The best states to go solar aren’t always the sunniest; those who benefit the most from installing a solar PV system for their home spend a lot in electricity and live in a state with good solar incentives.
Illinois may not have the year-round sunshine of the Southwest, but it does have a great solar market because of the available financial incentives. In addition to the 30 percent federal solar tax credit for solar system owners, Illinois residents can receive additional financial benefits through the state’s solar renewable energy certificate (SREC) market.
Current SREC prices and incentives in Illinois
Illinois has a renewable portfolio standard (RPS) that commits the state to produce 25 percent of its electricity from renewable energy by 2025. Of that 25 percent, 1.5 percent must come from solar. Solar panel system owners can sell the SRECs that their panels produce alongside their electricity in order to help the state meet the solar requirement. This is why the renewable energy Illinoisans produce has a monetary value in addition to offering savings on electricity bills.
The price of an SREC can depend on supply and demand in the market. In the past, the Illinois Power Authority (IPA) bought SRECs in “procurement rounds.” Solar system owners would typically sell their SRECs through an aggregator who acts as a broker between property owners and the state. These brokers will pay property owners for their SRECs on a quarterly basis over the course of five years, and sell the SRECs to the IPA during the specified procurement rounds.
A homeowner in Illinois with a 7 kW system could generate about 8,000 kilowatt-hours (kWh) each year, equivalent to eight SRECs a year. In the spring 2017 procurement round, one SREC from a small-scale system sold for approximately $180, which means that this homeowner could expect as much as $1,440 a year in additional income from their SRECs.
Change coming to solar in the Land of Lincoln
Recently, the Illinois government created new legislation that will alter the current REC program structure in the state. The Future Energy Jobs Act (FEJA) took effect on June 1, 2017. This legislation is designed to stimulate job creation in clean energy, assist in the state in meeting its ambitious RPS goal by 2025, and promote energy efficiency.
FEJA includes a proposed new incentive structure known as the Adjustable Block (AB) Program. Rather than the current five-year SREC program in Illinois, this new incentive structure lasts for 15 years. The SRECs will be sold at a fixed price which is determined by contracts, rather than the variable market prices of the old SREC program.
The AB Program uses a “block” structure to determine pricing. The state will set a specific amount of installed solar (in megawatts) and an associated SREC price for each block. Once that amount is reached, the incentive will transition to a new block with a lower price. The result is that, as more people install solar, there are fewer funds available for the incentive. The block you’re eligible for depends on a multitude of factors:
- Capacity: As blocks fill up, the price for one SREC will decline.
- Type of project: Community solar is eligible, but for different values than systems located on your property
- Size of your solar installation: In the proposed pricing, incentive values are categorized based on size (systems under 10 kW, 10-25 kW, 25-100 kW, and so on).
- Utility company: You’ll be placed into a specific block depending on your electricity distributor and your load zone.
Below is an image of the current blocks and pricing information from the Illinois Power Authority.
Here’s an example to help you interpret the proposed pricing. Let’s assume you own a 7 kW system that produces 8 SRECs each year, and you are a customer of Ameren. Under the Adjustable Block Program, if you go solar while there’s still capacity in block 1, your 8 SRECs a year would sell for about $85 each. In your first year, you’ll earn $680 in SREC sales. If you install solar after block 1 fills up, you’ll be enrolled in block 2. Each of your 8 SRECs would sell for about $82, or $660 in the first year.
Because the pricing is fixed for 15 years, while a solar panel system may experience degradation throughout the years and produce slightly fewer SRECs overall, the number of dollars that each SREC sells for would remain the same.
This incentive structure is very similar to the Megawatt Block rebate available in New York State, as well as the SMART incentive in Massachusetts that will replace their current SREC incentive and likely to be implemented later this year.
What’s next for SRECs in Illinois?
The Adjustable Block Program is still being finalized. The current planning timeline indicates that the final implementation will occur in early 2019.
Whether you should wait for the new incentive to go solar depends on your preferences. You’ll reap benefits and savings from going solar in Illinois whether it’s before or after the new block structure is implemented.
With the current SREC program, the SRECs are selling for higher amounts, but for fewer years. This could be worth exploring if you want to see a more immediate financial benefit. Another incentive to go solar sooner rather than later is a simple one: to start saving on your electricity bill as soon as possible.
That being said, one of the biggest benefits of the new incentive structure is that it offers fixed pricing over time and for a longer period. While the proposed pricing offers less monetary value per SREC than the current incentive, there is also lower risk associated with the AB incentive than the current SREC program, where prices are dependent on the competitive bidding process in the IPA procurement rounds.
With these new incentives in the works, it’s a great time to start evaluating your solar options. Register on EnergySage today to get quotes from local, reputable Illinois installers. The quotes would include current incentives available in your area. Alternatively, if you want to start out your process with an estimate of costs and savings associated with solar, try out our Solar Calculator.