Short Guide to Renewable Energy Credits (RECs) - Blue Raven Solar
 

Short Guide to Renewable Energy Credits (RECs)

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Going solar has several financial benefits. Some more obvious ones are saving on your utility bills, increasing your home’s property value (oftentimes without an increase in property taxes), and getting a significant return on your investment with your energized system. However, there are some less obvious ones, like net metering policies and Renewable Energy Credits (RECs). 

 

Net metering and RECs are similar, but not the same. Let’s identify the differences. Learn your state’s net metering policy. Here is what RECs are, how they work, and how they can benefit homeowners who go solar. 

What are RECs?

Renewable energy certificates are an incentive for homeowners that produce energy through renewable resources, like solar. They are credited for the clean energy created by their solar panels if they are in states with a renewable portfolio standard (RPS).

Male character standing next to a paper with a magnifying glass and 1,000KW of Energy Produced title on a light blue background

How Do RECs Work?

RECs work differently than net metering because the total amount of energy production is automatically counted towards REC value, whereas with net metering, it is only excess energy the home is not using.  

 

An RPS is a requirement holding utility companies to a specific percentage of electricity to be produced from renewable resources, and RECs are one way utility companies ensure they meet these requirements. 

 

Homeowners can earn one REC for every 1,000 kilowatt-hours (or 1 megawatt hour) of electricity their rooftop system produces. Utility companies can purchase these credits from the homeowner to help meet their required percentage of renewable energy production – the credits serve as proof the utility company has either produced the renewable energy or paid someone who actively produces renewable energy.  

 

RECs not produced through solar technologies work the same as far as accounting and purchasing, but solar RECs (SRECs) are only available in states with a solar carve-out. These states have a specific quota of energy production in their RPS to be met by solar specifically, not just by renewable energy overall. Because RECs and SRECs are state-specific, the policy is not federally mandated, and every state has a different threshold and quota. 

Male character facing another male character in black with title = Selling Credits on a bright blue background

Selling Your Credits

If your state has a solar carve-out and REC opportunities, homeowners will likely not sell their credits to utility companies directly. Instead, most solar owners will work with an aggregator or broker like SRECTrade, SolSystems, or even an installer like Blue Raven Solar so they can get the most value out of their credits. The value varies depending on geographic location and a couple of other factors that often fluctuate, which is why working with a third party is beneficial.

Two Common Fluctuating Factors:

 

  • Supply and Demand – REC markets operate similar to the stock market, but on a state-by-state basis. The price changes over time depending on the state’s supply and demand for renewable energy production and how the utility companies are doing with their quotas. An oversupply leads to lower prices, and an undersupply brings about higher-valued credits.  
  • Alternative Compliance Payment (ACP) – Every state has a different quota for their solar carve-out and renewable production quotas. These are enforced through ACPs, which are what utility companies will have to pay in penalties if they do not meet their mandated percentage. As with other REC policies, these are set by the state and are capped on SREC prices. Utility companies will not feel a need to buy SRECs if they are a higher price than the ACP and would opt to pay the penalty instead. 

If you live in a state with an SREC market, you can earn hundreds of dollars in renewable energy credits. For example, a 10-kW system produces, on average, between 10 MWh of electricity each year. For each of these MWh, you can earn one SREC, equivalating to 10 SRECs per year. Based on August 2022’s selling value, SRECs in Ohio were about $4 each, meaning with 10 MWh produced, Ohio homeowners could earn $40 without doing any extra work. 

 

As mentioned before, SREC values are determined by state. In Pennsylvania, SRECs are worth about $42 each, in Maryland, $59, and in Washington, D.C., $300 each. 

Going Solar with Blue Raven Solar and Receive Expert SREC Help

Around 30 states have an RPS in place, but only a few have solar carve-outs. Some of these states are Ohio, Illinois, and Virginia, where Blue Raven Solar is proud to assist customers in understanding their SREC markets! 

 

Solar benefits are around every corner, and Blue Raven Solar is here to ensure you take advantage of each one. As more states add solar carve-outs to their renewable portfolios, our team is ready to bring our customers even more savings! With award-winning finance products and a team of solar experts, we are ready to help you make the switch to clean, renewable energy with solar panels.  

 

Go solar today with a solar company you can trust, and experience the future of energy, today! 

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Should I Lease, or Buy?

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