SRECs serve as a mechanism to incentivize solar energy production by assigning a monetary value to the renewable energy generated. For every megawatt-hour (MWh) of solar energy produced, a solar energy system earns one SREC. These credits can be sold or traded, providing additional revenue for solar energy producers. The value of an SREC is influenced by market demand, regulatory mandates, and the existing policies in various states, leading to price volatility. SRECs play a significant role in achieving state renewable portfolio standards (RPS), which require utility companies to obtain a certain percentage of their energy from renewable sources.