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Solar Power Rocks

Clear info on home solar power rebates, tax credits, and other benefits

2017 Policy Grade

C

Avg. Yearly Savings

$109

Congratulations! You've found the ultimate guide to going solar in Illinois

2017 Policy Grade

C

Avg. Savings/yr

$109

Welcome to the 2017 Illinois solar power information page

Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.

The Land of Lincoln is the 5th most populous state in the nation, and has the 5th largest state economy. With all those people and all that business going on, it'd be a shame if there weren't some extensive incentive programs for residential solar power in place. The good news is strong solar power rebates help push the payback timeframe on a solar power system to a respectable 9 or fewer years. And with the Illinois Solar Energy Association gearing up to offer performance payments to solar generators, now is a great time to get into the solar game. Take a good look at our rundown of Illinois solar power incentives below.

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $3,500/kW! This is paired with the Illinois solar incentives you see below.

Your guide to going solar in Illinois

We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in Illinois. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

The Solar Strategy section is all about the various financial options you have in Illinois. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.

The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Illinois. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.

Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Illinois is doing to make solar more affordable for its citizens, you'll find it here.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in Illinois

Figuring out the best way to go solar in Illinois can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

Compare the Return of Different Solar Investments in Illinois

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or Power-Purchase Agreement (PPA). One thing it's important to note is: solar makes you a lot of money in Illinois. Yes, we said "makes!" You see, even though the state's electricity prices are pretty low, the state gets enough sun that solar saves you big money from day 1. And solar is cheaper than ever before, which, combined with the the Feds' 30% solar tax credit, means a solar panel system pays itself back quickly and makes you lots of money over its 25-year warrantied life!

Now let's discuss that chart above. We've examined three scenarios for going solar in Illinois, including a solar PPA, buying solar with a solar loan or home equity line of credit (HELOC), or buying solar with cash. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a HELOC and paying for the system over time (the orange bars) means you'll spend thousands of dollars less over time, while reaping a big financial benefit in year 1.

That's because you take a loan for the system, but you still get all the benefits of paying up front. In Illinois, that means the Federal tax credit, SREC sales, and big annual energy savings. With those incentives, you'll actually come out way ahead after the first year. And even though you'll be making loan payments for 15 years, the first-year windfall is so big, you'll never actually spend any of your own money.

Finally, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called third-party ownership. With a PPA, the solar installation company puts panels on your roof at no cost to you, and you by the eletrciity for a little bit less then you had been paying the utility company for their dirty energy. PPAs in Illinois are awesome, because all that sunshine means you start saving money right away. Your savings may start small, but they'll finish big, because the lease cost will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option even if you have equity or cash to put down, because it can save you tons of money!

Read more below about each of three very good options for solar in Illinois.

  Solar Power-Purchase Agreements in Illinois

A Power-Purchase Agreement (PPA) is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With a PPA, it's possible to get solar panels for $0 down and see big savings over 20 years!

As for PPAs in Illinois: the electricity costs here aren't very high—we're at almost exactly the national average—but the solar is cheap enough that the Illinois sunshine is enough to make solar power really profitable! That means a PPA saves you money starting on day 1. For now, the payments on a 5-kW solar system should be around $617 per year, but the energy the panels generate will save you $725 per year. That's $108 you get to keep in your pocket this year, just for saying yes to solar!

And those savings will only get larger over time. As the utility company raises rates, your PPA costs will go up by a smaller amount, meaning you'll see greater annual savings. Over 20 years, our estimate shows a total savings of $3,648. And the best part is the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!

Net Present Value: $997

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Illinois' $997 NPV on a solar PPA means you'd be that much better off spending your money on solar over the next 20 years than in, say, stocks. That number is pretty huge for a $0-down investment, so you can rest easy with a PPA in Illinois knowing you're doing right for your pocketbook at the same time as you're doing right by the planet!

Here's a little more about how a Illinois solar PPA works:

Example savings in Illinois

Annual Electric Bill Before Solar

$1,073

Annual Electric Bill After Solar

$348

Est. Annual Solar Payments

$617

Average Annual Savings

$109

Power-Purchase Agreements (PPAs) are the most popular form of what's called "third-party solar." A PPA just means your solar company owns the panels on your roof, and you pay for the electricity they produce. The numbers above show the savings with a solar PPA for an average home in Illinois. The typical electric bill before solar power is super expensive, but with a PPA, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!

