Chicago, Illinois, downtown skyline from Lincoln Park at twilight.

The Complete Guide To Solar Panels In Illinois


Solar panels are getting a major push in Illinois. According to the Chicago Tribune, federal and state climate laws may result in homeowners being able to install rooftop solar panels at half the regular cost. The state aims to produce 25% of its energy from renewables by 2025 and expects to add 1,700% more solar generation in the next 5 years. It’s a major effort from government agencies and the solar industry.

Let’s take a closer look at what’s behind this apparent plunge in solar panel installation costs for Illinois homeowners. We’ll touch on net metering, renewable energy credits, backup batteries and other common topics related to solar panels.

The Cost Of Solar Panels In Illinois

The cost of installing a 5-kilowatt (kW) grid-tied solar panel system in Illinois ranges from $13,400 to $18,100. That’s the out-of-pocket cost before factoring in incentives, and it makes the per-watt solar panel cost $2.68 – $3.62. The national average is $3.04 per watt.

Incentives For Home Solar Power In Illinois

The combination of the federal solar tax credit and the Adjustable Block Program, which is covered later in this article, offers an opportunity for a major reduction in the overall cost of a solar panel system.

Federal Solar Tax Credit

The federal solar tax credit, also known as the solar investment tax credit (ITC), is a major incentive for homeowners nationwide to install solar. The credit was scheduled to expire at the end of 2023, but Congress extended and raised the credit as part of the Inflation Reduction Act of 2022.

The extension allows eligible homeowners to apply for a tax credit of 30% of the cost of solar energy systems installed through the year 2032. The percentage drops off to 26% in 2033 and then to 22% in 2034. Homeowners who don't have enough of a tax burden to claim the full 30% credit may be eligible to carry the remaining credit into the next year. Consult a tax professional to see if you qualify.

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Solar Renewable Energy Credits And ‘Illinois Shines’

SolarRenewable Energy Credits, or SRECs, pronounced “ess-rex,” are a way for homeowners and businesses to shrink their carbon footprint. They allow homeowners and organizations to buy energy produced by renewable sources, which can enable those who can’t produce clean energy of their own to support clean energy projects. SRECs are essentially a certificate showing that a renewable source produced one megawatt (mW) of clean energy.

Solar homeowners in Illinois can use SRECs in a few ways. They can sell their SRECs, which have a value of $70 to $82, depending on the part of the state where you live.

Homeowners with solar systems can also participate in a program like Illinois Shines, which pays cash upfront for homeowners to install solar panels. Also known as the Adjustable Block Program, Illinois Shines is essentially a grant handled by your solar installer and the utility company that purchases the SRECs. The amount is based on how many SRECs your system is expected to produce over 15 years.

For example, average Commonweath Edison (ComEd) customers in and around Chicago could receive up to $7,900 through Illinois Shines. This payment can make it much more affordable for a homeowner to go solar. This incentive is available as part of the Climate and Equitable Jobs Act.

Illinois Solar Property Tax Exemption

Solar panels are a proven winner for increasing property value, but a higher property value can increase a homeowner’s property tax burden. The state of Illinois doesn’t tax the increase in property value that results from installing solar energy systems.

Illinois Solar For All (ISFA)

Illinois Solar for All features a variety of options, one of which allows low-income homeowners to have solar panels installed for little to no upfront costs. The installers reap the incentives that would normally go directly to the homeowner.

For example, the installer would get the federal solar tax credit and, in exchange, forego some portion of the upfront costs. This arrangement is similar to a solar lease, but the homeowner would still own the panels.

Multi-tenant buildings and certain types of roofs can make it difficult to install solar panels. Solar community projects allow people to subscribe to a shared local solar facility.

ISFA has several programs for people in multi-tenant buildings or below a certain income threshold to save money on electricity bills and reduce their carbon footprint with community solar.

Net Metering In Illinois

Utility companies use net metering to credit solar homeowners for excess power they generate and feed into the utility grid. This can be a major incentive for homeowners to invest in solar panels.

Illinois state law requires utility companies to offer net metering. Eligible customers with renewable energy generators of 40 kW or less receive a one-to-one retail rate credit for excess energy they generate.

The net metering law applies statewide, so customers of Commonwealth Edison (ComEd), MidAmerican Energy Company and Ameren Illinois are all eligible to participate in net metering. The utility companies accept applications on a first-come, first-served basis.

Customers on Time-of-Use (TOU) rates – which typically mean a higher price for energy consumed during peak hours – are compensated at the TOU rate. The average price per kilowatt-hour (kWh) in Illinois is 9.75 cents.

Illinois Solar Companies Are Growing The Industry

Solar is a growing industry in Illinois, according to the Solar Energy Industries Association (SEIA). The state has approximately 100 solar installers, more than 60 solar manufacturers and another 140-plus businesses supporting the solar industry. These include local companies and national installers such as Palmetto. Together, they employ over 5,500 people and have installed nearly 44,500 solar projects.

FAQ: Illinois And Solar Panels

These are a few questions that Illinois homeowners ask about solar panels.

Do I need a backup battery for a solar home in Illinois?

In the summer of 2022, much of Illinois faced the possibility of rolling blackouts lasting 15 minutes to 1 hour. Record-breaking heat strained grids in nearly every area but Chicago.

A grid-tied solar panel system with backup batteries, also known as a hybrid solar system, would allow homeowners to power their homes during outages. Some TOU customers may also be able to save money by powering their homes with solar batteries during peak hours.

Illinois also has severe weather events that can result in outages. Nationwide, the number of solar projects with batteries is four times the number it was in 2017.

Is solar worth it in Illinois?

The average payback period, or amount of time it takes solar panels to pay for themselves, is approximately 12 years for Illinois homeowners.

The statewide average monthly cost of electricity is $95.86, which adds up to almost $1,150 per year.

Your actual savings depend on the total cost of your solar panel system, your energy needs, how much energy you generate, your utility company’s net billing prices and local electricity prices.

Can I make Illinois greener by going solar?

Solar panels require resources to manufacture, and some are toxic. Still, solar panels typically produce more energy than was used to make them in 1 – 4 years. They also have lifespans of around 30 years, and they produce no emissions and use no water once manufactured.

How much they’ll help Illinois go green depends on the type of power plants they replace on the state’s grid. One recent study from the Georgia Institute of Technology (Georgia Tech) found that every 10 kW of solar capacity in Phoenix repels 23,000 pounds of carbon dioxide from the atmosphere each year. No Illinois metro areas were included in the study, but the Phoenix data offers perspective on the impact of solar panels.

The Bottom Line: Solar Is Worth It In Illinois

The state’s energy policies and generous incentives make this a good time for Illinois homeowners to consider solar panels. Adding batteries to the mix can boost energy resilience and create compelling cost savings and environmental benefits.

Rocket Solar does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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