Solar Renewable Energy Credits (SRECs) are one of the most valuable but least-understood incentive structures in the US solar market. In the states with active SREC markets, SREC revenue can dramatically improve project economics beyond what the federal ITC and net metering alone provide. But SRECs are complex: prices vary by state and over time, contracts have specific structures, registration processes differ by state, and program rules evolve. This guide walks through how SRECs work, which states have active SREC markets, how prices are set, how developers and EPCs monetize SRECs, and how design and documentation support SREC eligibility.
What is an SREC?
A Solar Renewable Energy Credit (SREC) is a tradable certificate representing the renewable attributes of one megawatt-hour (MWh) of solar electricity generated. SRECs are separate from the electricity itself: a solar system produces both electricity (used on-site or exported to the grid) and SRECs (which can be sold separately to entities required to comply with state renewable portfolio standards).
SRECs exist because certain US states have Renewable Portfolio Standards (RPS) that require regulated utilities to source a specified percentage of their electricity from renewable sources, with a specific carve-out for solar. Utilities meet the solar carve-out by either generating solar themselves, buying SRECs from qualifying solar generators, or paying an Alternative Compliance Payment (ACP) to the state.
SREC prices are set by supply and demand within each state’s market. When SREC supply is tight relative to the solar carve-out requirement, prices rise (up to the ACP cap). When supply is abundant, prices fall.
States with active SREC markets
Not every state has a functioning SREC market. Some states have replaced SRECs with different incentive structures over time. Currently active SREC markets include:
- Washington DC: historically one of the highest-value SREC markets in the US, driven by the District’s ambitious solar RPS carve-out
- Maryland: active SREC market with a solar carve-out under Maryland’s RPS
- Pennsylvania: SREC market with historically lower prices than neighboring states
- Massachusetts: SREC-I and SREC-II programs from earlier vintages remain active; the current SMART program replaced SRECs for new projects but existing SREC contracts continue
- New Jersey: legacy SREC-I and TREC programs remain for eligible vintages; the current SuSI program replaced SRECs for new projects but existing legacy SREC contracts continue
- Illinois: Illinois Shines program administers SRECs through the state’s Adjustable Block Program with structured rates
- Delaware: active SREC market under Delaware’s RPS
- Ohio: SREC market historically less active than East Coast markets
Program specifics change over time. Always verify current SREC market status for your target state.
SREC trading through PJM-EIS GATS
For much of the mid-Atlantic and East Coast, SRECs are tracked and traded through the PJM Environmental Information Services (PJM-EIS) Generation Attribute Tracking System (GATS). Solar system owners register their qualifying systems in GATS, monthly solar generation data is entered, and one SREC is minted for each MWh generated. SRECs can then be sold to buyers through the GATS system or through third-party aggregators and brokers.
Other regional markets use different tracking systems (M-RETS in the Midwest, WREGIS in the West). Illinois Shines has its own program-specific tracking.
How SRECs are monetized
Solar system owners can monetize SRECs several ways:
Long-term contracts (dominant approach)
Many solar developers and EPCs contract to sell SRECs at fixed prices for 5, 10, 15, or 20 years to buyers seeking predictable pricing. Long-term contracts provide revenue certainty for project financing but lock in prices that may end up above or below the eventual market clearing rate. Long-term SREC contracts are a standard component of project financing packages in DC, Maryland, and other markets.
Spot market sales
System owners can also sell SRECs on the spot market for current market prices, either directly through GATS or through aggregators. This captures current market prices but exposes the owner to price volatility.
Aggregators and brokers
Specialized SREC aggregators handle SREC registration, minting, and sales on behalf of many small system owners, distributing net revenue after fees. This is common for residential solar customers whose individual SREC output is too small to justify direct contract negotiation.
