Solar Renewable Energy Certificate
Every energy supplier must have a percentage of their output come from solar. The percentage is authorized by the state. In Pennsylvania, it is ½ percent of the supplier’s entire output. In New Jersey, it’s 4-5%. Because utilities don’t produce solar energy but must meet the state’s requirement, they buy solar energy from somebody who does produce it (homeowners or a business with solar panels).
The unit that utilities purchase from producers is called an SREC.
Suppliers need to purchase large amounts of solar energy. For a homeowner, a 50 kwH system is very large, but it’s not nearly big enough to produce the amount of solar energy that would interest a supplier. SREC Aggregators bundle many residential systems in order to create a package large enough to interest an energy supplier.
Every state has SREC aggregators. Solar States can recommend an aggregator to you.
SREC Future Strips
There is a futures market for SRECs.
If you have a commercial outlet with 500 SRECs, and the price of an SREC today is $200, a generation supplier might offer to buy SRECs from you for 5 years at a discounted rate ($150, for example).
This rate is guaranteed over time, so you are protected as the price of an SREC in your state fluctuates.
SRECs are state-by-state marketplace. They are not federally mandated. At the time of this writeup, the price of an SREC in New Jersey is $225, You can find current pricing information for your state at SRECtrade.com.