Solar Renewable Energy Credits (SRECs) are issued to homeowners and organizations to allow them sell certificates to their utility. For every 1000 kWhs produced by a solar panel system, a SCREC is earned. These credits are considered the currency of renewable energy which can be sold and bought in an open market setting. This means that homeowners and organizations getting electricity from commercial solar power systems can track and profit from the amount of clean renewable energy. Most companies using solar systems choose to sell these credits to help offset the cost of installing and maintaining a renewable energy system.
SCRECs can also be defined as Renewable Energy Certificates (RECs). However there is a difference to the two terminologies. SCRECs can be said to be one of the incentives for installing solar panels and exists as a result of a regulation known as the Renewable Portfolio Standard (RPS). State laws require utilities to produce a certain percentage of their electricity from renewable resources and this is what is known as RPS. In order for an organization to meet their RPS requirement, they have to obtain RECs as proof that they have either paid someone producing renewable electricity or that they produce that electricity by themselves, giving them the right to count the electricity themselves. Basically, SRECs and RECs are alike and they act as proof that an organization or individual is using electricity that comes from solar panels.
How To Make Money With SCRECs
The value of SRECs varies from state to state and from year to year. Not all states have an active SREC market. However, a few states have solar carve-outs that establish SREC market to facilitate the sale of SRECs. This allows utilities that need to meet their solar carve-out requirements to buy SRECs from solar panel system owners through the SREC market.
The price of SRECs varies from state to state and can range from under 50 dollars to over 300 dollars per SREC. The value of a SREC can also be dictated by RPS compliance regulations, the year the renewable energy was generated (the vintage), and supply and demand.
Some states have set high regulatory penalties for not meeting RPS requirements and this can affect the price of SRECs and due to the price cap created, the prices would go up as a result. However, if the price of SRECs is higher than the penalty, there would be financial incentive to pay a higher price.
What Happens To SRECs When One Is Planning To Move?
If a homeowner living in a state with an active SREC market wishes to sell their property, he or she will retain the rights to sell their system’s SRECs even after the sale. This means that individuals and organizations who sell their properties can still receive income from the solar systems that they installed for years after. However, one still has the option to pass SRECs rights to new owners if agreed upon as part of the transaction. Most homeowners use this tactic to negotiate for higher selling prices when selling their properties.