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What’s a solar renewable energy credit (SREC)?

Solar renewable energy credits or SRECs show that a certain amount of electricity was produced using solar energy. They are typically used in conjunction with state-level renewable energy standards (also called renewable portfolio standards) to show that regulated entities are meeting their solar energy goals. In one innovative model, PSE&G, a utility in New Jersey, used their state's SREC program to provide loans to homeowners for their solar systems. The loans were then repaid using the SRECs generated by the customers' solar energy systems.