State Solar Renewable Energy Certificate Markets
A renewable energy certificate (REC) is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. Solar RECs (SRECs) are created for each megawatt-hour of electricity generated from solar energy systems. The ultimate owner of the SREC owns the "solar-ness" of the power.
Many states create SREC markets to spur the development of solar by requiring electricity suppliers to purchase SRECs produced by in-state solar systems as part of their obligation under the state’s Renewable Portfolio Standard (RPS). This solar-specific requirement to meet a portion of the RPS with solar resources is often referred to as a “solar carve out.” Through the purchase of the SRECs, electricity suppliers are ensuring that their products meet the RPS-mandated amount of solar power. The monetary value of an SREC in these state markets is determined by supply and demand, with demand largely driven by electricity suppliers needing to meet their solar RPS requirement or pay a compliance premium.
Homeowners and businesses hosting solar systems in states with SREC markets are able to reduce their costs of electricity by selling the SRECs associated with their systems’ output into the SREC market, for ultimate use by utilities. However, by doing so, homeowners and businesses preclude themselves from making solar power “use” claims or claims on reducing their carbon footprint. For more on claims, visit the Solar Power Use Claims Guidance webpage.
Below are resources to help you understand how state SREC markets work, which states have SREC markets, and how SRECs may impact your project development.
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- Map of State Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions (PDF) (1 pg, 116K)
- The Database of State Incentives for Renewables & Efficiency (DSIRE), operated by the N.C. Clean Energy Technology Center, is the most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency programs in the United States. DSIRE provides state-specific information on RPSs with solar carve outs or provisions.
- Database of State SREC Programs
- DSIRE, operated by the N.C. Clean Energy Technology Center, is the most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency programs in the United States. This table provides details on state-specific SREC programs, including which type of entities are eligible for the program, what size and type of solar systems are eligible, and information on the financial incentive offered.
- Solar Renewable Energy Certificate (SREC) Markets: Status and Trends (PDF) (58 pp, 1.2MB)
- SREC markets have emerged in U.S. states as a method to meet compliance with solar carve out provisions of RPSs. This report, produced by The National Renewable Energy Laboratory, provides an overview of the SREC market and design, as well as the market trends and key issues facing SREC markets. The report was published in 2011, so some information may not be up-to-date. For more recent information about specific policies in your state, check out DSIRE or contact your state’s energy agency.