SREC prices vary widely by state
SREC prices are set by supply-demand dynamics within each state’s market:
- DC has historically had among the highest SREC prices in the US, reflecting the District’s aggressive solar carve-out and limited in-District generation capacity
- Maryland SRECs have generally traded lower than DC but remain meaningful for project economics
- Pennsylvania SRECs have historically traded low compared to neighboring states
- Illinois SRECs under Illinois Shines have set rates by capacity block
Solar developers pricing projects should use current, source-verified SREC price data for the specific state and project vintage.
SREC eligibility and design considerations
SREC eligibility depends on the state program’s specific rules. General considerations affecting design and documentation:
- The solar system must be qualifying under the state’s definitions (fuel type, technology, capacity limits)
- The system location must be within the state or an eligible import state under the program rules
- The system must be interconnected to the utility grid and generating measurable output
- Revenue-grade metering is typically required for SREC minting
- Program registration documentation is required for the system to begin generating SRECs after PTO
Design and documentation packages should support the SREC registration process without requiring rework after installation.
SREC decline over time in some markets
SREC prices have declined in several markets over recent years as solar penetration has grown and program capacity carve-outs have been met or expanded. In some states, programs originally structured around SRECs have transitioned to different incentive structures (Massachusetts SMART, New Jersey SuSI). Legacy SREC contracts continue in these states even as new solar projects use the successor programs.
How SRECs stack with the federal ITC
SREC revenue and the federal ITC are separate: SRECs generate ongoing revenue over the qualifying period; the ITC is a one-time tax credit. Both stack together. SREC revenue is typically taxable income and does not affect ITC calculation. State tax treatment of SREC revenue varies. Always consult a qualified tax advisor for the specific project.
Where outsourced solar design fits into SREC-eligible projects
SREC eligibility requires design and documentation that supports state program registration, revenue-grade metering, and interconnection compliance. Solar EPCs and developers pursuing SREC-heavy markets (DC, Maryland, Illinois, legacy MA and NJ) benefit from outsourced design partners familiar with the program-specific documentation requirements.
RIH Engineering provides outsourced solar PV design for EPCs, installers, and developers operating in US SREC markets. Our plan sets and interconnection documentation packages are prepared to support state program registration and SREC minting. If you want to talk through how outsourced design fits your SREC-eligible project pipeline, get in touch.
Frequently asked questions
What is a Solar Renewable Energy Credit (SREC)?
An SREC is a tradable certificate representing the renewable attributes of one megawatt-hour of solar electricity generated. SRECs exist because certain US states have Renewable Portfolio Standards with solar carve-outs that require regulated utilities to source solar power. Utilities meet the carve-out by generating solar, buying SRECs from qualifying solar generators, or paying an Alternative Compliance Payment.
Which US states have active SREC markets?
Currently active SREC markets include Washington DC, Maryland, Pennsylvania, Illinois (through Illinois Shines), Delaware, and Ohio. Massachusetts and New Jersey have legacy SREC programs for eligible vintages though their current programs (SMART and SuSI respectively) replaced SRECs for new projects. Program specifics change over time; always verify current status.
How are SRECs tracked and traded?
In the mid-Atlantic and East Coast, SRECs are typically tracked through PJM Environmental Information Services (PJM-EIS) GATS system. Systems register, monthly generation is entered, and one SREC is minted per MWh. SRECs can be sold through GATS, third-party aggregators, brokers, or long-term contracts. Other regions use different tracking systems (M-RETS in the Midwest, WREGIS in the West).
Why is Washington DC's SREC market so valuable?
DC has historically had among the highest SREC prices in the US, driven by the District's ambitious solar RPS carve-out and limited in-District generation capacity relative to the carve-out requirement. This creates strong demand for SRECs from qualifying solar generators, supporting long-term SREC contracts as a meaningful component of DC solar project financing.
How do SRECs stack with the federal ITC?
SREC revenue and the federal ITC are separate incentives that stack. The ITC is a one-time tax credit applied against federal income tax liability. SREC revenue is ongoing income over the qualifying period. SREC revenue is typically taxable income and does not affect ITC calculation. State tax treatment varies. Always consult a qualified tax advisor for the specific project.