Could your solar panels make money for you? If you can sell SRECs, you can turn your solar power into profit. Not every homeowner is able to do this. But some homeowners can make thousands of dollars in SREC profits per year. Let’s find out whether you could start earning money in SREC markets.

SREC are “Solar Renewable Energy Certificates.” One SREC represents 1000 kilowatt hours of power your home solar produces. Does selling SRECs mean that you’re selling your power? Not at all. SRECs are like “bragging rights” to your sustainable energy. The energy itself is still all yours. You’re simply selling proof that your home’s energy comes from a renewable source.

Will you be able to participate in SREC markets? That depends on how much energy your home solar produces; how much energy your home uses; and where your home is located. Let’s look at the details and figure out how you can turn your green investment into cash.

First, you’ll have to get your home solar certified. Next, you’ll take your certification to an online SREC market. The SREC markets are different in every state. But if you can sell SRECs, you’ll turn your certified solar power into income every two to six months.

• Who Will Buy SRECs?
• How Can I Get SRECs?
• How Can I Sell SRECs?
• Why are SREC Profits Unpredictable?

Who Will Buy SRECs?

Environmental laws require some utility companies to meet quotas for sustainable energy. This means that companies have to demonstrate that a certain amount of their area’s energy is generated sustainably. If they don’t meet these quotes, utility companies can be slapped with a large fine.

That’s where SRECs come in. Utility companies can avoid penalties by buying SRECs from homeowners producing solar power. This allows the company to buy “bragging rights” to your green energy and meet their quota.

If you are a homeowner who can sell SRECs, this arrangement generates a passive income stream for you. It also helps show that your area is relying less and less on traditional power like fossil fuels, coal, or nuclear energy.

You keep all the energy you produce: all you’re selling is the right to demonstrate that your home’s energy is clean. In order to sell that right, however, you’ll have to get your solar power certified.

How Can I Get SRECs?

To sell SRECs, you need to get certification from the state in which you are selling. Each state has different rules and regulations, and not every state even has an SREC market. For the states that do, the process usually begins with an application through the government.

This can become a little complicated if you sell SRECs outside of the state you live in. This is “selling to an outside market.” In order to sell SRECs, your certificate needs to be officially recognized by the state it’s sold in. For example: Let’s say you are living in Delaware but you are selling your certificate to the market based in Washington, DC. In that case, you need to get certified by the DC government (not Delaware).

A SREC broker can help you sell certificates. A knowledgeable aggregator or broker should direct you to the relevant applications for your state. Or they may help you work through the rules and regulations to sell out-of-state. After you are approved by the state you’re planning to sell in, you can bring your certificates to the market and start to make SREC profits.

How Can I Sell SRECs?

Working with a broker or aggregator will be the easiest way for most homeowners to begin selling their certificates. They can help you through the process and take care of the nitty gritty details for you. But how do you find the best broker or aggregator for you? Here are a few tips.

Before you decide which professional or firm you’ll work with, think about whether you plan to sell locally or sell in outside markers. SREC brokers working on a smaller, local level might take a smaller fee. But SREC aggregators who work on a larger or national level might offer you more security and knowledge about more different markets. So, a larger aggregator could help you sell SRECs for the top price and not only to the closest state.

In 2020, the top-paying SREC markets for homeowners in the U.S. were (from highest to lowest prices): Washington, DC; Massachusetts; New Jersey; Maryland; Ohio; and Pennsylvania. ^[1] EnergySage So if your home is in any of these states, that’s great news! You will probably see the top prices for your SRECs if you decide to sell. And you won’t have to worry about getting approval for outside markets.

But if you live outside those states, you might still be able to make a profit. Certification is different in each state so you may want to work with a large, experience SREC aggregator in order to learn more. We recommend comparison shopping for aggregators, just like you would for any other service. 

Why are SREC Profits Unpredictable?

Here’s where it gets tricky: SREC profits are pretty unpredictable because the markets change a lot.^[2]NREL, 2011 The value of your SRECs isn’t fixed so you won’t necessarily be able to predict the income you earn. And that’s even if your home always generates the same amount of power, and you’re smart about selling. So it’s wisest to think of SREC profits as a bonus or a plus, not a steady source of home energy savings.

Some SRECs sold for more than $400 each in 2020. That’s very impressive, but could change in 2021 and beyond. They might sell for less, or the SREC markets in a particular state might dry up altogether. The real cash value of SRECs can go and down over time, like the stock market.

Why do these values change so much from year to year? Because demand depends on a lot of variables. For one thing, the legal quota that utility companies need to meet might change. And the number of homeowners in your area selling SRECs can also fluctuate. So if you come to expect that SRECs will consistently deliver you a certain cash value, you could run into trouble.

Once you’ve familiarized yourself with SREC markets, you have a chance to make real income from your home energy upgrade. Your SREC profits can offer an extra return on the investment of solar installation, adding to your home solar savings . But remember, the value of your certificates is unpredictable. You shouldn’t rely on this income source to pay for your solar installation; instead, learn how you can keep your solar power costs low from the start.

Furthermore, selling SRECs have a surprising added benefit: it can increase your home’s solar resale value and curb appeal!

(Illustrations: Business by DinosoftLab; stock market by ProSymbols)