SRECs

What Are Solar Renewable Energy Certificates (SRECs)?

The state of NJ rewards homeowners with SRECs for producing “green” energy from solar installations.

For every 1,000 kWh of AC power that you generate from your solar installation, you earn one SREC.  A typical 9.9 kW southern oriented system will produce 11 SRECs a year.

How Do I Make Money from SRECs?

These SRECs are traded in the open market.  While prices vary and it is impossible to forecast future values, SRECs have been trading on the spot market for approximately $225 as of November 2011.

For example, a homeowner with a solar system that produces 11 SRECs per year would earn $2,475 per year at a price of $225 per SREC.   To find the latest market values as well as historical data, go to www.njcep.com.

Homeowners may choose to earn returns on their investment with this revenuestream or use the SRECs to pay back a loan from PSE&G to finance 40-60% of their system cost.

Why Are There SRECs?

Load Serving Entities (LSEs) are making great strides towards having renewable energy as a significant portion of their electric generation portfolio.  However, if they don’t meet certain percentages set by the Board of Public Utilities, they must pay “Alternative Compliance Payments” (ACPs) as a penalty.

Utilities have the option of investing to build their own solar or other renewable energy facilities, or they can buy SRECs from your solar installation (and you will be rewarded financially by selling these Solar Renewable Energy Certificates or SRECs).

The ACP prices help drive the market and set a ceiling price for SRECs in the open market since utilities may find it less expensive to buy SRECs (at a price lower than the ACP price) than to invest capital in building new renewable energy facilities.