Everything you need to know about solar SOLAR INCENTIVES, REBATES, & TAX CREDITS in Illinois
The state of Illinois is offering tons of helpful incentives to those who decide to install solar panels, whether at home or at work. As a consequence, there have been over 465 megawatts (MW) of solar energy installed in Illinois recently, and it’s bound to keep growing.
Available Incentives for Switching to Solar Energy in Illinois
Solar system owners in Illinois can generate Solar Renewable Energy Credits (SRECs) based on the energy produced by their solar panels. In Illinois, each SREC is equivalent to 1,000 kilowatt-hours (kWh) of solar energy or one megawatt (MWh). Essentially, whenever a solar array generates a MWh, a corresponding SREC is created.
Owners sell their SRECs in Illinois through a 15-year contract established by the Illinois Power Agency (IPA). Notably, SRECs are distinct from the actual electricity they produce. This allows owners to utilize the solar array’s electricity to directly reduce their home or business’ electric bill while selling the SRECs resulting from that energy to buyers.
Accumulating as solar electricity is generated, SRECs are typically paid out either as a lump sum or over a 7-year period. For smaller residential and commercial systems under 25 kW (AC), the SREC payment occurs in a single payment. Larger systems, ranging from over 25.0 kW to 5,000 kW, receive annual payouts over a 7-year period. Ultimately, these Illinois solar incentives play a crucial role in fostering the development of new renewable energy resources.
Solar Credits & Rebates for Illinois
The state of Illinois has been very committed to switching to sustainable and renewable energy. As a matter of fact, an Illinois renewable portfolio standard (RPS) has been drafted and it explains that it aims to increase the renewable energy production by 25% by the year 2025. To assist with this goal, the state of Illinois has been offering some incredible incentives to make the cost of solar in Illinois more affordable.
More Solar Incentives for Illinois
Unfortunately Illinois does not offer a tax credit for installing solar systems as of yet from the State, but there is the federal tax credit and few tax incentives that are worth taking advantage of when you install solar in Illinois. Read more below.
Solar Energy Property Tax Incentive
Illinois’ Special Assessment for Solar Energy Systems is an incentive that ensures that solar energy systems that are newly installed in Illinois are exempt from a property tax assessment. We surely are aware that a solar system on a property increases value but thankfully this law allows you to take advantage of solar energy without having to pay for it in property tax increases.
This privately owned manufacturing corporation employs 1800 employees in Illinois . This solar system was paid for using the company’s tax liability in conjunction with the Federal Tax Credit and Illinois Smart Inverter Rebate. As a result, the company began saving money as soon as the system was operational in June 2021. They have now contracted Solar One to build an additional 15 mW across all of their facilities taking advantage of the larger tax credit to pay for their solar system before it diminishes.
Illinois Net Metering
Under the Illinois net metering policy, utility companies in Illinois will credit you with any excess energy your solar system generates. This helps you “zero-out” your annual energy costs. Net metering enables you to collect credits when your solar energy panels are producing more energy than you use. You can then use those credits when your panels produce less than what you need (like during winter months).
Commercial Rebates for ComEd Customers
If you’re a ComEd Utility’s commercial customer, you may qualify for commercial and industrial rebates, which will help you decrease the cost of installing solar considerably.. Commercial solar panel systems that have a total capacity of up to 2,000 kilowatt (kW) qualify for a $250 rebate per each kW. That’s an incredible $25,000 rebate for a 100 kW system!
Federal Solar Tax Credit (ITC)
The Federal Solar Tax Credit is still 26 percent for construction that started before Dec. 31, 2022.
Like other solar tax credits, with the ITC thanks to the Inflation Reduction Act you can deduct 30% of the cost of your solar energy system from your federal taxes.
In 2023, the ITC will drop to 22%.
Combined with our proprietary energy savings program we provide Illinois businesses the most compelling solar ownership program out there. Contact us today to learn if our program is a fit for your organization.
Federal Solar Investment Tax Credit (ITC)
A Significant Reduction in Solar Costs
The Federal Solar Investment Tax Credit (ITC) is one of the most significant incentives for solar energy adoption in Illinois. This program allows property owners to deduct 30% of the cost of installing a solar energy system from their federal taxes. This substantial tax credit can lead to an average saving of around $6,143 in Illinois, making a notable difference in the overall cost of solar system installation.
How It Works
The ITC applies to the total cost of the solar system, including both hardware and installation. Once the system is installed, the tax credit can be claimed when filing for that year’s taxes. This one-time credit significantly reduces the initial financial barrier to adopting solar energy.
Illinois Shines Program
Encouraging Solar Production for Profit
The Illinois Shines Program, also known as the Adjustable Block Program, provides performance-based incentives to solar system owners. It allows them to earn credits for the solar energy they produce, which can then be sold for profit. This program not only incentivizes solar installations but also promotes the generation of clean energy.
This state incentive program pays solar system owners upfront for the estimated amount of solar energy their system will produce over the next 15 years. The payment amount varies based on the system’s size, location, and other factors. Illinois Shines is a critical component of the state’s Renewable Portfolio Standard (RPS), driving forward its clean energy objectives.
Illinois Solar for All Program
Making Solar Accessible to Low-Income Households
The Illinois Solar for All Program is specifically designed to extend the benefits of solar energy to low-income communities. This program reduces the cost barriers associated with solar installations, making it more accessible and affordable.
