How Much Is an SREC Worth in New Jersey?

Solar Renewable Energy Certificates (SRECs) offer a financial incentive for individuals and businesses in New Jersey adopting solar energy. Understanding an SREC’s value is key to assessing the economic benefits of solar installations. This mechanism helps bridge the gap between solar system costs and financial returns for owners.

Understanding SRECs and Their Purpose

A Solar Renewable Energy Certificate (SREC) is a tradable commodity representing the environmental attributes of one megawatt-hour (MWh) of electricity from a solar energy system. In New Jersey, an SREC is issued once a solar facility produces 1,000 kilowatt-hours (kWh) of metered electricity. These certificates can be sold separately from the power generated, providing an additional revenue stream for solar system owners.

SRECs incentivize solar energy generation and help states meet renewable energy goals. New Jersey’s Renewable Portfolio Standard (RPS) mandates that electricity suppliers source a percentage of their power from renewable sources, including a specific amount from solar. SRECs serve as the compliance instrument for these obligations.

Electricity suppliers purchase SRECs to demonstrate compliance with the state’s solar RPS requirements. This market-based mechanism encourages the development of solar energy infrastructure by offering a financial reward beyond the value of the electricity itself. The long-term demand for SRECs, driven by the RPS, provides a predictable source of revenue that can facilitate financing for solar installations.

Key Determinants of SREC Value in New Jersey

An SREC’s value in New Jersey is primarily shaped by market supply and demand. When SREC supply exceeds demand from electricity suppliers, prices tend to decrease; conversely, if demand outpaces supply, prices usually rise. The volume of new solar installations directly influences SREC supply.

New Jersey’s Renewable Portfolio Standard (RPS) significantly drives SREC demand by setting increasing solar energy procurement requirements for electricity suppliers. To comply with the RPS, suppliers must either purchase SRECs or pay a Solar Alternative Compliance Payment (SACP). The SACP acts as a price ceiling for SRECs, as suppliers will pay the penalty rather than purchase SRECs at a higher price. For example, the SACP for the 2025 energy year is $208 per megawatt-hour.

Policy changes and market liquidity also influence SREC prices. Changes in RPS targets, SACP levels, or SREC eligibility rules can significantly impact the market. The ability to bank SRECs for a period, such as five years, can also affect market behavior and pricing by allowing for strategic holding or release of credits.

New Jersey transitioned from a fluctuating SREC market to a fixed-price incentive program for new solar installations under the Successor Solar Incentive (SuSI) program, which includes SREC-II. For residential and community solar projects under 5 megawatts, SREC-II offers a fixed payment of $85 for every 1,000 kWh (1 MWh) produced, for 15 years. This fixed rate provides certainty for new solar owners, differentiating it from the prior market-based system for older solar installations.

Accessing Current SREC Market Prices

Accessing current SREC market prices is essential for solar system owners, as prices can fluctuate, especially for legacy SRECs not under the fixed-price SREC-II program. Due to the dynamic nature of these markets, a fixed SREC worth cannot be provided. Market data can be found through various resources that track SREC activity.

SREC brokers and online exchanges are primary sources for real-time pricing. These platforms often provide bid and ask prices, reflecting current supply and demand. Some platforms, such as Flett Exchange and SREC Marketplace, offer online trading or broker-assisted sales.

Additionally, the New Jersey Board of Public Utilities (BPU) and New Jersey’s Clean Energy Program (NJCEP) websites may offer information or links to resources that track market activity and historical trends. When interpreting price data, it is important to consider the “vintage” or energy year of the SREC, as older SRECs may have different values and expiration dates. Prices are also influenced by the annual reduction in the SACP, which occurs each June for the new energy year.

Participating in the New Jersey SREC Market

Participating in the New Jersey SREC market involves several steps for solar system owners, from initial registration to eventual SREC sale. The process begins with registering the solar project with the appropriate state program, such as the SREC Registration Program (SRP) or, for newer systems, the Successor Solar Incentive (SuSI) program. This registration typically occurs before installation and includes system equipment and estimated production details.

After installation and final inspections, post-construction documents are submitted for final certification. Upon certification, system owners receive a unique identification number and instructions to establish an account with a SREC tracking system, such as the Generation Attribute Tracking System (GATS). This system tracks solar energy production based on readings from a revenue-grade meter installed with the system.

Once a project generates 1,000 kWh (1 MWh) of electricity, an SREC is created and deposited into the owner’s electronic account in GATS. System owners must report their energy production regularly, typically monthly, by entering meter readings into the tracking system. These SRECs can then be sold through various channels.

Options for selling SRECs include directly engaging with SREC aggregators or brokers, who facilitate transactions for system owners, or using online trading platforms. Aggregators can simplify the process, often handling the sale for a fee. Some owners may also opt for long-term contracts with purchasers, which can provide price stability.