How do SRECs work?
Each time a solar installation generates 1,000 kilowatt-hours (kWh) of electricity, an SREC is earned. Solar project owners report the energy production to the Generation Attribute Tracking System (GATS). This reporting allows SREC’s to be placed in the customer's electronic account. SRECs can then be sold on the SREC Tracking System, providing revenue for the first 10 or 15 years of the project's Qualification Life.
The Clean Energy Act, signed by Governor Murphy on May 23, 2018, included the following provision: "For all applications for designation as connected to the distribution system of a solar electric power generation facility filed with the Board after the date of enactment of P.L. 2018 c. 17 (C. 48:3-87.8 et al.) the SREC term shall be 10 years." L. 2018, c. 17, 2(d)(3).
On October 29, 2018 the New Jersey Board of Public Utilities clarified the language above as follows: NJ SREC Update: Implementation of New 10-year SREC Term.
Electricity suppliers, the primary purchasers of SRECs, are required to pay a Solar Alternative Compliance Payment (SACP) if they do not meet the requirements of New Jersey’s Solar RPS. One way they can meet the RPS requirements is by purchasing SRECs. As SRECs are traded in a competitive market, the price may vary significantly. The actual price of an SREC during a trading period can and will fluctuate depending on supply and demand. See recent SREC trading prices.