Here's an estimate of the monthly savings for a solar PPA in Illinois:

With a PPA, your solar company essentially becomes a second utility provider, only the solar electricity is sold to you at a lower rate than the fossil fuel electricity you've been buying from the electric company! Note: your PPA won't eliminate your power bill from your regular electric provider, because you'll still need energy from the grid when the sun isn't shining. But it will save you money!

The less-popular cousin of the third-party solar family is the solar lease. It's basically like renting your panels for a set monthly payment, and getting all the energy they produce—however much it is. Don't get spooked by that language, though. A typical solar lease comes with energy production guarantees that will make sure you're getting what you paid for. In fact, if you're not offered a production guarantee with a solar lease, walk away.

Here's the best part of third-party solar: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.

Keep in mind, the numbers above are based on an average home in Illinois. If you're ready for a custom quote for a solar lease or PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Home Solar Power: PPA vs. Purchasing

To PPA, or not to PPA? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.

In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!

Additionally, if you go the PPA route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar PPA company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).

 Solar Loans in Illinois

You don't need thousands of dollars sitting around to pay for solar. If you finance a solar purchase with a loan or home equity, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in Illinois, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break!. You'll come out thousands ahead this year, and you'll see a spectacular profit over the 25-year life of your system. The reason this works so well is that you're paying over time, but reaping all the benefits now.

In Illinois, those benefits include energy savings, SREC sales, and a big Federal tax credit. Your energy savings will offset most of the cost of the loan payments, too, which might sound like it's too good to be true... so let's take a look at the numbers.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You have good eneough credit to qualify for a solar loan or get a home-equity line of credit (HELOC) for $21,250, with a fixed rate of 4.5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
  • You love making money without much risk.

Net Present Value: $3,138

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Illionois' $3,138 NPV on a solar loan means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. That's a huge number, and it shows how getting a loan for solar is so much better than the alternatives. You can rest easy with an Illinois solar loan knowing you're doing right for your pocketbook at the same time as you're doing right by the planet!

Here’s how the numbers pencil out for a Illinois homeowner who makes a solar purchase with a loan:

  • Installing a typical 5-kW solar system should start at about $21,250. That's how big your loan will need to be to cover the system cost.
  • The electricity you'll save in the first year of operation would have cost $725, but your annual loan payments will be $1,886, meaning you would spend $1,161 on solar this year, but...
  • You'll get a huge tax break! Uncle Sam will give you 30% of the cost of your system back as an income tax credit, which in this case means $6,375 you won't be paying the Feds this year, and on top of that, the state enables you to sell your SRECs to the utility companies, netting an extra $1,016 in solar income this year.
  • All those incentives mean you'll come out $6,229 ahead after year 1, and it's smooth sailing from then on out. You'll be able to sell SRECs and keep turning a profit until 2021, after which your yearly net cost (electricity savings minus loan payments) for solar will be $1,089 (about $91 per month). The difference between payments and savings will shrink as the cost of electricity rises but your loan payments don't.
  • By the time you've paid off your loan in 2031, you'll see yearly savings of over $1,000. After 25 years, your total profit will be $6,430! Really awesome for a $0-down investment.
  • On top of the green that will stay in your pocket, your system will mean green for the environment, too—101 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Illinois. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

 Buying Solar in Illinois

An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with lower equipment costs, the big Federal tax credits, and the Illinois Solar Renewable Energy Credit (SREC) market, solar costs less than ever before, and a solar installation pays itself off in 8 years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.

With a loan, you can make monthly payments instead of putting $21,250 down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have good credit or equity in your home, and you can secure an interest rate of 4.5% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $21,250, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced almost $13,500 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $725 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Net Present Value: $1,410

Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and Illinois' $1,410 NPV on a 5-kW solar system means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. With investment return like that, you'll be padding your wallet while you save the planet. Good job! But check out what happens to NPV if you buy the same system with a loan that you can pay back over time.

