Section: Incentives & Policy

What Are SRECs? Solar Renewable Energy Certificates Explained

By ClearWatt Editorial Team · Published September 14, 2026

Short answer: An SREC (Solar Renewable Energy Certificate) is a tradable credit representing one megawatt-hour of electricity generated by a solar system, created in states that require utilities to source a percentage of power from solar. Homeowners in those states can sell SRECs, separate from their utility bill, for extra income — but SREC markets exist in only a handful of states, not nationwide.

What an SREC actually is

An SREC is not a discount, a rebate, or a tax credit. It’s a certificate — essentially proof that one megawatt-hour (1,000 kWh) of electricity came from a solar system — that gets tracked, registered, and sold on a market separate from the electricity itself. The certificate’s value comes from state law, not federal policy: a number of states have adopted a Renewable Portfolio Standard (RPS) with a “solar carve-out,” a specific requirement that utilities source a rising share of their electricity from solar specifically, on top of any general renewable-energy targets.

Utilities that don’t generate enough solar themselves have to buy SRECs from homeowners and businesses who do, or pay a penalty (often called an Alternative Compliance Payment). That penalty effectively sets a ceiling on what SRECs are worth in that state’s market, because a utility won’t pay more for a certificate than it would cost to just pay the fine. This is why SREC prices vary so much state to state and year to year — they track that state’s specific supply-and-demand balance, not a national rate.

New Jersey’s renewable portfolio standard, which created the legal basis for its solar certificate market, is codified in state law and is a useful example of how these programs are structured at the statutory level — see N.J. Stat. § 48:3-87, which lays out the state’s renewable energy and solar-specific requirements for electric power suppliers.

How you actually earn and sell one

If your system is in a state with an active SREC market, your solar production is metered (usually through your existing production meter, sometimes a separate revenue-grade meter is required) and registered with a state or regional tracking system. Once you’ve generated 1,000 kWh, that becomes one SREC, which you can then sell — either directly on an exchange, through a broker/aggregator that bundles many homeowners’ certificates together, or under a long-term contract with a utility or third party. Aggregators typically take a cut of the sale price in exchange for handling the paperwork and finding buyers, which is often worth it for homeowners who don’t want to manage individual trades.

Because SREC marketplaces involve ongoing contracts, brokers, and sometimes unsolicited sales pitches, it’s worth applying the same scrutiny the FTC recommends for any solar-related offer — get terms in writing, understand who is actually buying your certificates, and confirm the buyer is registered with your state’s program before signing anything. The FTC’s general guidance on evaluating solar offers is a reasonable starting checklist even though it isn’t SREC-specific: FTC, Solar Power for Your Home.

Which states actually have SREC markets

This is the part most articles get vague about, and it matters: SRECs are not a national program. They exist only where a state legislature or utility commission created a solar carve-out. As of 2026, a limited group of states have run SREC or SREC-like markets historically, though several have restructured or replaced their original programs. Because these programs change frequently — closing to new applicants, being replaced by successor incentive structures, or adjusting compliance targets — the table below is a starting point, not a final answer. Confirm current, state-specific status through the Database of State Incentives for Renewables and Efficiency before assuming a program applies to you: DSIRE.

Every one of these programs has caps, eligibility windows, application deadlines, and price mechanics that change year to year. Treat the table as a list of states to research, not a guarantee that a market is currently open or profitable where you live. For a broader rundown of what’s currently funded versus what has closed, see our state solar incentives guide.

What SRECs are actually worth

There is no single, stable “SREC price.” Because value is set by each state’s supply-and-demand balance and its compliance penalty, prices can differ by a wide margin between states, and can swing significantly within the same state over a few years as more homeowners install solar and add supply to the market. Any specific dollar-per-certificate figure you see quoted online is a snapshot of one state’s market at one point in time — it is not transferable to your situation. Before assuming an SREC will meaningfully change your payback math, check current pricing through your state’s program administrator or DSIRE, and treat any number an installer quotes you as an estimate, not a guarantee: DSIRE.

It’s also worth understanding what SRECs are not connected to. They are unrelated to the federal residential solar tax credit, which was a 30% credit under Section 25D of the tax code that applied to what you paid for your system — and which was repealed for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act. You can see the credit’s original structure on the IRS Residential Clean Energy Credit page, and the repealing legislation itself at H.R. 1, 119th Congress. For a full breakdown of what changed and what’s still claimable for systems installed before the cutoff, see our federal solar tax credit guide. Third-party-owned systems — leases and power purchase agreements — may still allow the installer to claim a separate commercial credit under Section 48E, but that credit belongs to the system owner, not automatically the homeowner, and any pass-through savings depend on the contract; our loan vs. lease vs. PPA comparison on-site covers how that ownership distinction affects who can access which incentives.

SRECs vs. net metering: don’t confuse the two

Homeowners frequently conflate SRECs with net metering, but they are structurally different programs that can, in some states, both apply to the same system:

• Net metering credits the electricity your system sends back to the grid against your own future usage, reducing your utility bill. It exists in some form in most states with meaningful solar adoption, though the specific credit rate and rules vary widely by state and utility. See our net metering explainer for how those rules differ.
• SRECs are a certificate tied to total generation, sold on a separate market that exists only where a state’s RPS created a solar carve-out. They generate direct income from a sale, not a bill credit.

A homeowner in New Jersey or Maryland, for example, could plausibly have both net metering on their utility bill and a separate SREC or successor-certificate income stream from the same system. A homeowner in a state without a solar carve-out will have net metering (if their state/utility offers it) but no SREC income at all, regardless of how much electricity their system produces.

Practical steps if you think you qualify

1. Confirm your state actually runs an SREC or successor certificate market — don’t assume based on a neighboring state or an older article. Start with DSIRE.
2. Ask your installer, at the quote stage, whether SREC or certificate registration is included in their service or whether you’ll need to register and sell certificates yourself.
3. Get a written explanation of how metering and certificate creation will work for your specific system before you sign a contract, using the same scrutiny recommended in general solar buying guidance from the Consumer Financial Protection resources referenced by the U.S. Treasury’s solar consumer advisory.
4. If you use an aggregator to sell certificates, confirm their registration with your state’s program before signing a multi-year contract.
5. Track SREC or certificate sales for tax purposes; this income is generally reported separately from any prior tax credit claim.

This article is for general information and is not tax, legal, or financial advice; state SREC and successor-certificate programs change frequently, so confirm current rules and pricing with your state’s program administrator or a qualified tax professional before making decisions based on expected certificate income.

Sources

• DSIRE - Database of State Incentives for Renewables and Efficiency (consulted 2026-09-14)
• N.J. Stat. § 48:3-87, New Jersey Renewable Energy Portfolio Standard (consulted 2026-09-14)
• IRS, Residential Clean Energy Credit (consulted 2026-09-14)
• H.R. 1, 119th Congress (One Big Beautiful Bill Act) (consulted 2026-09-14)
• FTC, Solar Power for Your Home (consulted 2026-09-14)
• U.S. Treasury, Consumer Advisory on Solar Financing (consulted 2026-09-14)