What are SRECS?
The incentive known as “Solar Renewable Energy Credits” is run through the “Illinois Shines” program, and is highly beneficial for anyone with the ability to invest in a moderate sized solar or wind power system. Renewed in September of 2021 under the “Climate & Equitable Jobs Act”, this is one of the few programs that actually pays you cash for the excess electricity your system produces.
You might be asking yourself why the state of Illinois even has a program like this. Illinois has a renewable portfolio standard commitment passed by the state legislature to produce 25% of its energy from renewable or green sources by the year 2025. Of that energy, no less than 1.5% of it must come from solar power. If utility companies fail to meet this standard by 2025, they will be forced to pay fines to the state each year until these mandates are met, so it is in the best interest of these utilities to encourage customers to install solar energy systems. Furthermore, the solar energy customers produce has a monetary value to these utilities- if a utility is not producing enough renewable energy on their own, they have to “buy” it from another source to satisfy their 1.5% / 25% mandate.
How does the Illinois SREC program work?
Owners of solar systems can generate SRECs from the energy their solar panels produce. Under Illinois law, one SREC is credited for each 1,000 kilowatt hours (or one megawatt) or power created and fed back into the grid.
The IPA (Illinois Power Authority) has in the past bought SRECs in “procurement rounds”. Solar panel owners could then sell SRECs through a broker or aggregator who acts as a middle-man between the state and owners of solar systems. These brokers then pay sellers for their SRECs every three months over the course of 5 years, meanwhile selling the SRECs to the IPA during these procurement rounds. The new program has changed a little however, with changes to duration of procurement rounds and fixing of prices received for SRECs based on your area of the state, system size, etc.
FEJA & The Adjustable Block
When the Illinois legislature created the “Future Energy Jobs Act” (FEJA) in 2017, the legislation was meant to stimulate job growth in new green industries. FEJA includes the incentive structure known as the “AB” or “Adjustable Block” program, also known as “Illinois Shines”. Under this program, SRECs are sold at a price set by contracts instead of variable prices based on market fluctuations as they were in the old SREC program.
The “block” structure determines the value of the SREC in which the state set an amount of installed solar power and an SREC price for each block. Once the amount in a set block is reached, the incentive transitions to another block with a lower price, with the ultimate result being as more people install solar panels, there is less money available for the incentive. The block which you fall into depends on several factors including:
- Type of solar project: Community, home and commercial installations, among others, are all valued differently.
- Utility: Your electricity provider and your load zone determine which block you’ll be placed into
- Block Capacity: As blocks reach their capacity, prices for SRECs go down. So the later you are in installing your solar system, the less money you can potentially make. So if you get added into block 1, you may earn $90 per SREC, but if block 1 fills up and you are inserted into block 2, you may only earn $80 per SREC.
- Size of Solar array: Your incentives become less valuable the bigger your system. So if you’re running an entire 50 acre solar farm they’re not going to pay you as much per kilowatt-hour as a smaller producer.
How Do you Earn SRECs?
The first and most obvious step is to install a solar panel system. This is more easily said than done, as there are a lot of factors to consider- Which company to go with, what types of panels to install, how many, where to install them, etc. This is a lengthy process and can often take 6 months to a year from beginning to end, so don’t expect it to be an overnight solution. You won’t call the Great Illinois Solar Company Tuesday afternoon and have free electricity by Friday. Or even next Friday or the Friday after that. It will be a process.
If you really are serious about earning SRECs, you’re going to need to produce a lot of electricity to feed back into the grid. To this end, you’re going to want to go over the amount of electricity you’ll need to run your house. Most homes require somewhere between 6 and 8 kilowatts to operate, so you’re going to want to install a system of at least 9-10 kilowatts so you are constantly feeding electricity back into the system.
Next, once your solar system is completely operational and producing, you’re going to need to complete the necessary paperwork. Most solar installers are imminently familiar with whatever paperwork might be required to receive solar incentives, including SRECs, so they can help you through the process and hopefully make it as painless as possible.
Overall, the Illinois Shines SREC program is one of the most encouraging incentives to produce solar energy in any state. Most of the time extra energy fed back into the grid is credited to your future electric bills, which is great and is more or less equivalent to cash, but there’s nothing quite like getting a check for the energy your system has produced. That’s why so many Illinois residents have made the decision to install solar electric systems, and if you’re in a financial position to make the investment, you should too. The worst case scenario is that your system pays for itself after a few years with energy savings and you “only” get several years of free electricity out of your panels. Best case scenario, you have a viable stream of income from your solar farm.