Here’s how the numbers work for a 5-kW rooftop solar system in Illinois:

  • Installing a typical 5-kW solar system should start at about $21,250. That's cheaper than solar has ever been, but it's still a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
  • Next, the Federal government offers a great income tax credit of 30% of post-rebate system costs. That's $6,375 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $14,875.
  • And during the year, your system will generate enough electricity to offset $725 of your bill. But Illinois law also enables you to sell your SRECs, at a price of about $168 a piece. That's another $1,016 in income when all is said and done, and that means a final first-year cost of just $13,134 for solar.
  • You'll be able to keep selling SRECs until 2021, and your electricity savings will quickly pile up, meaning your system will pay for itself in just 13 years. But your panels carry 25-year warranties, and they'll likely keep on kicking out kilowatts for a few decades or more. You'll see a total net profit of $13,473 by the end of that warranty. The internal rate of return for this investment is a solid 7.4%.
  • And here's a nice bonus to consider: your home's value just increased by over $17,000, too—your expected electricity savings over 20 years.
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 106 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Illinois. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Illinois Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Illinois:

RPS

25% by 2025

Grade: B

A Renewables Portfolio Standard (“RPS”) basically requires utilities in the state to source a percentage of energy from renewable sources by a given date. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.

Illinois has a solid goal of having 25% of its energy needs met by renewable energy sources by 2025. While this is by no means the most aggressive RPS in the country, it’s a really good way of getting electric utility companies to help the little guy (that means you!) get into the solar game.

What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.

RPS solar carve out

1.5% by 2025

Grade: B

Illinois mandates that 6% of its RPS (1.5% of total electricity) come from solar power. That’s a decent, but not spectacular number, but it means that the big utilities have an extra incentive to purchase generation from smart homeowners like you who produce their own power from solar panels.

What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!

Illinois Electricity Prices

$0.12/kwh

Grade: C

The average price of electricity in Illinois is 12 cents per kilowatt-hour (kWh), about a penny less than the national average. But everyone expects the price of electricity to rise dramatically very soon because of the EPA regulating the emissions of CO2 from power plants.

Whether you believe that’s a good idea or not, the bottom line is that electricity costs are going up for people that don’t produce their own electricity. This is how solar saves you money, today and long into the future.

Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.

The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

Illinois Net Metering

B

Grade: B

With net metering in place, your utility is required to track your renewable energy production and consumption during each monthly billing cycle. Any surplus you produce is carried over as a credit onto your future bills. Net metering is required to be available for you under Illinois law, unless your electricity is supplied by a cooperative or municipal cooperation. So far so good.

Illinois’ net metering policy would be just about perfect, if those credits hung around indefinitely, but they don’t. At the end of every annual period all remaining credits expire and revert back to the utility without compensation. You may select an annual period that ends with last day of either their April or October billing period, so at least you have a bit of flexibility to maximize your credit usage. What this means is that you need to make sure your solar system isn’t so big that you generate more electricity in a year than you use, not that you would want to anyway.

Note: Illinois is studying whether changes should be made to the net metering program. If the program is changed or done away with, it could have serious negative consequences for the financial returns of a solar installation here. Check here for updates.

What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.

The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.

Illinois Interconnection Rules

B

Illinois makes it pretty easy as a homeowner to connect to the grid with solar panels. Your residential system using certified equipment (our on-the-ground partners have still got that covered!) qualifies for Illinois’ simplified interconnection procedures, and it should be pretty easy for you to get on the grid and start taking advantage of net metering. Your connection also will not be required to carry additional liability insurance; such safeguards are limited only to very large projects where mandatory insurance coverage makes more sense.

Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.

Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.

Solar Incentives in Illinois

Illinois Solar Power Rebates

Chicago and Springfield only

Grade: F

Up until this year, Illinois had offered a rebate for all customers of investor-owned utilities (ComEd and Ameren). The rebate amounted to $1,500/kW back on solar systems, up to 25% of project costs or $10,000, whichever was less.

Sadly, the rebate is now closed, and it looks like it ain't coming back. That makes a typical 5-kW solar system in Illinois abot $5,300 more expensive than last year. Boo, Illinois.

There is still hope for residents of Springfield and Chicago, which each have their own solar grant programs. Your installer (click here to see what you can save with solar power on your home) will give you all the details on those and any other grants and rebates you may qualify for.

How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.

The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.

