SRECs & Performance Incentives, Explained

A Solar Renewable Energy Credit, commonly called an SREC, is a tradeable certificate that a solar system owner earns based on electricity generation. One SREC is issued for every megawatt-hour (1,000 kilowatt-hours) the system produces. These credits exist because some states require electricity suppliers, such as utilities or retail providers, to source a portion of their power from solar energy under what is known as a renewable portfolio standard or solar carve-out. Suppliers who cannot meet that requirement on their own must purchase SRECs from system owners to demonstrate compliance. The owner of a solar installation can register with the relevant state program, accumulate credits as the system generates power, and then sell those credits into that state's compliance market, creating a potential revenue stream separate from the electricity itself.

Not every state operates this kind of market. Based on verified program data covering all 51 jurisdictions, approximately 13 states currently maintain an active SREC or performance-based incentive market. These tend to be states that have established mandatory renewable energy targets with a specific solar requirement, and the program structures, eligibility rules, and registration processes differ significantly from one state to another.

The price of an SREC is not fixed. It fluctuates based on supply and demand within the state market: when many systems are generating credits and compliance demand is satisfied, prices tend to fall; when solar supply is tight relative to the compliance obligation, prices tend to rise. Nothing guarantees a particular value over time, and past market prices are not a reliable indicator of future earnings.

It is important to understand that SRECs are entirely separate from net metering, which is a billing arrangement between a customer and their utility whose terms vary by utility and state. SRECs are also separate from any applicable tax credit. The federal residential solar credit under §25D expired for systems placed in service after December 31, 2025, and some states maintain their own credit or deduction programs. Because incentive rules, market conditions, and tax laws change, readers should confirm current program terms directly with their state energy office, public utility commission, the relevant utility's tariff, or the IRS. This page provides general background information only and does not constitute tax or financial advice.

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Verified as of June 2026. How we verify this data. Informational only — not tax or legal advice.