Solar Renewable Energy Credits (SRECs)
A solar array generates electricity. But it also contributes environmental benefits and energy security to the greater community. The contribution of 1000 kWhs of solar-generated electricity is considered to equal one SREC.
The Illinois Power Agency (IPA) uses funds provided by the state’s three investor-owned utilities to purchase SRECs on the three utilities’ behalf, so that they may meet their state-mandated renewable energy obligations.
The value of a solar array’s SRECs is significant, amounting to recovery of a sizeable percentage of the system’s original cost in either year 1 or over the first five years of operation, depending on system size.
A solar array owner contracts with a middleman known as an ‘aggregator’ to ‘sell’ to the IPA all the SRECs their array is expected to generate over the first 15 years. So if your solar system generates 9000 kWh one year, you have nine SRECs to sell. And again, these payments are in addition to the direct savings you reap from actually reducing your energy purchases from the utility.
Note that in Illinois SRECs are considered taxable income. Learn even more about SRECs.