(Please note SRECs are not available to organizations purchasing solar electricity via a Power Purchase Agreement (PPA). In those cases, the original investor owns and sells the SRECs.)
Every solar system produces actual electricity, as well as an environmental and energy security benefit to the region.
The concept of an SREC is a way to place a value on this benefit, so that someone other than the system owner can buy just the benefit, and count it as its own contribution to the community. When an organization buys an SREC it is essentially buying the environmental benefits (leaving the system owner to use the electricity without claiming the environmental benefit).
Nationwide, the agreed upon standard is that one SREC equals the benefit afforded the community by the generation of 1000 kWhs (kilowatt-hours). And remember payment for a system’s SRECs are in addition to the direct savings the system owner reaps from actually using the electricity they produced.
In Illinois (as well as a few other states) there is a dedicated marketplace for this. To protect Illinois’ long-term energy supply and its natural environment, the Illinois Power Agency (IPA), on behalf of Illinois utilities, is tasked with meeting a goal of 40% renewable-sourced energy by 2030. This % requirement is known as a state Renewable Portfolio Standard or RPS. Most states in the nation today have an RPS.
The State’s 3 investor-owned utilities (not energy cooperatives or municipal utilities) must pay into a dedicated fund, and these dollars are collected from ratepayers. The utilities draw from this exclusively to purchase SRECs (according to specified state RPS targets) from owners of solar electric systems including those in cooperative and municipal utility territories.
The process through which the IPA buys SRECs changed under Illinois’s 2016 Future Energy Jobs Act. To make purchase of SRECs a more streamlined process, utilities buy the SRECs in larger quantities through bundled contracts with Approved Vendors. These Approved Vendors contract with IPA and the utilities and package together all the SREC paperwork for many small projects.
Approved Vendors work with various Designees to submit projects into the Illinois Shines SREC program. StraightUp Solar works as a Designee with Approved Vendor Carbon Solutions Group. Approved Vendors have expertise in legal/technical aspects of contracting with the utilities and IPA to buy individuals’ SRECs, which enables Designees like StraightUp Solar to do what we do best – build solar!
The value of each SREC has been determined by the State on a set schedule, in blocks of decreasing value. The sooner the consumer has a signed purchase agreement the more likely they are to obtain a contract for the higher value SRECs.
Due to the popularity of rooftop solar, the block of SRECs was filled by the end of 2020, awaiting new legislation to re-open the program. Finally in 2021, the Illinois General Assembly passed the Climate & Equitable Jobs Act (CEJA) with a commitment to reaching 50% renewables by 2040. This included re-opening new blocks of SREC funding. Blocks will close as they are filled.
If your home or business is in Illinois, reach out for a custom solar quote to discover how much you can save with SRECs as well as other possible incentives.
In Illinois you as a solar owner contract with an Approved Vendor (through your installer) to sell all the SRECs your system is expected to generate over the first 15 years. Then for systems under 10kW you receive a lump sum payment after your solar array has been installed in one lump sum. For systems larger than 10kW, the 15 year payment is spread out over 5 years. In both cases, you receive your payments from the Approved Vendor.
So if your solar system generates 9000 kWh one year, you have 9 SRECs to sell for that year. And again, these payments are in addition to the direct savings you reap from actually using the electricity you produce.
As the solar system owner you will sign the actual contract for your SRECs with our chosen Approved Vendor, who we have been successfully working with for several years. The contract will specify the maximum number of SRECs that the IPA is obligated to buy, and the exact price per SREC. The IPA pays the Approved Vendor for the SREC delivery. The Approved Vendor in turn distributes payments to their contracted solar owners.
A few other notable aspects of SREC programming: While the SREC sale is a purely paper transaction, there are safeguards in place to prevent individuals from selling the same SRECs to more than one party. Once a homeowner sells their SRECs, technically speaking the correct way to publicly describe their contribution to the larger community is that the homeowner is ‘producing green energy on behalf of the State of Illinois.’