One of the greatest, yet least understood, incentives to installing solar panels is solar renewable energy certificates or SRECs. By taking the time to understand SRECs and how they can benefit your solar system installation, you can enjoy significant savings down the road. In fact, SRECs won’t just save you money but will make you money!
Let’s learn the basics of SRECs and how they can make a solar panel installation more financially attractive.
What is a SREC?
A solar renewable energy certificate is a solar incentive that lets homeowners sell their leftover energy credits as stock. For every 1000 kilowatt hours that are produced by the solar panels, you earn one SREC. In some markets, one SREC can be worth as much as $300!
SRECs exist because of the renewable portfolio standard (RPS). These state laws require utility companies to produce a certain amount of energy from renewable sources. Approximately 30 states have a renewable portfolio standard, and nearly 10 more have renewable portfolio goals. In order for the utility companies to meet these requirements, they must show proof that they have produced renewable energy; SRECs are this proof.
SRECs are separate from the credit that your local utility company will give you from producing excess electricity. The average homeowner earns around five to eight SRECs in a year, which can then be sold similarly to stock.
What Can You Do with the Money Earned?
As exciting as it is to know that your solar panel system can generate energy credits, the better question is what can you do with this money?
Many solar system owners use SRECs for upfront financing. You can request either a check or lump sum payment. The most effective way to sell your credits is by locking into a contract or agreement with a utility company. Utility companies need the credits to stay in compliance with RPS requirements. What the company pays for your credits is less than the fines would be.
Remember, whatever you receive from SRECs is separate from local credits from your utility company, as well as state and federal incentives. Who would have thought that owning a solar system could be so lucrative?