SREC vs. Net Metering: What’s the Difference?

Get the Most Financial Payoff from Your Solar Panel System

Prospective solar customers often ask, “What’s an SREC vs. a net metering setup?”

SRECs and net metering are similar. They’re both smart ways for grid-tied solar panel system owners to maximize the financial results of their solar system. However, they’re different in the ways they ultimately pay out.

SRECs (pronounced “ess-wrecks”) put cash in your pocket whereas net metering is credited against your utility account to potentially “zero out” your energy bills. Read on to learn more about the differences between SRECs and net metering.

What is an SREC?

SRECs (Solar Renewable Energy Credits) are credits from a utility company for the production of clean solar energy. Essentially, utility companies are mandated by state and federal governments to produce a certain amount of clean energy. Instead of adding renewable energy, they’ll pay for the clean energy you produce. Often, utility companies heavily rely on “dirty” energy sources and states’ (and federal) laws must set minimums for clean energy production by energy companies.

The nice part about SRECs is that you’re not “losing” or selling the actual energy back to the utility. You’re able to use all the energy you produce and get paid. The utility company pays you to take credit for the clean energy produced by your solar array. It’s a no-brainer for folks with grid-tied solar systems!

Net metering vs. SREC
Do you know the difference?

How do SRECs work?

A homeowner earns one SREC for every 1,000 kilowatt hours (kWh) that their solar panel system produces. On average, a system produces somewhere between 2 and 6 SRECs per year. The exact amount you are paid depends on the rate offered by your utility. Keep in mind SRECs are not available in all states. Contact our expert solar consultants to see if you’re eligible.

Basically, SRECs are a way to generate income with your solar panels.

SRECs are not selling energy back to the grid, that’s net metering. With an SREC, the electric company is buying the excess power you produce so they can take credit for the clean power your solar panels made.

What is net metering?

Net metering is is also a credit but the money earned is applied to your bill, instead of receiving a check. The difference is that with net metering you won’t receive income per se.

Still, net metering saves money by lowering or even zeroing out your energy bill. Essentially, net metering is a system of credits and debits that is calculated based on how much energy your solar panels produce vs. how much energy you are consuming. By exporting your excess power back to the grid, you reduce future electric bills with net metering.

Like SRECs, the option for net metering is not available everywhere. Currently, 38 states (plus D.C., American Samoa, US Virgin Islands, and Puerto Rico) have net metering rules (2017).

How does net metering work?

The best way to explain net metering is with an example.

Let’s say that in July your grid-tied system produced more energy than what your home ended up using. That excess energy is sent out into the main utility grid for others to use and your account is credited (not paid, just credited with the amount of excess energy you made).

In December, your energy needs outweigh what your system produces. The credits you earned over the summer cover the cost of pulling additional energy from the grid in the winter.

These debits and credits will ebb and flow over the course of the year, keeping you from having to worry about monthly bills while ensuring you always have access to the energy you need. Once a year you can settle up with the utility company if you end up owing them anything.

Unlike an SREC, you won’t get cash for producing extra electricity. However, in some places you’re able to transfer your net metered earnings to another energy bill of your choice (another property, a family member, a school, etc.).

SUMMARY: SRECs vs. Net Metering

While SRECs vs. net metering are both great ways to get the most bang for your buck, they differ in how you are rewarded for the excess energy you produce.

Both are nice financial benefits to producing clean energy, the difference is the payout or distribution.

SRECs or net metering ensures you get the maximum financial benefits from your grid-tied solar energy system.

Want to find more tax incentives, solar rebates, SRECs, and other financial benefits to going solar?

MOXIE maintains a solar tax incentive, rebate and net metering info page for every state we service. But keep in mind, the laws change. Sometimes our tax credit, incentive, or solar rebate info is slightly out-of-date and behind the current law. The other challenging factor is that some utilities have their own rules. A state-wide SREC or net meter plan may not be available, but your city’s power or your regional utility company can have special opportunities that are different than the state-wide law.

For example, in Austin, TX, you can earn $2,500 by completing a solar education course and installing a qualifying solar system on your home. The power company, Austin Energy, also has options for renters to benefit through a community solar program.

You don’t have to decide between SRECs vs. net metering. The only decision to make is when to go solar.

Share this post

Get an instant ballpark solar estimate using satellites!