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Solar Renewable Energy Certificates (SRECs) Explained

By Abigail Peryea, Energy Grant Administrator

Residential solar heating was developed by biophysicist Maria Telkes, the “Sun Queen” 1947 and used salt of sulfuric acid, to store heat in preparation of sunless days. Photo credit, The MIT Press Journals

SREC may look like a typo to many people but for those in the energy industry, this acronym is a signal of cleaner and greener energy. Solar Renewable Energy Certificate or SREC are special incentives designed to encourage the adoption of solar energy. To fully understand an SREC and why it is important to Maryland, we need to look at our sustainability goals. 

The Greenhouse Gas Emissions Reduction Act – Reauthorization, signed into law by Governor Larry Hogan, expanded on the original law to require that the state achieve at least a 40% reduction in statewide greenhouse gas emissions from 2006 levels by 2030. This requirement is substantially greater than the United States’ commitment to reduce emissions by 26-28% by 2025 under the Paris Agreement. The percentages of solar, offshore wind, and overall renewable power required at the end of the year is set by the Renewable Portfolio Standard law. The current standard requires 14.5% solar, 2.5% off-shore wind, and 50% total renewables by the end of calendar year 2030. 

To receive SRECs, a solar system must be registered with the Maryland Public Service Commission (PSC). Within 30 days of registering with the PSC, a solar array owner needs to go to PJM Interconnection’s Generator Attribute Tracking System (GATS) for next steps.

Example:  A homeowner in the Baltimore area installs 10 kilowatts (kW) of solar panels on his/her house. Given the array size, tilt, direction and shading, this array is expected to produce 12,000 kilowatt-hours over a typical year. As a result, the homeowner is issued 12 SRECs per year, representing the 12 MWh of solar energy produced over the year. The homeowner can keep the SRECs and do nothing with them, hold them in hope of a higher future price (as SRECs have a life of 3 years), try to sell them directly to an energy supplier, or assign them to an SREC aggregator to sell as part of an SREC group transaction. 

If SRECs have value, why would a person want to keep their SREC? It is a good question and the answer goes back to the definition of a renewable energy credit. RECs embody all of the environmental attributes of the energy produced, so the only person who can technically claim to be using solar energy is the person who owns the SREC. If you sell your SRECs to someone else, they can claim to be using solar energy and you cannot.  So, if you want to retain the bragging rights to using solar energy, keep the SRECs. If on the other hand you would prefer the money that comes from selling SRECs, then by all means sell them. The environment benefits either way.