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The Virginia SREC Market Outlook (Oct 2025)
The solar carveout is poised for an expansion.
SRECs in Virginia are, as of October 2025, trading in the low $20s. A few years ago, in 2022, it was the best of times when the price was up in the $60's.
There are three main reasons why the price has fallen:
Virginia’s REC market is oversupplied, specifically the "carveout" portion of the market.
Dominion (the required buyer of these RECs) has “banked” a few years worth of RECs.
Concern about federal challenges to RPS programs is creating uncertainty.
However, a legislative solution is underway, and there is reason to expect that the price may start to increase in the next 12-18 months.
Oversupply in the "Carveout"
The Virginia Clean Economy Act ("VCEA") requires that Dominion procure RECs to meet an annual clean energy requirement—a percentage that increases every year through 2045. For example, in 2025 the requirement is 26%, which amounts to roughly 14,000,000 RECs. The VCEA has a special "carveout" that requires 1% of that number of annual RECs come from smaller "distributed" energy generation—like from rooftop solar.
There's an oversupply because the 1% carveout is too small. Nearly 600,000 RECs will be minted this year but only about 140,000 RECs are required. When supply outpaces demand, prices fall. When the VCEA was conceived, stakeholders anticipated that the need may arise to adjust the number to reflect reality once the program clocked a few years of data.
Banked RECs
Dominion has been overbuying carveout RECs for a few years now in order to build up a surplus, and has "banked" several hundred thousand RECs. Those banked RECs have a shelf life of 5 years and can be used in order to meet annual compliance requirements without the need to procure additional RECs in the short term. Though there is still liquidity for VA carveout RECs, the market has dried up significantly in 2025.
Federal Challenges
Since President Trump took office, there has been worry that somehow the federal government will start meddling with state laws establishing RPS programs, such as the Virginia Clean Economy Act. We have not seen any direct action taken to date by the DOJ, and we don't expect that Virginia RPS program will ultimately face any credible challenges.
The Fix
For prices to rise, demand for RECs needs to increase. RECmint has been working behind the scenes to increase VA’s solar carveout, currently at 1%, to an appropriate level given what we’ve seen in the first 4 years of the open market here in the Commonwealth. Encouragingly, we saw HB1883/SB1040 pass this spring with bipartisan support, which would have increased the carveout to 3% then 5%, but Gov. Youngkin vetoed it as expected.
Even so, the 3%-5% increase was not adequate to balance the market quickly enough given its current state. Compliance markets are tough to get right when initially designed, but now there’s enough data to set it on the right track for coming years. We, along with the clean energy community, are working hard to increase the carveout in 2026. It turns out that in Virginia, the carveout percentage should be at least 5% to reflect a natural balance between energy being produced by small generators and larger utility-scale generating facilities
We have had a front-row seat to witness the incredible growth of solar in Virginia following the passage of the VCEA in 2020. There's nearly half a gigawatt of distributed solar deployed! With an appropriate adjustment to the carveout, we're hopeful that we'll see Virginia's distributed energy momentum carried into 2026 and beyond!
