Solar Renewable Energy Certificates (SRECs) in Massachusetts: History, Status, and Alternatives

Massachusetts pioneered one of the earliest state-level solar certificate markets in the United States, establishing a framework that directly shaped how residential and commercial solar owners monetized generation beyond electricity savings. This page covers the definition, historical arc, current status, and successor mechanisms of the Massachusetts SREC program — including the transition to SREC II and the eventual replacement by the Solar Massachusetts Renewable Target (SMART) program. Understanding this history matters for system owners who hold legacy SREC contracts, those evaluating the Massachusetts clean energy center role in program administration, and anyone comparing incentive structures across program generations.

Scope and Coverage

This page covers Massachusetts-specific solar certificate programs administered under state jurisdiction, primarily governed by the Massachusetts Department of Public Utilities (DPU) and the Massachusetts Clean Energy Center (MassCEC). Federal certificate markets, out-of-state REC programs, and voluntary green power markets administered by private certification bodies such as Green-e are not covered here. The legal authority for Massachusetts REC rules derives from the Massachusetts Global Warming Solutions Act (M.G.L. c. 21N) and the Renewable Portfolio Standard (RPS) regulations at 225 CMR 14.00 and 225 CMR 15.00. Entities operating solar systems in Rhode Island, Connecticut, or other New England states are outside the scope of this page, even if those systems interconnect through shared grid infrastructure.

Definition and Scope

A Solar Renewable Energy Certificate (SREC) is a market-based instrument representing the environmental attributes of 1 megawatt-hour (MWh) of electricity generated by a qualifying solar photovoltaic system. SRECs are distinct from the electricity itself — a system owner can sell the electricity to a utility or consume it on-site, and separately sell the SREC to a retail electricity supplier or broker on the open market.

Under Massachusetts RPS regulations (225 CMR 14.00), retail electricity suppliers serving Massachusetts customers are required to source a defined percentage of their electricity from qualifying renewable sources each year. A portion of this obligation must be met specifically by solar generation, creating mandatory demand for SRECs. The mandatory nature of that demand — backed by penalty payments called Alternative Compliance Payments (ACPs) — gave SRECs their market value. The ACP for the RPS Solar Carve-Out was set at $550 per MWh (Massachusetts DOER, RPS Solar Carve-Out), which effectively established a price ceiling during the original SREC I program.

The SREC market applied exclusively to systems registered under the RPS Solar Carve-Out or RPS Solar Carve-Out II frameworks. Systems connected to the broader RPS Class I category do not generate SRECs in the Massachusetts-specific sense and are outside this classification boundary.

For broader context on how solar energy systems function and generate electricity in the state, see How Massachusetts Solar Energy Systems Works: Conceptual Overview.

How It Works

The Massachusetts SREC mechanism operated through a three-phase process:

1. System Registration — A solar installation qualifies by registering with the Massachusetts Department of Energy Resources (DOER) through the NEPOOL Generation Information System (NEPOOL-GIS), operated by ISO New England. The system must meet capacity, metering, and interconnection requirements.

2. Generation Tracking — A revenue-grade production meter reports output data to NEPOOL-GIS on a monthly basis. For every verified MWh of generation, one SREC is issued into the system owner's NEPOOL-GIS account.

3. Certificate Sale — The system owner or an aggregator sells SRECs to retail electricity suppliers through bilateral contracts, spot transactions, or auction platforms. SREC prices fluctuated between approximately $285 and $550 per MWh depending on market supply and ACP levels. The DOER published quarterly market data tracking registered capacity and certificate issuance.

4. Compliance Retirement — Retail electricity suppliers retire purchased SRECs against their annual RPS Solar Carve-Out obligation. DOER verifies compliance and may assess ACP charges for any shortfall.

SREC I systems that were registered by a specified qualification deadline received a 10-year eligibility window for certificate generation. SREC II, which opened in 2014 to address SREC I market saturation, maintained the same mechanical structure but introduced a declining ACP schedule to manage oversupply risk.

The regulatory context for Massachusetts solar energy systems provides additional detail on how DOER and the DPU interact with program compliance structures.

Common Scenarios

Legacy SREC I System Owner
A homeowner who installed a 6 kilowatt (kW) system in 2012 and registered under SREC I would have received a 10-year SREC generation window, expiring around 2022. Such systems now produce electricity but no longer generate tradeable SRECs unless they qualified for transition to SMART program incentives.

SREC II Registrant
Systems registered under SREC II after 2014 faced a lower ACP ceiling of $300 per MWh (DOER, SREC II program documentation), which compressed achievable market prices compared to SREC I. SREC II remained active until SMART program launch in 2018 effectively closed new SREC II registrations.

Commercial System with Aggregated SRECs
Larger commercial installations — typically above 25 kW — often worked with SREC aggregators who pooled certificates across multiple systems to achieve better pricing in bilateral markets. Aggregation did not alter certificate validity but shifted transaction costs.

Post-2018 System Owner Under SMART
New solar installations in Massachusetts commissioned after the SMART program launch are not eligible for SREC programs. Instead, they receive a fixed incentive rate per kilowatt-hour (kWh) through the Massachusetts SMART program, which replaced the market-based SREC structure with an administrative price set by DOER.

A comparison of the two models:

Decision Boundaries

Which program applies to an existing system?
The determining factor is the Registration Date in NEPOOL-GIS relative to SREC I and SREC II qualification deadlines. Systems that missed SREC II registration deadlines and did not achieve SMART enrollment are not covered by any active state incentive mechanism unless they qualify under a separate program such as community shared solar — see Community Shared Solar Massachusetts for that classification.

Can a system participate in both SREC and SMART?
No. Massachusetts regulations prohibit dual enrollment. A system receiving SMART incentive payments is categorically ineligible for SREC generation. The Massachusetts solar incentives and rebates page outlines how these program boundaries interact with federal incentives such as the Investment Tax Credit.

What happens after a SREC eligibility window closes?
The solar system continues to generate electricity and may be eligible for net metering credits under net metering in Massachusetts, but the SREC-specific revenue stream terminates. No automatic transfer to SMART occurs — SMART enrollment required a separate application during open program windows.

Do SRECs affect permitting or inspection status?
SREC registration is an incentive-layer process and does not alter local permitting or inspection obligations. All Massachusetts solar installations must meet 780 CMR (Massachusetts State Building Code) requirements and applicable electrical codes regardless of SREC eligibility. The SREC registration process also does not substitute for utility interconnection approval.

For a complete overview of Massachusetts solar programs, the Massachusetts Solar Authority home provides orientation across program types, geographic considerations, and eligibility categories.

References

• Massachusetts Department of Energy Resources — RPS Solar Carve-Out (SREC I)
• Massachusetts Department of Energy Resources — RPS Solar Carve-Out II (SREC II)
• Massachusetts DOER — SMART Program
• 225 CMR 14.00 — Renewable Energy Portfolio Standard, Massachusetts
• 225 CMR 15.00 — Renewable Energy Portfolio Standard for Alternative Energy, Massachusetts
• ISO New England — NEPOOL Generation Information System (NEPOOL-GIS)
• Massachusetts Clean Energy Center (MassCEC)
• Massachusetts Global Warming Solutions Act — M.G.L. c. 21N