What is it? How do I get it? How much is it worth? Let start with the acronym itself. SREC stands for Solar Renewable Energy Credits.
1,000 kilowatt hours (kWH) = 1 MWH (1 Solar Renewable Energy Credit (SREC)
Where Do SRECs Come From?
SRECs solely exist because of Illinois’ interest in renewable energy and (possibly saving the planet). Illinois has set requirements for our utilities to produce 25% of their electricity from renewables by 2025.
This is beyond their current ability, so they must buy clean energy from other sources, like your roof! The utilities buy green credits that you are making. This is in addition to the fact that you’ve stopped using their electricity by producing your own! This is one of the great reasons to invest in a solar PV system for your house.
What is an SREC?
SRECs look at your energy production, by the MW, as a commodity to be traded. They are open to bidding in an open market. This means there is some fluctuation in price, but there is high demand until the utility companies can match the state mandates on their own.
This also means the sooner you produce solar energy, the more valuable the SRECs are. As more systems come online to sell their credits, the less value they will hold.
The Illinois Power Agency (IPA) has used the Renewable Energy Resources Fund to purchase SRECs since the summer of 2015, and PV systems that are approved are guaranteed to sell SRECs for five years (on a quarterly basis).
You don’t sell directly to the utility company. Typically production from residential solar panels and commercial solar systems will be pooled by an “aggregator” to be sold in larger blocks. Rethink Electric has a lot of experience in connecting your SRECS with the market and making sure your system is reaching its financial potential.
Rethink Electric can even get a system that predates 2015 into the SREC market. The demand is high and the utilities need your production to comply. Learn more about our Illinois solar services.
What is their value?
With the advent of SRECs you can save up to 20% of the initial cost of your PV system. Remember, that this is in addition to the 26% federal tax incentives (as of 2020) already offset your costs.
Here in Illinois, the Solar Renewable Energy Credits are calculated not by actual production but by what you should potentially be producing. The IPA has determined that SRECS will be calculated by multiplying the nameplate capacity of a system by 14.38%. This seems a little conservative, but it is what it is.
Example: Thus, assuming you have a 8 kW PV/ 1000kW (convert to MW) * 14.38%* 8760 hours/year (hours in a year) * 5 yrs = 50.39 SRECS
If SRECS are trading around $170/credit then $170 * 50 = $8500 back across five years. That cuts substantially down on the payback time for the system.
Let Rethink Electric help you get your solar array production in the market and make even more money back on your smart investment. Contact us today for a free solar consultation and estimate.