Illinois SRECs: Changes coming to the program in 2022

The best states for a home solar energy system aren't always the sunniest; those who benefit the most from installing a solar photovoltaic (PV) system for their home spend a lot of money on electricity and live in a state with good solar programs and incentives.

Illinois may not have the year-round sunshine of the Southwest, but it does have a great solar power market because of the available financial incentives. In addition to the 30% federal solar tax credit (investment tax credit or ITC) for solar system owners, Illinois residents can receive additional financial benefits through the state's solar renewable energy credits (SREC) market.

• Illinois' SREC incentives are managed under the Adjustable Block Program.

• Incentive values vary based on estimated solar production, the size of your solar installation, your utility company, and more.

• All applications to the Adjustable Block Program must be submitted by an approved vendor, which includes solar installers, project developers, and SREC brokers and aggregators.

• See how much you can save with this solar incentive on the EnergySage Marketplace.

Illinois's renewable portfolio standard (RPS) commits the state to produce 25% of its electricity from renewable energy by 2025. Of that 25%, 6% must come from solar. This is where SRECs come in – a utility can claim the electricity produced from your home solar system to help meet RPS requirements by purchasing SRECs. Essentially, you can generate additional income from your panels' power to help the state meet the solar requirement. The idea is to boost Illinois solar investments by increasing their monetary value and offering savings on electricity bills.

In the past, the Illinois Power Authority (IPA) bought SRECs in "procurement rounds." Homeowners 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 every quarter over five years and sell them to the IPA during the specified procurement rounds. With the new SREC program, it's a bit different – the current SREC program lasts longer, and the price you receive for each SREC is fixed and dependent on your utility company, system size, and how soon you go solar.

In 2017, the Illinois government created new legislation that altered the state's existing Renewable Energy Certificate (REC) program structure. The Future Energy Jobs Act (FEJA) took effect on June 1, 2017. It is designed to stimulate job creation in clean energy, assist the state in meeting its ambitious RPS goal by 2025, and promote energy efficiency.

FEJA established the incentive structure known as the Adjustable Block Program (ABP) or the Illinois Shines program. Rather than the old five-year SREC program, this new incentive structure lasts for 15 years worth of solar production. Illinois SRECs are sold at a fixed price determined by contracts rather than the variable market prices of the old SREC program. In addition to FEJA, the Climate and Equitable Jobs Act (CEJA) significantly expanded the ABP Program in 2021.

Illinois Shines block structure

The Illinois Shines or ABP Program uses a "block" structure to determine the value of an SREC. The state set a specific amount of installed solar (in megawatts, MW) and an associated SREC price for each block. Previously, the incentive transitioned to a new block with a lower price once it reached its set amount of installed solar – this resulted in fewer available incentive funds as more people installed solar. However, CEJA altered the program from this cascading approach to an annual block approach. Now, when a block's capacity is filled, applications are placed on a waitlist until the next program year (if filled mid-year). Block eligibility depends on a few 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: Incentive values are categorized based on the alternating current (AC) rating size of your system, which is the size of the inverter (systems under 10 kilowatts (kW), 10-25 kW, 25-100 kW, and so on).

• Utility company: Depending on your electricity distributor and load zone, you'll be placed into a specific block.

Block groups

Currently, two groups are associated with the ABP program: Group A and Group B. Block groups are determined by utility companies and load zones. Solar projects serviced by Ameren Illinois, MidAmerican, Mt. Carmel, Rural Electric Cooperatives, and Municipal Utilities located in MISO belong in Group A; Commonwealth Edison (ComEd), and Rural Electric Cooperatives and Municipal Utilities located in PJM belong in Group B.

Block categories

The block groups are divided into four main categories: Small Distributed Generation (DG), Large DG, Traditional Community Solar, Community-Driven Community Solar, and Public Schools. From there, each category is further divided by the size of the solar installation; if your installation produces less than 25 kW, you fall into the Small DG category, whereas the Large DG, Traditional Community Solar, Community-Driven Community Solar, and Public School categories all range from 25 kW up to 5,000 kW. Lastly, each size range within a category corresponds to an SREC price.

Once you determine your block group and the size of your installation (most home solar systems will qualify as a Small DG), you can use this chart from the Illinois Power Agency below to understand how much your SRECs might be worth. You can also check the current block status here.

Importantly, the pricing of your SRECs is fixed, and when you receive the incentive depends on the size of your solar panel system; if you're installing a system with an inverter size of less than 10 kW, you receive your SREC incentive as an upfront lump-sum payment. However, if your system is larger than that, you receive the payments over five years.

This incentive structure is very similar to the Megawatt Block rebate available in New York State and the SMART incentive in Massachusetts.

REC pricing for the 2022-2023 program year

The EnergySage Solar Calculator estimates the net 20-year savings of a 5 kW system installed in McLean County, IL, to be anywhere from $21,564 to $29,175. Under the Adjustable Block Program, this system falls into the Small DG category. Let's assume this is your solar panel system, and it generates six SRECs a year. If you go solar while there's still capacity for the 2022-2023 program year, your SRECs will sell for $78.51 each, earning roughly $7,066 in SREC sales!

The first step towards earning SRECs is to shop for a solar panel system. Once you move forward with a solar company, they'll work with you and the state to ensure your system is eligible for SRECs once it's operational. In Illinois, all applications to the ABP program must be submitted by an "approved vendor," meaning you won't work directly with your utility to receive your SREC payments. Instead, approved vendors facilitate the application process and transaction. This could be your installer, a project developer, a broker, or an aggregator. Browse approved vendors.

How long does it take to start seeing SREC payments?

Utilities are only required to issue SREC payments quarterly, so the time it takes to receive your check varies. Usually, you can expect to receive your payment within a year of your system's completion. 

Do businesses and nonprofits qualify for SRECs in Illinois?

SRECs are a great way for businesses and nonprofits to generate savings in Illinois. Like homeowners, small businesses and nonprofits can apply to the Illinois Shines program through an approved vendor. Additionally, eligible nonprofits and public entities can apply for the Illinois Solar for All program, which aims to promote access to the benefits of solar through program incentives.

Are you eligible for SRECs if you installed the system yourself?

If you are deemed a "qualified person" as defined by Illinois Administrative Code 83 § 468.20, then yes! But most people won't qualify unless they already have solar installation experience. Below is the state's definition of a qualified person:  

A person who performs installations on behalf of the certificate holder and has either satisfactorily completed at least five installations of a specific distributed generation technology or has completed at least one of five listed programs requiring lab or field work and received a certification of satisfactory completion. More information about these programs can be found in the Administrative Code document above.

With these incentives in the works, it's a great time to evaluate 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 your process with an estimate of costs and savings associated with solar, try out our Solar Calculator.