it’s important to understand how these certificates work and how to claim them.
This article is a good starting point. Check out the FAQs below, and be sure to confirm the details with your installer, then get ready to save.
Frequently asked questions
Q: Do you have access to SRECs if you lease?
For systems leased under a traditional solar lease or Power Purchase Agreement (PPA), you’re unlikely to have access to the SRECs your system generates. The company that owns your solar panels generally owns the SREC credits it generates, too, and the registration is with the owner.
Q: What happens to your SRECs if you move?
If you own your home and the solar panels on it, the sale of the house usually includes the solar panels on it. That means the new homeowner would collect the SRECs going forward. Again, since all states are different, and rules change frequently, check with your realtor and utility company for the most up-to-date information.
Q: Are SRECS available in my state?
Delaware, District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, Ohio, and Pennsylvania currently have active SREC markets.
Some states aren’t accepting new solar installations onto their SREC markets. For example, New Jersey and Massachusetts have shifted their SREC programs for homeowners into new solar incentive programs.
Some areas of Indiana, Kentucky, Michigan, and West Virginia have access to Ohio’s SREC market.
This can change frequently, so be sure to check with your solar installer to get the latest information.
Q: How much are SRECs worth?
It depends on where you live. SREC prices vary a lot from state to state, and the price will fluctuate based on supply and demand. SREC prices in Ohio were under $3 in September 2025, but SREC prices in the District of Columbia were around $415 per credit. See our list of SREC prices above.
Q: How can I get SRECs for my solar energy system?
To get SRECs, you must live in a place where you have access to a SREC marketplace. Then you’ll need to have your system certified and registered. Homeowners use a variety of means to do this, because some installers will certify your system for you, while others do not. Some homeowners use an aggregator, broker, or exchange to handle certification, registration, and trading SRECs on the market.
Q: Can I participate in both net metering and SREC programs?
Yes. Net metering gives you credit with your utility for power you put back onto the grid. SRECs are different. One SREC credit represents the environmental benefit of 1 MWh of solar-generated electricity from your system. Utilities can buy those credits on a SREC market to meet their renewable energy goals.
Q: What does SREC stand for?
SREC stands for Solar Renewable Energy Certificate (sometimes called a Solar Renewable Energy Credit). It represents the environmental value of 1 megawatt-hour of solar electricity your system produces.
Q: What is an SREC in simple terms?
An SREC is a certificate you earn for every megawatt-hour your solar panels produce, which you can sell — separately from your electricity savings — for extra income in states with SREC markets.
Q: Are SRECs the same as net metering?
No. Net metering credits you for excess electricity sent to the grid; SRECs are a separate certificate tied to total generation that you can sell to utilities, regardless of how much electricity you use.
