There are many factors that have made solar panels for your home more affordable in recent years, but Solar Renewable Energy Credits, or SRECs, are possibly one of the most important.
So what are they? Think of them like a stock. One SREC represents the monetary value of 1,000 kilowatt-hours (kWh) produced. That value changes every day based on how much energy is produced across the state, how much energy is being used, and what portion of that energy comes from renewable resources (which includes wind power generation, geothermal, biomass, etc.).
In an effort to combat the effects of climate change and dependency on foreign oil, federal, state and local governments require utilities to have a certain percentage of their energy produced from renewable resources. In Maryland, utilities are required to have 15% of all electricity generated to come from renewable energy sources by 2022, of which 2% must come from solar power. Those percentages are phased in over time, which means that each year utilities must either produce that energy themselves or purchase energy credits.
And that’s where the value of SRECs is determined. It is easier and less expensive for utilities to purchase credits than to build new energy production facilities. The less energy they produce from solar and other renewable, the greater the value of the SRECs. And as energy demand continues to grow, the value of those SRECs will also continue to grow. That means that the longer you keep your SRECs, the more valuable they will be.
How many SRECs your system earns each year will entirely be based on the size of the system. When we do a solar analysis, we help you calculate what the cost/benefit is, taking into account the SRECs your solar panel system will earn.
Take note: a solar thermal system (also known as solar hot water) does not earn SRECs! They can, however, help you dramatically lower your utility bills.
Also note: SRECs are not the same as net metering, which requires utility companies to give solar electricity owners a credit if their system generates more electricity than is supplied by the grid.
