What's the Difference Between SRECs and TRECs? (Homeowners' Guide)

September 6, 2022

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Solar renewable energy certificates (SRECs) and transition renewable energy certificates (TRECs) allow you to earn money from your solar panels. However, if you live in New Jersey, it’s vital that you know the difference between these two! While both programs pay you for solar power, the state stopped the SREC program in 2021.

Additionally, property owners should understand how solar power works and earns money for them overall. After all, the more you know about solar panels, the more likely they are to earn top dollar for you! Also, remember that you can typically ask any solar questions to an installer in your area. He or she can answer questions about how solar works and if it’s right for you.

What Are SRECs?

First, it’s vital to learn how SRECs work. Second, you can then better understand how they earn you money! Note that SRECs are credits or “certificates” that represent the environmental benefits of solar power. A solar panel earns one SREC for every megawatt-hour or 1000 kilowatt-hours of electricity produced.

Next, utility companies typically buy those certificates from property owners. These certificates then become part of that company’s Renewable Portfolio Standards. These state standards require utility companies to produce a portion of their energy from solar power.

srecs for a home solar system in NJ

By purchasing these certificates, utility companies then show that they are rewarding or incentivizing solar power production. This process helps fulfill those state standards for their Renewable Portfolio.

What's the Difference Between SRECs and TRECs?

In brief, both SRECs and TRECs provided property owners with credit for solar power produced by their panels. Solar renewable energy certificates (SRECs) pricing was variable. On the other hand, transition renewable energy certificates (TRECs) pricing is fixed.

The government-based solar renewable energy certificates (SRECs) pricing on supply and demand. In other words, your earnings might go down if demand for solar power decreases. Your earnings would also go up as demand increased.

Fixed transition renewable energy certificates (TRECs) pricing guarantees you’ll earn a certain amount for every solar megawatt produced. The market doesn’t affect its price no matter the demand. Also, the transition renewable energy certificates (TRECs) introduce a 15-year program versus the SREC 10-year program.

Are SRECs Going Away?

The SREC program in New Jersey closed in early 2021. However, this doesn’t mean that you can no longer earn money from solar power production on your property! As said, the TREC program allows property owners to earn money from solar produced on their residential or commercial property. These work just like SREC but offer a fixed rather than variable price for every megawatt-hour of electricity produced.

Note, a solar facility needs approval from the state before becoming eligible for the TREC program. The state’s Transition Incentives Program assigns every approved facility a unique registration number. Also, you must provide your meter reading every month for your certificates. Registrants can get started at https://www.pjm-eis.com/.

Although New Jersey opted for a new TRECs program, these states continue to have a SRECs program: Massachusetts (which may not be open to new homeowners), Pennsylvania, Washington D.C, Delaware, and Ohio.

Is Net Metering the Same as SRECs?

The good news for property owners is that net metering is not the same as SRECs! Why is this good news? First note the net metering process so you better discern their differences.

Net metering refers to solar power systems located on private property that’s still wired to a public utility. As those systems produce power, it’s sent back to the electrical grid. The property owner then receives a credit for that power produced.

As an example, suppose your home uses $100 worth of electricity in a month. Your solar panels produce $60 worth of electricity. You would receive a credit for that $60 and a bill for the remaining $40. In turn, net metering reduces or potentially eliminates your electricity bills.

As said, SRECs are different than net metering. Consequently, those solar panels can earn money for you in more ways than one! With net metering, you reduce your electricity bills. Additionally, utility companies might pay you for those SRECs or TRECs earned by your solar panels.

How Much Can You Earn With TRECs in New Jersey?

There is no “one size fits all” answer about how much you might earn with solar certificates in New Jersey. However, note that an average household might use a 7.2 kW system. This system usually produces 9000 kilowatts per year, earning 9 TREC certificates.

Figuring a $91.20 price per certificate translates to about $840 per year for your TRECs. As said, this is in addition to net metering, which can lower your utility costs by hundreds if not thousands of dollars every year!

SRECs & the Solar Tax Credit

Solar tax credits and SRECs are entirely different! The solar tax credit refers to a credit you claim on your tax returns for your solar panel installation costs. The 2022 Inflation Reduction Act offers a 30% tax credit for solar through 2032. Then, the credit reduces to 26% in 2033 and 22% in 2034. Your tax professional can explain this credit in more detail.

Go Solar New Jersey is happy to provide this information about solar renewable energy certificates (SRECs) and transition renewable energy certificates (TRECs). Hopefully, you found it helpful in understanding how solar can earn a property owner money with their use! If you’re ready for clean, green solar power, call our New Jersey solar panel installation contractors today. We’re happy to answer all your questions and provide a FREE consultation and price quote. For more information, just give us a call!


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