Illinois Solar Power Tax Credits

None

Grade: F

Illinois doesn’t offer any tax credits for solar power installations. This is a tried-and-true way other states use to encourage homeowners to go solar. Come on, Springfield! The good news is you’ll still qualify for the full 30% Federal tax credit.

About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)

The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.

Solar Power Performance Payments

$168/SREC avg.

Grade: B

Solar Renewable Energy Credits (SRECs) are generated when electricity is created from clean sources, like solar panels on your rooftop. What makes them valuable though are the hungry eyes of your utility company, who will pay you straight up cash for the SRECs you produce, just to be able to say they are meeting their RPS targets and avoiding higher alternative compliance fees to Springfield.

Solar Power Performance Payments are just extra money you get for feeding solar powered electricity into the grid. The utilities would rather reimburse you for producing solar powered electricity than make the investments in land, labor and equipment themselves. You just get more money, on top of the electricity savings! That’s the good news. The bad news is Illinois currently doesn’t have SRECs, for all practical purposes. However, $30,000,000 has been provided to fund SRECs in Illinois in 2015. Hopefully this will all come together and you will be getting a check, in addition to your savings on your electric bill. There’s no way to know for sure in advance how much you will get, but it’s expected to be as much or more money than you were spending on electricity! Get the electricity savings and tax credits now, get the SRECs in the future!

The price of SRECs in Illinois is expected to average $168 in 2016. As one installer we spoke to put it “the real goal of your system is to pay for itself via your electric bill savings, SRECs now are just the bonus on top.” To be sure, the $168 per SREC isn’t going to make you rich. But money is money, and SRECs may still get you a nice weekend on the lake! And you'll sign a contract to sell your SRECs at that price for 5 years, so it's a way to have stable, regular solar income on top of electricity savings.

Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.

If you don’t know what an SREC is, or how they work, check out this great SREC video

Property Tax Exemption

Special assessment

Grade: C

Illinois has a property tax incentive to encourage solar power use. When you register your solar system with the chief county assessment officer (again, our partners on the ground will take care of all of this for you (click here to see what you can save with solar power on your home), your solar equipment will be valued at no more than the value that would be given to a conventional energy system. That’s not as clear-cut as the 100% property tax exemption that we’ve seen in a lot of states, but money saved is money saved, right?

About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).

For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!

The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.

Sales Tax Exemption

Grade: F

Illinois offers no sales tax exemption up front, meaning you’ll pay between 6.25% to 10% of the installed costs. Other states do offer a 100% sales tax exemption, and Illinois even offers the exemption for wind energy installations, so the legislature needs to catch up here.

What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

Switch to solar and save $36.44/mo on avg ($0 installations available) - Click Here

The consensus on Illinois solar power rebates and incentives

It was a close call, but we just can’t give Illinois an A in solar policy. While a 9 year payback time-frame is pretty strong, it’s just a bit short of our target of 8 years or less in every state and if you don’t get a grant from the state or other agency then you are looking at a 9 year payback. On the other hand, if you get a state grant AND a local grant, you could be looking at a payback of 5 years or less!

Without strong statewide incentives, the future of solar in Illinois is uncertain, at best. With the solid but not spectacular payback time-frame, the chance of a REC and one of the nation’s few solar-specific carve-outs, Illinois is inconsistent enough to earn only a C+. With a few tweaks to existing legislation or a strong statewide tax credit, Illinois could take a place among the top states for solar.

49 thoughts on “Illinois Solar Power for your house – rebates, tax credits, savings

  1. I didn't vote for Madigan says:

    The job of the governor is NOT to put a budget together, it is to approve a budget that is put together by the state legislature, which is their job. The governor’s responsibility is to review and approve the budget. Keep things here factual and don’t mislead people who are easily impressionable with no knowledge of how government works. Rauner has stated he will not approve a budget that is a deficit spending budget, meaning spending without offsetting revenues. The democratically controlled legislature has spent Illinois into a horrible debt, one of the worst in the US so tax credits and rebates and such are not likely to return any time soon before basics are remedied first. So maybe in a millennia, if Illinois buckles down we can dig out of this horrible debt to be able to offer common sense rebates and credits for renewable energy.

