Does Selling SRECs Make Money?
Hey homeowner: let’s find out if your panels can earn you money in SREC markets. How much do you know about selling SRECs to turn a profit with your home solar system? Not all homeowners can do this, but your solar installation might generate its own passive income. Some homeowners make thousands of dollars a year selling SRECs.
To make it happen, you’ll need to get your solar power certified and then take it to an online SREC marketplace. Does all this mean you are selling your solar power? Nope! SREC markets are a way to sell the “bragging rights” to your green energy. You’re not selling the power. You still get to use every watt! You’re just selling the proof that your energy came from a clean source. The markets vary from state to state. But selling SRECs can earn you actual money by turning solar credits into bankable income every 2-6 months.
Can you take part in these programs? It all depends on three things: how much power your home makes, how much power you use, and where you live. Our solar advice can guide you through these questions and help you turn clean energy into actual cash.
- What Are SRECs?
- Who Buys SRECs?
- How Do I Get Certified?
- How Do I Join SREC Markets?
- What’s the Problem with Selling SRECS?
What Are SRECs?
SREC stands for “Solar Renewable Energy Certificates.” For every 1000 kilowatt hours (kWh) of clean energy you produce, you earn one SREC. That’s great, but why would anyone want to buy them?
Who Buys SRECs?
Utility companies buy SRECs. Some utility companies have quotas for how much energy in their area has to be produced by green methods. This is due to environmental laws. If they fall short of their quotas, the company gets fined a fairly large amount. Instead of losing money that way, utility companies would rather avoid the penalty. The best way for them to avoid the penalty is to buy a certificate from a homeowner who is running a home solar system. The company can use the certificate to show that green energy is being generated in their area. The utility company uses it to meet their quota by buying the “bragging rights” to your clean power, and you take home the profit.
As a solar homeowner, you get to make passive income while demonstrating that your area is becoming less dependent on old-fashioned power sources like nuclear plants or coal. The best part is that you’re not even selling your energy; you still get to use every watt you make, so you get all the usual savings on your electricity bill. The only thing you’re selling is the right to announce that the energy being generated at your house is clean, green, and solar. For those bragging rights to be profitable, you’ll need to get your home solar officially certified for sale.
How Do I Get Certified?
You will need one special thing: to get your energy “certified” by the state that you are selling in. Each state with an SREC market has its own rules and regulations for how certification happens. Most of them have a government-administered application process that starts with some basic paperwork.
This only gets tricky if you are selling certificates out of state. That’s called “selling to an outside market.” For a certificate to be sold, it needs to be recognized as official by the state that it is sold in. If you live in Delaware but are selling to the market in Washington, DC, then it doesn’t matter to the market if you’re approved as green by Delaware where your power is produced; you need to get certified by Washington, DC, where it will be sold. You’ll probably want to work with an SREC broker to sell your certificates. An experienced broker or aggregator should be able to help point you to the applications in your state. Or they can help you navigate regulations and rules so that you can sell to the best outside. Once you’re approved by the state you want to sell in, you can take your SRECs to market and start turning profit.
How Do I Join SREC Markets?
The most accessible way for a homeowner to start selling SRECs is to partner with a broker or aggregator. They do the nuts and bolts transactions and help guide you through the process. You’ll need to find the broker or aggregator that is the best deal for you and your region. Here are a few good rules of thumb.
Smaller or more local SREC brokers may take smaller commission fees. But a larger or national SREC aggregator may be able to help you get more security by having knowledge about and relationships in more markets. So they can try to work with you to sell your certificates for the best price and not just to the nearest state. Before you find the firm or professional you want to work with, consider whether you’re more interested in just selling locally or if you want to look at outside markets.
As of 2020, the highest-paying SREC markets for US homeowners are (in order from highest paying to lowest): Washington, DC; Massachusetts; New Jersey; Maryland; Ohio; and Pennsylvania. [1] EnergySage If you live in one of these states, congratulations! You’re likely to see top dollar if you pursue selling SRECs, and won’t have to figure out the nuts and bolts of getting approved by outside markets.
If you don’t live in one of these states, you may be able to see a profit anyway. Certification varies state to state so you’ll want to get in touch with a large, reputable SREC aggregator to learn about your options. Comparison shop for the best deal by looking at a few different aggregators, the same way you’d compare the fees and services of any other business in any other field before you decide where to go.
What’s the Problem with Selling SRECs?
The problem with selling SRECs is that the markets change a lot [2]NREL, 2011 and the value of your certificates is not fixed. That means that no matter how much energy your home generates, or how smart you are about selling the certificates, this won’t be a reliable or predictable source of long-term income. As a homeowner, it is smart to think of any money you make from selling SRECs as a “bonus” rather than as a fixed part of your overall home solar savings.
As of 2020, some certificates were selling for over $400 each. That’s great news, but next year they might be selling for much less, or the market in a given state may have dried up completely. The cash value of these credits changes over time, sort of like how stocks go up and down in the stock market.
SREC markets are volatile and change a lot from year to year. Because the demand for certificates depends on so many factors, including whether there is a legal quota for utilities in your area, how many other people are selling SRECs, it is not a stable income source; if you start to assume it will be there or rely on it, you could hit financial trouble.
Once you learn a little about how SREC markets work, you can turn your home’s upgrade into real income. The profits from selling your certificates can help lower overall home solar cost by giving a good return on your initial installation investment. But if you’re tempted to use potential SREC profits to calculate whether you can afford home solar overall, remember that you can’t predict this income. Instead of relying on SREC income to pay for your home solar installation, make your budget work by learning how to cut home solar installation costs.
To review what you’ve learned and bring your knowledge about investing in solar power to the next level, take a quiz on Your Solar Investment.