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Are My Illinois SRECs Taxable?

by: Jesse Feinberg
Posted on: February 26, 2019

Are your SRECs taxable?  Yes.  And it doesn’t matter which company you go with; it’s always the same legal question.  Let us explain more.

What Are SRECs?

One Illinois SREC represents the renewable attributes of one megawatt-hour of electricity generated by your solar system.  Under the Illinois Shines program, utilities such as ComEd must purchase these SRECs from you on terms dictated by the Illinois Power Agency, a unit of the State of Illinois.

Read more about Illinois SRECs here.

Why SRECs Are Taxable

Well, technically, SRECs themselves are not taxable.  SRECs are merely the “renewable attributes” of the electricity your solar system produces.  But, the proceeds from the sale of your SRECs to ComEd are taxable.  That’s because the IRS considers the sale of the SRECs to be a sale of property rights.  Specifically, you are selling your rights to the SRECs to ComEd.  In other words, ComEd would then get credit (SREC is literally an acronym for “solar renewable energy credit”) for producing renewable energy, allowing it to reach its 25% renewable energy target.

Why Section 136 Does Not Apply

You may be told that thanks to Section 136 of the Internal Revenue Code, renewable energy subsidies are exempt from taxation.  That is true.  But SRECs are not renewable energy subsidies.  They are property rights that you sell to ComEd.  An IRS private letter ruling literally describes the purchase by a public utility of residential SRECs:

2. The [S]REC payment shall not be treated as a subsidy provided (directly or
indirectly) by a public utility to a customer for the purchase or installation of any energy conservation measure as described in § 136(a).

Granted, we at Certasun are not legal experts, but Jones Day is an internationally recognized law firm and they reached the same conclusion.

Our “No Surprises Guarantee”

One good reason to work with Certasun is that we guarantee you no surprises.  We won’t sugarcoat the truth to win a sale.  If you’re going to owe taxes on something, we tell you straight up.  Read more about our unique No Surprises Guarantee.



by: Jesse Feinberg
Jesse is one of Certasun's founders.



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