  2. Sarbjit says:

    I am looking for solar system in my home

  3. PB says:

    Governor Rauner cannot put a budget together and so the Illinois rebate has been suspended for 2015, and Illinois should get an F for this, rather than a B. The electricity generated by solar gets incentivized via SREC because it’s an investment in the future. It improves capacity preventing additional power plants from being built, and it improves the environment. This is in contrast to oil subsidies that are not investments in the future. I’m not sure where the 200% figure comes from. If I generate electricity at 10 cents per kilowatt, the utility buys it at 10 cents. Profit to me is zero. Income generated via SRECs is for 5 years only, and is merely a way for utilities to buy capacity that they do not have to build. Think of it as selling a commodity. It does not permanently knock your rates down — you are not profiting monthly, long term.

  4. Anonymous says:

    How does the new Tesla technology effect solar? We are looking at buying a house now and consideration is the option to add solar upfront during renovation. Do you have to hook up to the current grid (com ed in our area) or would we now have the option of storing on the Tesla Battery Pack?

    1. Ben Zientara says:

      Hi there! We’re writing a new blog about the Tesla technology! It’s exciting and headline-grabbing for sure, but it’s not the right financil choice for homeowners—at least not yet! When the blog is up, it’ll be here: https://solarpowerrocks.com/?p=15966

  5. Anonymous says:

    Governer Rauner has suspended the 25% credit for solar installation in Illinois. It’s not clear to me why the energy produced would be worth 200% of market value (spot price of production plus the SREC amount which is predicted to be “a monthly income that’s as large as your electric savings”. Comments appreciated.

  6. Anonymous says:

    Please contact me? I’m hoping to get solar panels on my roof, also in a portion of the backyard.

    1. Hi! Just fill out a contact form from any of the links on the page and we will put you in touch with as many installers as you like!

  7. Anonymous says:

    Could someone inform me where in the Chicago area I can receive a certificate for a professional installers? Would appreciate for info

  8. Tina M says:

    So would it still be a better choice to go with soloar replacement over traditional gas furnace, and does the solar panels run everything electric?, Hot water, airconditioner, lights? etc.

  9. Phillip Geil says:

    The Illinois rebate is no longer 30% and one has to submit within a week or so from when it opens to receive it. Having just installed a second 8 kW myself, I believe it was 25%. It is also not a rebate but a grant so one has to pay Illinois income tax on it. In addition, other than for the ISEA program, for which one needs to be a member (should be anyways) I know of no other place to “sell” SRECs. For it, also, one has to submit rapidly after it opens. I also recommend the use of Power Smart pricing if with Ameren since they pay and charge at an hourly rate which is higher during the day when you are producing, than at night when you use their power and they will warn you by e-mail the few times in the summer when prices are expected to be greater than 11 cents/kWh. An aditional upcoming problem is that the state is apparently going to prevent home owners from installing a system themselves, requiring it be done by state licensed installers

  10. Kevin says:

    After reading the info above i realized that you do not get credit for excess power generated. It doesent make sense to oversize the system because you can’t make money by selling the excess. Do I have that right? Why wouldn’t we be treated like other utilities?

    1. Alisha Anker says:

      Kevin, that very much depends on the utility which you connect to. Check their policies. Some give 1:1 credit on future use, in such case oversizing the system does not make sense. Some pay their avoided cost for excess generation. Inquire to be sure before designing.

  11. Sean T says:

    hey Jeff, how is that 6% annual return investment looking these days?

  12. D says:

    What if a family doesn’t have this money up front but still wants to do the right thing? We live on a great corner to show off this modern technology. Are homes ever chosen and funded because of their location?

  13. DON says:

    What does are the requirements for a foreign UK renewable energy company to set up a solar energy company in Chicago.

  14. Wayne says:

    Great posting site. I’m the Property and Grounds leader at our church and we are looking at installing anywhere from 20 KW to 40 KW of panels on our roof which is perfectly sloped facing south, without obstruction. What kind of incentives are available to non-profits (tax rebates don’t help us, etc..) Church has the money and even something as long as a 15 year payback is not an issue. We’re trying to be a leader in the city, and a green neighbor, so this is one way to start. We pay almost $0.18 / kw for power, and our bill runs about $800 / month. Any help would be appreciated.

