Illinois’ New Incentive: Solar Renewable Energy Credits
What is an SREC? Solar electric system owners now have the opportunity to sell what’s known as the Solar Renewable Energy Credits (SRECs) their solar array produces. The sale of these SRECs will allow solar owners to recover up to 20% of their system’s initial price tag. This is in addition to the 30% refund taxpayers already get as a credit against their federal taxes.
To protect Illinois’s long-term energy supply and its natural environment, the State of Illinois is mandated to ensure that a certain proportion of the electricity used in-state comes from renewable resources. One way of doing this is recognizing that individuals, businesses, and organizations that generate their own electricity using the sun instead of buying it from the local utility, create a real and measurable benefit to the community (in addition to producing their own power). The Illinois Power Agency (IPA) will use the Renewable Energy Resources Fund to purchase SRECs starting this summer.
Through the SREC program, this community benefit from solar energy becomes a commodity that can be bought and sold, just like electricity itself. That’s what an SREC is – it’s the benefit to the community in terms of long-term energy security and protection of natural resources, that a solar array produces in addition to actual electricity.
The IPA will buy SRECs in 4 rounds. In each round, SRECs will be purchased starting with the lowest price first until the state-designated pot of money has been spent. In the vast majority of cases homeowners and small businesses will sell their SRECs through a middleman, referred to as an “aggregator” and the state will buy the SRECs in larger aggregated blocks. StraightUp Solar will facilitate the arrangements between our customers and the aggregator if your system was constructed on or after January 21, 2015. If your system was constructed before this date, StraightUp Solar will facilitate the process for a small administrative fee. Solar REC payments are distributed on a quarterly basis over 5 years.
Solar electric systems which began producing electricity on or after January 21, 2015 are eligible to sell their SRECs beginning in June. (If you installed prior to this date, you can sell your SRECs in September).
We are currently signing agreements with immediate access to SRECs that StraightUp Solar won in the first procurement in June. This means that your project can go forward with Guaranteed SREC payments over the first five years after construction. We are one of only a few installers in the state with this incentive in-hand and ready for your immediate benefit.
Summary & Example SREC Calculation
An SREC represents the environmental benefits of producing one megawatt-hour of electricity using solar power. The IPA is purchasing SRECs under a 5-year contract. 1,000 kWh of solar electricity = 1 MWh of solar electricity = 1 SREC. Calculation of SRECs for the purpose of the IPA’s purchasing event in June is done according to an estimated annual capacity factor of 14.38% for each kW installed.
How many SRECs is my array worth?
Mike’s 9.5 kilowatt (kW) Solar Array is worth approximately 59 SRECS
Because: 9.5 kW / 1000 kW * 14.38% * 8760 hours/year * 5 yrs = 59.83 SRECs
So therefore, Mike can enter into a 5-year contract to sell 59.83 SRECs to IPA.
How much will I be paid for my SRECs?
Though the SREC value is not published by IPA, but determined through competitive bidding, we use an estimate of $110 here as a conservative example.
59.83 SRECs * $110 = $6,581
Mike will receive approximately $6,581 divided into quarterly payments over 5 years.
This $6,581 revenue payment is in addition to the fact that Mike hasn’t paid a penny for electricity since his system went online last June, that he drives his Volt 1,000+ miles a month on 1.7 cents/mile guilt-free sunbeams, and he’s preventing 20,500 lbs of CO2 from entering our our atmosphere every year. Pretty sweet!
Call us today at (844) -97-SOLAR to take advantage of Illinois’ first ever SREC purchasing program.
We are signing contracts and guaranteeing SREC payments now!