30% ITC Federal Tax Credit
The solar Investment Tax Credit is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States. A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government. The investment Tax Credit allows the system owner to apply the credit to his/her personal or business income taxes. Both the residential and commercial ITC are equal to 30% of the total investment which have commenced construction through 2019. We highly recommend discussing this incentive with your tax professional to see how a renewable energy tax credit may positively influence your personal or business financials.
Illinois Solar Renewable Energy Credits (SREC's)
Illinois has a renewable energy portfolio standard (RPS) that commits the state to produce 25% of its electricity from renewable energy by 2025. Of that 25%, 1.5% must come from solar. Each applicable SREC is awarded for every 1,000kWh produced. Solar Renewable Energy Credits provide a monetary value to the system owner in addition to the energy savings off of the existing electricity bill.
Recently, the Illinois government created new legislation that will enhance the current SREC program structure across the state. The Future Energy Jobs Act (FEJA) took effect on June 1st, 2017. This legislation is designed to stimulate job creation in clean energy, assist in meeting it's ambitious RPS goal by 2025, and promote energy efficiency throughout Illinois for residential, commercial, low income, and community solar.
FEJA includes a proposed new incentive structure known as the Adjustable Block Program. Rather than the previous five-year SREC program, this new incentive will provide a 15-year production payout once the system has been energized for 12 months.
Systems producing roughly 15,000 kWh/year and under will receive a lump sum payment.
Systems producing over 15,000kWh/year will receive 20% payment each year for 5 years.
The Adjustable Block Program uses a "block" structure to determine available REC pricing. The state has set a specific amount of installed solar (in megawatts) for an associated REC price on each block. Once the Block 1 goal is reached, the incentive will transition to a new block (2 then 3) with a lower price. This program is designed to offer a higher incentive for systems which are installed and energized earlier in the program.