  15. Lynn says:

    Does anyone know if there is anyone buying srecs (sp)? for energy generated in Illinois

  16. Lynn says:

    Joe – Hawk Energy Solutions locating in Washington Illinois is doing Solar Electric installations. He just installed my system in Monee, IL – but he is much closer to you. Here is the web address http://www.solar-pv-system.com/Renewable-Solar-Energy/Solar-PV-System.html

  17. Joe says:

    I am looking into a possible solar setup for my home in Central Illinois. I am curious as to how much a system would cost, that would be just to help my electric bill. Currently our rates are high and going up. My summer bill is around $180 avg and can be over $400 in the winter a month. Any suggestions?

  18. john says:

    anyone out there?

    1. Dan Hahn says:

      Yes John, we’re here.

  19. Tai says:

    Is this all a conspiracy. Clean, cheap renewable energy is here, but the utility gangsters, spend our money on keeping residential production out of reach.

  20. Ry says:

    How much would it cost for everything if you built the panels yourself?

    1. Dave Llorens says:

      Hi Ry,

      There’s a lot of stuff on the internet about “building your own solar panels,” but unfortunately, they are scams, more or less. It would not be possible for an individual to make a panel that would last 25 years more economically efficiently than a large manufacturing facility, even with their marketup.

  21. claire liu says:

    How much does it cost to install a solar system to heat a 500sqft indoor pool in Chicago?

  22. Vickie says:

    We are just South of Chicago and are interested in Open Energy SolarSave tiles. We are having a hard time finding installers. Would anyone here know who to contact? We are about 75 miles South of the city.

  23. ROb says:

    I am currently a student with the I.B.E.W. and I am learning PV istallation. I am working towards receiving entry level NABCEP certification. I have been part of the unemployed for the last year and a half. I have focused my energies in the renewables markets. It appears to me that the cost of a residential system still remains high in Illinois even after incentives. I understand that Illinois offers net metering, but the buyback rate is low .03 per. kw. Com Ed seems to have control of the situation in the Chicago area. What will have to change in Chicago to create a PV boom?

    1. Very simply, Rob, the rebates have to continue and perhaps a little more federal help. There’s a new clean energy bill on the way in Congress right now. That will be help to Illinois. Plus, it would help if Illinois and Chicago would pass a PACE program.

  24. We have engineers and electricians researching design schemes to determine how much affordable solar energy can be made. High priced products ensure enjoyment by the few, but denial by the masses. Researching the cheapest method of delivery is critical. Every citizen is entitled to the benefit of nature’s cheap energy

  25. Dale says:

    This technology is severly underutilized due to a weak marketing strategy by everyone involved.
    Most people just assume solar energy is cost prohibitive and only has evironmental value. John and Jane Doe care about the environment, but don’t ask them for a $15-50k (after rebate) donation. With the exception of the “Off-Grid” abodes, I only see Solar Energy adds profiling fine homes, so it must be only for the rich or the different. (No offense different folks).
    I’m curious why manufacturers in this industry (Panels, Inverters, etc…) have not invested in a partnership with local colleges to establish professional (Certified) Solar Energy and Solar Thermal Installer training sites in every area.
    Illinois, an incentive is only an incentive if you fund it.
    K, sry for the rant, but I’m going to have to travel a long distance from Southern Illinois to get the expensive certification training I need to sell this idea (figuratively and literally).

  26. James Sanchez says:

    Solar Energy International in Colorado has a hands-on as well as an on-line component. It’s not cheap.
    I will have to say that taking a 1 or 2 day class can set you up to learn the basics.
    There is no substitute for a Certified Professional in this or any field.
    There are codes and trade specific information that a seasoned veteran will, in the long run, save a lot of time expense and headaches.
    Youtube has a couple of “self proclaimed” experts that show you exactly how to install something that will get you in serious trouble down the road.
    The groups that give you these 1 or 2 day “workshops”, give you enough info to go to the next, “advanced workshop”.
    For a homeowner looking to put up a system and get some knowledge of what’s being put on their roof, that’s o.k.
    For someone to do this as a vocation, get some serious training.
    Remember, this is electrical work, this can start fires and endanger lives if installed improperly.

