How do Illinois SRECs work?
Solar system owners can create SRECs from the energy produced by their solar panels and arrays. One Illinois SREC equals 1,000 kilowatt-hours (kWh) of solar energy generated, or one megawatt (MWh). In other words, every time a MWh is produced by a solar array, another SREC comes into existence.
Owners sell their generated SRECs in Illinois for a 15-year contract into a market set up by the Illinois Power Agency (IPA). SRECs are sold separately from the actual electricity they produce, which means owners can use the electricity from their solar array to directly lower their home or business’ electric bill and sell the SRECs that get created from that energy to the buyer.
SRECs accrue as solar electricity is generated and are typically paid out annually within a 5-year period. For small residential systems under 10 kW (AC) the SREC payment will occur in one payment. Ultimately, these Illinois solar incentives help stimulate development of new renewable energy resources.
Don’t Forget about the Federal Investment Tax Credit Too!
Don’t forget about the 26% Solar Federal Tax Credit that is still available for solar owners as well (stepping down to 22% in 2023 and for residential phasing out thereafter and for commercial stepping down to 10%). That incentive is a dollar-for-dollar reduction in the income tax liability that a person or company claiming the credit would otherwise pay the federal government. The Energy Policy Act of 2005 created the investment tax credit (ITC) for commercial and residential solar energy systems. For the latest info as of January 2021 see our blog post.