Some states have enacted Renewable Portfolio Standard legislation – requiring utilities to produce a prescribed percentage of energy generation from renewable resources.

Solar Renewable Energy Credits (sRECs) are the ‘safety valve’ option for utilities to purchase the renewable attributes from other renewable energy producers in the instance they have not developed their own resources – a significantly more expensive proposition. This mechanism creates a market price – and long‐term value – for sRECs produced by residential and commercial solar installations.

An sREC is a measure of energy output with 1 sREC equivalent to 1000 kWh of power. For every 1000 kWh of power produced from a solar electric system 1 sREC is generated and available to be sold on the spot market – regardless of whether the energy is consumed at the time of production or supplied to the utility grid. In effect, the value of the energy production and the value of the environmental benefits are separate economic events.

Market prices for sRECs vary by state – see the Solar Economics section for state-by-state details – but provide a significant revenue stream to solar project owners. In most cases the value of sREC revenue significantly exceeds the value of displaced energy – augmenting the value of solar projects and leading to short payback periods and robust financial returns.