Based on a solar electric system with 5 kilowatts of electric generating capacity, and earning 6 SRECs, here is how SRECs are calculated in Maryland:

• Drawing on the amount of sunshine available, on average, throughout the year at this latitude and in the region's climate (accounting for rain, snow and overcast days), as well as the orientation of your solar panels and any shading, the formula is determined by an algorithm known as PVWatts and developed by the National Renewable Energy Laboratory in Golden, Colorado. It is used by the Maryland Public Service Commission (PSC), which regulates the state's utilities, and multiplies the size of the solar system to calculate the megawatt hours of electricity generated per year. For most homes ands businesses, that multiple is 1.2 for each kilowatt.
• A 5 kilowatt system annually earns 6 Solar Renewable Energy Credits: 
   
  5 kilowatt system x PVWatts multiple of 1.2 = 6 megawatt hours = 6 SRECs 
• The value of an SREC is based on the "Alternative Compliance Payment," or ACP, set by Maryland PSC. Utilities must pay this Alternative Compliance Payment as a penalty for not generating the electricity they need to meet the state's renewable electricity requirement (aka Renewable Portfolio Standard, or RPS). Their penalty is your reward for generating renewable electricity.  In Maryland, the ACP in 2010 is $400. 
• Utilities are permitted to make their Alternative Compliance Payment by purchasing SRECs in bulk. So, as you might guess, a cottage industry is materializing to aggregate SRECs for small system owners. Beware, some of the aggregators are very new to the business and only think about their bottom lines -- today. 
• The ACP in 2010 is $400. The market for SRECs for 2010 is conservatively estimated at 70% of that, or $280.
• SRECs x market price of $280 = $1,680

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