SREC’s, or ‘green tags’ are certificates issued to owners of renewable energy systems. SREC prices are locked-in for fifteen years. In New Jersey, power generated by solar energy collectors can be tracked, and registered on a state website. Whenever the amount of power generated reaches one MW (megawatt), a certificate, or tag, is issued and registered in the name of the system owner.
Utility companies are required to show that a certain percentage of their power comes from renewable sources. Building renewable energy generating systems statewide takes time, so the state allows these companies to satisfy a portion of their renewable energy requirement by purchasing SREC’s from system owners.