  27. kurt says:

    Has Illinois approved the rebate for solar installations yet. As of mid August it had not yet been released.
    Thank you

    1. Kurt,

      As far as we’ve been able to tell, there is no more funding for Illinois solar rebate right now. Please yell at Blago’s successors and see official announcement. :(

      http://www.commerce.state.il.us/dceo/Bureaus/Energy_Recycling/Energy/Clean+Energy/01-RERP.htm

  28. Mike says:

    One question I have not seen the answer to anywhere has to do with system improvements and obsolescence. I imagine that after 20 years we will be several generations of improvements along in the solar technology, yet you will be stuck with an obsolete system. Even if you lease the system, which is now being offered, there would be removal and installation costs to put the new and improved product in.

    1. Mike,

      Solar does not improve as radically as computer chips. There will certainly be improvements, but, for example, we’ve improved solar efficiency from about 8% in the 1970’s to now around 18%. (By efficiency, I mean that 18% of the sunlight that hits solar panels gets converted into electricity.) So, technology has doubled in 40 years, not every 5 years or whatever. Bottom line, if you size your system correctly, you’ll be way ahead of the game financially as well as for the planet. If you keep waiting, it will improve, but not dramatically, and meanwhile, you’ll have lost all of these financial and environmental gains. Hope that answers your question.

  29. Carter says:

    Nelly, this is the only large-scale place, it’s in WI:

    http://www.the-mrea.org/course_workshops.php

    They are doing some workshops in IL, and the ISEA is moving in this direction, but for now you will need to head north.

  30. Dan Hahn says:

    Chris,

    You definitely have an argument. Take the information from the appraiser’s journal article located above and get a re-appraisal. That system you have on your roof in NY is worth a LOT of $. It needs to be valued as part of your home.

  31. Chris says:

    I did a solar install in N.Y. about ten months ago on my own home and had an electrician sign off and tie -in invertor. all is great. However, I am now trying to re-finance to a lower rate and term on my mortgage. The appraisor did not give me any value on my system stating that my house is comped to others that do not have a system. Doesn’t every improvement on a home have a value. I paid $350 for an appraisal that is not an accurate value of my home. Do I have an arguement?

  32. Juan Uribe says:

    Hello,

    Can you please tell me if you are aware of any solar panel installation courses available in the Chicago land area? My boyfriend has been a General Contractor for over 15 years and would like install solar panels on his industrial building and become certified in order to offer this service to his clients in the future.

    He has attended several workshops but is now interested in formal courses and hands on training. Any information would be greatly appreciated.

    Please advise,

    Sincerely,

    Nelly Rodriguez

  33. Henry Marsh says:

    All of this just makes too much sense to me. I have been in the roofing industry for more than 30yrs. and have been involved with a few PV projects. Unfortunately my experience is limited just to my field.
    I am considering installing a system on my residence and wondering what are the drawbacks to makeing this a DIY project?
    I will be calling in favors from various professionals so the technical portion shouldn’t be an issue.

  34. james saw says:

    what credit would a do-it yourself person get.

  35. Dan Hahn says:

    Sandip,

    Thanks for piping in. Check this PDF from the Appraiser Journal confirming home value increases at 15-20 times your annual electricity savings. Granted, appraisers are still figuring standards out for valuation of systems, but consider most solar energy systems produced now are guaranteed to perform at 80% of their peak efficiency at year 25. Therefore, if you install a new system and you sell your home, the new property owner gets all that production. In my estimation, this should be even more than 20x annual savings as you don’t even have to go the step of installing the system any longer and utility prices will be rising at at least 6% year over year.

  36. Sandip Chatterjee says:

    Dan

    I do agree with your note (except for the jump in the value of the home by 20 times the annual energy cost saving). I am not sure what is the source of this information – as I have heard 10 times as a more reasonable and commonly used number.

    My other request for Jeff is to provide us with additional information on the 25 year 6% guaranteed scheme.

    Ciao
    Sandip

  37. Dan Hahn says:

    Jeff,

    I’m hearing a lot from you about why not to go solar. However, your $24,000 banking assumption earning you 6% interest with no taxes for simplicity sake is, well.. a little overly simplistic.

    1) You’re gonna be significantly taxed on that “put it in the bank and pay your bills from the interest” scheme.

