by Tim Montague & Brian Haug

If you’re considering a commercial solar project, you might be aware that there is a very generous cash incentive called Solar Renewable Energy Credits (SRECs) in Illinois which helps solar project owners pay off their systems in 4-6 years. That’s right, your solar power plant can be cash positive in 4-6 years in Illinois – but only if you apply for the incentives and act soon because the incentives are in limited supply. SRECs are literally worth 30-50% of project value and are paid out in the first five years. There is also a Smart Inverter Rebate which sweetens the pot by 10%. Here is a blog post about the incentives we made a short while back (watch a video here).

There is $200 million worth of RECs coming into the market every year which is quite generous. But these SREC incentives are not infinite. As projects get built, the SRECS get spent and right now we’re spending them faster than they’re accumulating. What this means is that there will be funding ‘gap’ or ‘cliff’ starting in 2021 unless we get additional RPS legislation like the Pathto100 or other clean energy legislation which is in the works.

Earlier this month (March 5, 2020), the Illinois Power Agency announced that the 4th block of SRECs for large solar (so called DG or distributed generation) projects ‘closed’ meaning that they have begun to allocate 300 MW of ‘large commercial’ solar SRECs to actual solar projects; large commercial is defined as 11 kW to 2,000 kW DC. What happens next? Whatever you do, don’t postpone your solar project. Here’s why.

If you postpone, all you do is lessen the likelihood that you will receive highest possible value incentives (SRECs) for your renewable energy project. Now that Block 4 is closed, newly planned or energized systems will begin lining up in a Block 5 waitlist and it’s first come first serve. While we don’t know when Block 5 will open, it will open – have faith. FEJA funds 2800 megawatts of new solar in Illinois and blocks 1-4 only account for 666 MW of those RECs. Barring additional legislation Block 5 will eventually open – perhaps in 2022 or 2023. The timing of Block 5 is not predictable, but it will open and those business owners and facility operators who have the foresight to drive their clean energy projects forward will benefit first.

It’s a common misperception that the renewable energy market is somehow ‘on hold’ now that Block 4 is closed for large DG. Waiting will not serve you if you are truly interested in renewable energy. And there is additional legislation in the works to expand the share of clean renewable energy on the grid in Illinois. The Path to 100 is one such bill that will expand the and strengthen SREC funding in Illinois. But in a worst case scenario, you go ahead and build you projects, energize them, and begin collecting RECs. You will eventually be compensated for those RECs, it’s just a question of exactly when.

REC prices do decline by 4% from block to block. So if you’re considering a 2 MW AC solar project, your Block 4 REC would have been $38.42/REC in Ameren and $39.49/REC in ComEd territory. Block 5 values will be $36.88/REC in Ameren and $37.91/REC in ComEd. No big deal.

The Adjustable Block Program that manages these incentives will continue to be very popular. That’s the purpose of having a special value for RECs – they are designed to jump start a market. So dive in and benefit from these incentives. Read more about Tax incentives like the Investment Tax Credit here.

Reach out to us by phone or email. We love to hear from our readers and until then, Let’s Grow Solar!

Tim Montague tmontague@CESnrg.com
Tim is lifelong renewable energy enthusiast and NABCEP Solar PV Technical Sales Certified Professional. He works with commercial, industrial, government, nonprofit and campus clients across Illinois to help them achieve their energy conservation and sustainability goals through solar and battery storage solutions.

Brian Haug bhaug@CESnrg.com
Brian is the President of Continental Energy Solutions and has served on the Board of Directors of the Illinois Solar Energy Association for several years. Since 2017 he has served as the Board President of ISEA  and he has worked closely with dozens of other solar professionals in Illinois to expand funding for the renewable portfolio standard, help to get the Future Energy Jobs Act passed, and helped Illinois’ solar industry grow and mature. He is a Licensed Professional Engineer and holds an MBA from the University of Chicago. His mission is to speed the energy transition, creating a cleaner healthier environment for all.