SREC-II pays New Jersey solar owners a fixed rate for every megawatt-hour their system produces, locked in for 15 years from the date they register. It runs inside the state’s Successor Solar Incentive (SuSI) program and pays separately from your regular net metering credits.
What Is SREC-II
If you’re asking what SREC-II is, the short answer is that it stands for Solar Renewable Energy Certificate II, the current version of New Jersey’s long-running solar incentive. It replaced the state’s older, market-priced SREC program, which became too volatile to rely on as more homeowners went solar.
New Jersey created the Successor Solar Incentive program, commonly shortened to SuSI, to fix that problem. It pays a fixed, government-set price instead of a fluctuating market rate.
SREC-II lives inside SuSI’s Administratively Determined Incentive, or ADI, track. That track covers nearly every residential system in the state, along with commercial systems up to 5 megawatts.
Instead of selling your certificates on an open market where prices swing month to month, the state guarantees a set payment per certificate for the life of your contract.
How Does SREC-II Work, Step by Step
Homeowners researching how does SREC-II work usually want the mechanics, not just the concept. Here’s the process from installation to payment.
- Your system generates electricity: This happens automatically any time the sun is out, tracked by a dedicated production meter separate from your regular utility meter.
- Production reports into PJM-GATS: Every kilowatt-hour your system produces is logged into the regional tracking system that officially issues the certificates.
- Every 1,000 kWh becomes one SREC-II: Once your system accumulates one megawatt-hour of production, you earn a single SREC-II certificate.
- The state pays a fixed rate per certificate: For systems registered under the current ADI schedule, that rate is $85 per SREC-II.
- Payments continue automatically for 15 years: You don’t sell certificates yourself. Your installer handles registration, and payments arrive on a set schedule without you doing anything further.
For a typical residential system, that adds up to real annual income. An 8 kW system, for example, can earn upwards of $800 a year in SREC-II payments alone, on top of whatever you save through net metering.
SREC-II NJ 2026: What Changed
If you’re comparing SREC-II NJ 2026 numbers to what older homeowners received, the rate has changed. New Jersey’s original SREC program let certificate prices float with market demand, which sometimes worked in a homeowner’s favor and sometimes didn’t.
Prices could spike when demand was high, but they could also drop sharply if the market became oversupplied. That made it hard for homeowners to predict what their system would actually earn over time.
SuSI’s ADI track replaced that uncertainty with a locked rate that’s set on your registration date and cannot be reduced later, even if the rate offered to new applicants drops in a future year. This gives homeowners a dependable number to plan around instead of a moving target.
This matters more in 2026 than in past years, since the 30% federal residential solar tax credit expired for homeowner-owned systems installed after December 31, 2025. With that federal credit gone, New Jersey’s state-level incentives, including SREC-II, now carry a larger share of the total return on a solar investment.
Net metering and the sales and property tax exemptions still apply on top of SREC-II. That’s part of why New Jersey continues to rank among the strongest states for solar economics even without the old federal credit in the picture.
SREC-II vs. Net Metering: They’re Not the Same Thing
A common point of confusion is how much does SREC-II pay per year compared to your regular electric bill savings. These are two separate income streams that stack on top of each other.
| Incentive | What It Pays For | How You’re Paid |
| SREC-II | Environmental value of the electricity your system produces | $85 per MWh, fixed for 15 years |
| Net metering | Excess electricity sent back to the grid | Retail-rate bill credit, trued up annually |
| Sales tax exemption | Solar equipment purchase | No sales tax at time of purchase |
| Property tax exemption | Home value added by solar | Ongoing exemption from added assessment |
Net metering credits your bill for power your system sends to the grid. SREC-II pays you regardless of whether you use the electricity yourself or export it, since the payment is based on total production, not what happens to that electricity afterward.
Together, these two programs are a large part of why a New Jersey solar renewable energy certificate program is considered one of the strongest state incentive stacks in the country.
SREC-II and Leased or Financed Systems
Ownership status changes who actually receives the SREC-II income. If you purchase your system outright, whether with cash or a solar loan, the certificates and payments belong to you.
If you sign a lease or a power purchase agreement instead, the company that owns the panels collects the SREC-II payments and your net metering credits, since both go to the system’s legal owner.
That doesn’t necessarily make a lease a bad choice. Some homeowners prefer the lower upfront cost, and leasing companies sometimes pass part of that value through as a reduced monthly payment. But it’s worth understanding how a solar lease compares to a solar loan before deciding, since the SREC-II vs lease vs owned solar tradeoff can add up to thousands of dollars over 15 years.
Is SREC-II Income Taxable
Yes. SREC-II payments count as taxable income at the federal level, similar to other forms of renewable energy certificate income. Most homeowners simply set aside a portion of each payment to cover the tax owed, since the payments are modest and spread out over 15 years rather than arriving as one lump sum.
SREC-II Payment Schedule
The SREC-II payment schedule is straightforward once your system is registered. Certificates are issued automatically as your production meter reports data, and payments follow on a set cadence set by the SuSI program administrator rather than arriving as a single lump sum.
Most homeowners see payments show up periodically throughout the year as their system accumulates enough production to earn each new certificate. This continues for the full 15-year term regardless of changes to the program for new applicants.
How to Register for SREC-II
You don’t apply for SREC-II directly. Registration happens through your solar installer, who submits your system’s information to the SuSI program on your behalf.
- Confirm your installer is set up to register systems in the SuSI program before you sign a contract.
- Ask specifically what rate per MWh your registration date will lock in, since rates can be adjusted for new applicants over time.
- Get written confirmation of your registration once your installer submits it, rather than assuming it happened automatically.
- Use a total cost calculator to see how 15 years of SREC-II payments affect your overall payback period alongside net metering and any exemptions.
Ready to Understand Your Solar Contract’s Real Value
Programs like SREC-II can make solar significantly more affordable in New Jersey, but the numbers only work out the way you expect if your contract accurately reflects them. Solar Equity Solutions is BBB accredited and has worked through more than 5,000 solar contracts, with hands-on experience across nearly every major solar company operating in New Jersey and beyond.
If a salesperson quoted you SREC-II income that doesn’t match what your installer actually registered, that’s worth confirming before you’re locked into a 15-year agreement. You can start by visiting Solar Equity Solutions to see how they’ve helped other homeowners review their contracts.
Frequently Asked Questions
What is SREC-II?
SREC-II stands for Solar Renewable Energy Certificate II, New Jersey’s current solar incentive under the Successor Solar Incentive (SuSI) program. It pays a fixed rate for every megawatt-hour your system produces.
How does SREC-II work?
Your system’s production is tracked by a dedicated meter and reported into PJM-GATS. Every 1,000 kWh generated earns one certificate, which the state pays for automatically over 15 years.
How much does SREC-II pay per year?
The current rate is $85 per certificate under the ADI track. A typical residential system can earn several hundred to over a thousand dollars annually, depending on size and production.
Is SREC-II income taxable?
Yes, SREC-II payments are treated as taxable income at the federal level, so it’s worth setting aside a portion of each payment for taxes owed.
Do I still get SREC-II if I lease my solar system?
No. On a lease or power purchase agreement, the system’s owner, not the homeowner, receives the SREC-II payments and net metering credits.
This article is for informational purposes only and does not constitute legal or tax advice. Solar incentive programs change over time, so verify current SREC-II rates and eligibility with your installer or the New Jersey Board of Public Utilities before making a decision.