    2) Your property tax will not jump by the $720 a year or $36,000 improvement factor as you mention. In fact, your property taxes will increase by ZERO. When installing solar in Illinois, any reputable installer will alert you to alternative valuation of energy systems on your property: You compare the value of any applicable heating or cooling system already on your property to the value of your new solar energy system. Whatever one is the lesser of the two (99.8% of the time this will be your existing heating or cooling system) is what is used to compute your property taxes.

    Not convinced? This is straight from the Illinois tax code and verified via phone today at 10:20am PST:

    “Sec. 10-10. Valuation of solar energy systems. When a solar energy system has been installed in improvements on any property, the owner of that property is entitled to claim, by filing with the chief county assessment officer, an alternate valuation of those improvements. When a claim for alternate valuation is filed, the chief county assessment officer shall ascertain the value of the improvements as if equipped with a conventional heating or cooling system and the value of the improvements as equipped with the solar energy system. So long as the solar energy system is used in total or part as the means of utilizing solar energy improvements, the alternate valuation computed as the lesser of the two values ascertained under this paragraph shall be applied.”

    3) It ain’t up to the buyers to appraise your home. It’s up to the appraiser. That said, your home value will immediately increase in value by a factor of 20 times the amount of energy you save annually. So in this case, you get an instantaneous return on your investment once you are tied into the grid. When you sell your home, you get all that money to take with you (less capital gains taxes). If you find the same type of ROI in any other type of bank investment nowadays (and god bless you by the way for having faith in one of the banks to actually survive long enough to continue paying your 6% or whatever on your long term CD), we’ll come over to your house and bake you a cake.

    4) Scheduled “maintenance” for solar PV systems include hosing the panels off once a year and switching out your inverter after year 15. There are no moving parts.

    Cheers,

    – Dan

    1. Rey Acob says:

      Dan,
      Correction Inverters are now 25year warranty same as Solar Modules. Aloha From Hawaii

  38. Jeff says:

    Take that same $24,000 (cost of system minus tax refunds/rebates) and invest it at 6.00% for the same 25 years and you would have $107,000 in the bank (assuming no taxes paid on earnings for simplicity). The advantage is that you would have the money to take with you when you sell your house and it wouldn’t depreciate or require periodic maintenance.

    Another thought is to invest the $24,000 and use the yearly earning to pay your utilities. At 6%, it would generate $1,480 per year (which would just about cover my annual utility costs).

    What many sites fail to include in their savings calculations are the increased property taxes involved. Here in Illinois, there is a 2-year break on this type of investment and the homeowners would then see their home value jump by the $36,000 improvement. Where I live, that would result in an additional $720/year in property tax, which would exceed the savings in utility costs as a result of the PV system. Instead of paying the utility company, I would be paying the county government and local school systems.

    If I sold my home and the buyers refused to recognize any value to the solar system, I would basically have to give it to them for free in order to sell the house and I would end up with a total loss of my investment. If I kept the money in the bank earning interest, I could take every penny of it with me when I moved.

    1. Another huge factor is, it seems you’ve (and this site) missed a key component; rising utility costs which we could realistically see double in 5-7 years. Our customers generally go for a 10 year financing program, even with attached interest, they will more thank likely see savings during the payback period alone!

      You’ve also completely dismissed the government rebates, so who’s paying $24,000? We sell a 5k system for just about the same cost as in this example. We put people into a 12 month no interest period so that our customer can get their rebates before they really see a statement. At that point, they’re at about $14,000.00 which equates to about a $140 payment over 120 payments (10 years) with a HELOC (usually around 3-4%).

      Then, there’s SREC. And, for the life of me, I can’t understand why Solar Power Rocks keeps showing only a one year example of SREC credits. That’s a yearly thing!! iiirrrgggghhh…. it’s so frustrating!! Even at $500 a year (at low rates they’re about 4750 with a 5k) it will be as if you are freezing your current bill price.

      In other words, the electricity savings plus SREC’s fully cover your bill. THAT IS WHAT IS MAKING YOUR PAYMENT FOR YOU. Essentially, there is nothing out of pocket.

      In 10 years, YOU OWN IT!

      In 10 years, a $140 bill may look something like $400-500 a year.

      Now, do the math.

      Frank Perrelli
      interstatesun.com
      888-605-0804

  39. Roger says:

    $360.00 per ton of greenhouse gas, that may be of some help if everyone could afford to do it

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