SRECs

SRECs, or Solar Renewable Energy Certificates, are tradable certificates that represent the environmental attributes and 1 megawatt-hour (MWh) of solar electricity generated and delivered to the grid. They are used primarily in certain U.S. states as part of the Renewable Portfolio Standard (RPS) to encourage solar deployment. Each SREC corresponds to one MWh of solar energy, and the certificate is issued by a state-approved registry for a specific solar facility’s production in a given vintage year.

In operation, a solar project is registered, and the registry issues SRECs that owners may sell to electricity suppliers, utilities, or aggregators to meet a solar-specific compliance obligation. Utilities are required to purchase a certain number of SRECs each compliance period; if they do not meet their target, they may pay an Alternative Compliance Payment (ACP) or buy SRECs from the market, depending on state rules. SREC prices are determined by supply and demand within the state market and can vary widely over time. SRECs have a defined lifespan tied to the program’s vintage year and state rules; unsold certificates may expire or be treated differently in various jurisdictions.

Markets are typically overseen by state energy agencies and supported by registries and trading platforms that track ownership and prevent double counting. Critics note price volatility and market fragmentation across states, while proponents view SRECs as a targeted incentive that supports solar investment without up-front subsidies. SRECs differ from generic RECs in that they specifically reflect solar generation.