An S-REC (pronounced “ess-reck”) is an acronym for a Solar Renewable Energy Certificate, which a brilliantly simple, yet confusing, abstraction we’ll attempt to explain. (They are also commonly known “solar credits”, which unfortunately only adds to the confusion, since the term “credit” leads some people to mistakenly think S-RECs will save them money on taxes, which is not the case.)
S-RECs are a specifically solar version of Renewable Energy Certificates (RECs), which were originally invented to create markets for renewable energy back in the late 1980’s. Two excellent YouTube videos, one by the EPA and the other by CRS explain them quite well: https://www.youtube.com/watch?v=_12VYXms6-c and https://www.youtube.com/watch?v=opJMrzNauFQ
An S-REC is said to be the embodiment of all non-energy attributes of the generation of one megawatt hour of solar energy, and it is created when that much solar has been added to the power grid from a specific facility. Such attributes are fundamentally environmental, since solar generation does not produce emissions or undesirable byproducts the way non-renewable generation resources do. In other words, an S-REC functions as a proof of origin for a whole megawatt hour of solar grid energy. Most S-RECs are third-party certified, to insure their legitimacy.
When an S-REC is consumed (or “retired”) in conjunction with use of 1 MWh of grid electricity, it is said that 1 MWh of solar electricity was consumed because both the solar claim (the S-REC) and the matching amount of energy was used. Once an S-REC is retired, it can’t be used again. This matching is the only legal way that solar (or any form of renewable energy) can be used within the grid. For businesses or anyone making a renewable energy use claim commercially, the Federal Trade Commission requires and enforces this matching.