New Jersey BySolar
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SRECS

What are SRECs?

A Solar Renewable Energy Certificate, known as an SREC and sometimes referred to as an energy credit, is a solar energy attribute representing 1,000 kilo-Watt hours (kWh) of electrical production.

For example, a solar system that produces 10,000 kWh per month would be awarded 10 SRECs each month.

The electrical production from each approved solar system in New Jersey is provided to the Generation Attribute Tracking System (GATS), an organization who awards SRECs to solar system owners. (Note: SRECs are not affected by the savings you receive on your energy bill.) The SRECs received each month by the solar system owners may be sold for cash to SREC brokers, who then sell blocks of SRECs to the utility companies. Learn more about New Jersey's SREC Cycle.

What is Their Purpose?

In order to encourage the deployment of renewable energy solar systems, the State of New Jersey's Clean Energy Program (NJCEP) has established a Renewable Portfolio Standard (RPS) whereby electricity utilities (such as JCP&L, PSE&G, and Conectiv) must secure a portion of their electricity from solar renewable energy sources.  

The electric utilities are required to show this compliance through the use of the SREC program. If the electricity utilities cannot produce sufficient solar electricity themselves, they must purchase the SRECs from other solar electricity producers in New Jersey.

If the utilities do not obtain sufficient SRECs to satisfy their RPS allocation, they are required to pay an "Solar Alternate Compliance Payment" (SACP). The NJCEP has set the SACP price schedule for years 2013 through 2028 as follows:

Energy Year 2013 2014 2015 2016 2017 2018 2019 2020
SACP $641 $339 $331 $323 $315 $308 $300 $293
Energy Year 2021 2022 2023 2024 2025 2026 2027 2028
SACP $286 $279 $272 $266 $260 $253 $250 $239

How Do You Benefit From SRECs?

To meet New Jersey's RPS requirement, it is in the best financial interest of the electric utilities to purchase SRECs because they cost less than the SACP.

There is no assigned value to an SREC - its prices are influenced by supply and demand. While the demand is determined by New Jersey's RPS requirements, the supply is determined by the number of solar installations producing SRECs. Up though the end of the 2011 SREC trade reporting year, there was a limited number of SRECs available for purchase by the utility companies, which ensured a high SREC spot price for the seller. At this time, SRECs were being sold by solar system owners for as much as $640 while the SACP was set at $675.

Due to a recent surge in large, commercial solar installations, the number of available SRECs on the market has substantially increased and the price of SRECs dropped to about $130. Although this hefty price drop may affect a new owner's plans to pay off the system's cost sooner, it still provides an economic benefit for investing in solar. The income from the sale of SRECs plus the electrical savings gained from the solar system still provide a significant operating cash flow from the solar system.

SRECs may also be sold on a three, five, or ten year contract at a predetermined price to give people more certainty over prices.

You can read more about how SRECs are generated and sold by going to our SREC Cycle page.