Switching to Clean Energy: A Simple Guide on SRECs

We live in a world of acronyms. Popular chain restaurants, organizations, and well-known people have their names shortened to acronyms (KFC, WW, NASA, and JFK). And don’t forget the myriad of acronyms used in everyday conversations—YOLO, FOMO, LASER, and CAPTCHA.

One acronym you may not be familiar with comes from the clean energy sector: SRECs.

This guide takes you on a brief tour of what SREC means and how it might impact you. Take a minute and explore a common term for people interested in switching to clean energy.

SREC 101

Everyone enjoys a reward for good behavior, no? Think of Solar Renewable Energy Certificates (SRECs) as a reward system for homeowners and businesses that generate solar energy. They’re credits earned when you use solar panels on your home or commercial building to generate power.

Homeowners can earn 1 SREC for every 1,000 kilowatt-hours (kWh) of solar electricity they produce.

SRECs are similar to stocks. Consumers can sell them, and utility providers buy them.

That said, each participating state has a solar SREC market. Based on supply and demand, the state determines how much they value an SREC.

You install a solar array on your roof. Use the electricity it generates while earning your SREC credits. Then, you sell your SRECS to a buyer.

SRECs Are Not Available Everywhere

Currently, nine states and the District of Columbia offer SREC programs. You can view SRECs by state here.

What about states with an abundance of sunshine (e.g., Arizona) and a high number of residential solar systems? Why don’t they offer SRECs?

In Arizona’s case, utility companies meet RPS requirements without needing to purchase SRECs from private parties. Texas, another state you likely assume would have SRECs, doesn’t have a statewide program. Instead, many utility providers and even some local governments offer incentives.

If your state hasn’t jumped on board yet, be patient. The process to develop SREC programs takes time and a fair amount of legislation.

Looking at One State’s Example

As mentioned earlier, states participating in SREC programs take charge of developing the rules and regulations. For example, the Ohio SREC program mandates that investor-owned utilities have until 2025 to generate 0.50% of their energy from solar power.

As in other states offering SREC incentives, the price you can sell back your credits depends on market supply and demand. Once you earn an SREC in Ohio, it has a duration of five years.

Switching to clean energy in Ohio and many other states is more affordable than ever. According to experts, Ohio SREC prices, federal tax credits, and the state’s efforts to encourage Ohioans to embrace energy conservation make a residential solar installation more attractive than ever.

Ready to Invest in Clean Energy?

If you live in a state with access to solar energy incentives, now is the time to consider investing. You could see a return when you sell your SRECs that pay for your solar array over the long term.

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