Quick definition
Once electricity flows onto the grid, there's no physical way to tell a renewable electron from a fossil-fuel electron; they're indistinguishable in the wires. A REC solves this bookkeeping problem: it's a separate, tradeable certificate representing the environmental attribute of one megawatt-hour of renewable generation, tracked independently of the physical electricity itself.
Because RECs are separable from the underlying power, they can be sold to someone entirely different from whoever actually consumed that electricity, which is exactly what makes them a genuine market instrument rather than just an accounting label.
At a glance: an SREC is a specific solar-only category of REC used in states with dedicated solar carve-out requirements; a REC more broadly can come from any qualifying renewable source, including wind and hydro.
Why it matters
RECs are the mechanism that makes renewable energy claims verifiable and tradeable rather than purely self-reported. A company that wants to credibly claim it runs on renewable power needs a real, auditable way to back that claim, and RECs provide exactly that: a specific, quantifiable certificate that can be tracked, retired, and verified, rather than a vague marketing statement.
This separation between the certificate and the physical power is also what enables companies without their own on-site solar to still make legitimate renewable energy claims, by purchasing RECs equivalent to their electricity usage. It's a genuinely important tool for corporate sustainability programs and renewable portfolio standard compliance, letting renewable generation get financially credited and tracked even when the buyer and the physical generator are in completely different locations. The EPA's Green Power Partnership, a voluntary program that has worked with more than a thousand organizations purchasing green power, documents exactly this kind of procurement strategy in its own guidance materials.
For a residential solar owner, understanding RECs matters because selling them, where the local market allows it, is a real, separate revenue stream from simply using the power you generate. It's worth understanding, though, that selling your RECs generally means giving up the legal right to claim that specific electricity as renewable yourself. The EPA's Green Power Partnership states this plainly: the REC owner holds the exclusive legal right to claim the renewable electricity as "used," regardless of who physically generated it, a nuance worth knowing before assuming you can both sell the certificate and keep the green claim. For the numbers behind Renewable energy certificate (REC), the levelized cost of energy calculator in our Savings & Payback section walks through the calculation step by step.
Where you'll see this
The SREC market price comparison tool shows current pricing in solar-specific REC markets across different states.
The SREC value estimator works out the potential income from a specific system's solar-generated certificates.
REC accounting also comes up outside individual ownership: the community solar subscription savings calculator covers a structure where the environmental attributes of shared generation get allocated among subscribers in a related but distinct way.
This term comes up in corporate sustainability reporting, in state renewable portfolio standard compliance documentation, and any conversation about how renewable energy claims get verified and traded separately from the underlying electricity.
Related terms
Frequently asked
An SREC is a specific type of REC generated exclusively from solar power, used in states with a dedicated solar carve-out requirement. A REC more broadly can represent renewable generation from any qualifying source, including wind, hydro, or other renewables, not just solar.
Generally no. EPA's Green Power Partnership guidance is direct on this point: the REC owner holds the exclusive legal right to claim that specific electricity as renewable or "used," regardless of who physically generated it. Selling the certificate transfers that claim to the buyer, even though the physical electrons still came from your panels.
This depends on the specific state or provincial market and program rules. In some markets, residential system owners can register and sell RECs; in others, RECs may be automatically retained by the utility or not tracked at the residential scale at all.
Buying RECs is often faster, simpler, and more flexible than installing on-site solar, letting a company claim renewable energy usage for sustainability reporting without the capital investment or physical space an on-site system requires.