The program offers an accessible payment plan for low-income solar customers and provides additional incentives that vary based on the size of the solar system and the average monthly electric bill of the applicant. It’s a significant step towards equitable access to renewable energy.
Solar Property Tax Exemption
Protecting Property Values
This incentive ensures that the increased property value due to solar installations does not result in higher property taxes. The Solar Property Tax Exemption waives all taxes on the increased property value attributed to the solar system.
Long-Term Financial Relief
This ongoing exemption protects property owners from tax hikes as long as the solar system operates, thereby offering long-term financial relief and making solar investments more appealing.
Commonwealth Edison (ComEd) Solar Rebate Program
Businesses, nonprofits, and industrial customers in the ComEd service area can benefit from a substantial cash back incentive for installing solar equipment through the ComEd Solar Rebate Program. The maximum cashback is $250 per kW of capacity installed, up to 2,000 kW, translating to a potential total of $500,000.
Net Metering in Illinois
Net metering in Illinois plays a crucial role in maximizing the return on investment for individuals and businesses that choose to go solar. This policy not only makes solar more financially viable but also encourages wider adoption of renewable energy.
Understanding Net Metering
The Foundation of Solar Energy Savings
Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. Essentially, when a solar panel system produces more energy than is used on-site, the excess energy is sent back to the grid. In return, the system owner receives credits on their electric bill.
How Net Metering Works in Illinois
In Illinois, every kilowatt-hour (kWh) of excess solar power sent to the electric grid is credited back to the solar system owner at the same rate as the utility charges for power consumption. This one-to-one credit system ensures that solar panel owners get full value for the excess energy their system generates.
Benefits of Net Metering
Reducing Electric Bills
One of the primary benefits of net metering is the potential reduction or even elimination of monthly electric bills. Since the excess energy produced by solar panels is credited at the full retail rate, homeowners and businesses can significantly lower their operational costs.
Encouraging Efficient Energy Use
Net metering incentivizes solar system owners to use energy more efficiently and to maximize their solar energy production. By generating more solar power, they can increase the amount of energy they export to the grid, thus earning more credits.
Supporting the Grid
Excess solar energy fed back into the grid can be used by other consumers, thereby reducing the overall load on the grid and contributing to a more stable and reliable energy supply.
Net Metering Policy in Illinois
All utility companies in Illinois are required to offer net metering to their customers. This includes major providers like Ameren and ComEd, ensuring that the policy has widespread impact across the state.
Favorable Terms for Consumers
Illinois offers one of the most favorable net metering policies in the country. The credits earned through net metering can be carried over indefinitely, providing solar system owners with continued savings.
Deadline for Enrollment
The current net metering policy in Illinois is available until the cumulative capacity of net metered systems reaches 5% of a utility’s peak demand. This cap provides an urgency for consumers to adopt solar energy solutions and benefit from the net metering system.
Navigating the Electric Utility Landscape in Illinois
Understanding the electric utility landscape in Illinois is crucial for residents and businesses considering the transition to solar energy. The state’s utility providers, predominantly ComEd and Ameren, play significant roles in determining the overall cost-effectiveness of solar installations through their rate structures and policies.
Key Players in Illinois’ Utility Sector
ComEd’s Rate Structure
- Standard Metering Charge: ComEd charges a standard metering fee of $3.10 per month, a slight decrease from the previous rate of $3.40. This fee covers services like installing, maintaining, and testing meter equipment.
- Illinois Electricity Distribution Charge: At 0.132 cents per kilowatt-hour (kWh), this charge recovers the Illinois Electricity Distribution Tax, applicable to all customer classes.
- Monthly Customer Charge: For non-electric heat homes, the charge is $10.79 per month for single-family homes (increased from $10.44) and $8.06 per month for multi-family homes (up from $7.75). For electric heat homes, the charge is $12.23 per month for single-family (previously $11.95) and $8.70 for multi-family (formerly $8.43).
- Distribution Facilities Charge: Non-electric heat homes are charged 4.065¢/kWh for single-family and 3.217¢/kWh for multi-family. Electric heat homes are charged 1.888¢/kWh for single-family and 1.827¢/kWh for multi-family. This charge covers costs of maintaining equipment and wires.
Ameren’s Rate Structure
- Meter Charge: Ameren’s meter charge is $5.22 per month, an increase from $4.76, covering meter-related services.
- Monthly Customer Charge: This charge is now $5.57 per month, reduced from $6.45, and helps cover administrative costs.
- EDT Cost Recovery Charge: The charge is 0.13375¢/kWh, a slight increase from 0.12484¢/kWh, covering the Illinois Electricity Distribution Tax.
- Distribution Delivery Charge: During summer, the charge is 6.008¢/kWh, up from 5.550¢/kWh. In non-summer months, it’s 3.517¢/kWh for the first 800 kWh (previously 3.249¢/kWh) and 1.867¢/kWh for usage over 800 kWh (previously 1.724¢/kWh).
Understanding Supply and Delivery Rates
Electric bills in Illinois are divided into two main components: delivery and supply. Delivery rates, which account for approximately one-third to half of the electric bill, cover the costs of transmitting electricity over the utilities’ infrastructure to consumers’ homes. These rates have seen increases due to legislative changes and infrastructure modernization efforts.
Supply rates, on the other hand, cover the costs of the actual electricity used. Unlike delivery charges, utilities cannot profit from supply rates. They are passed onto consumers with no markup. For 2023, ComEd’s Price to Compare for supply is 9.665¢/kWh, slightly down from 9.765¢/kWh. Ameren’s Price to Compare is 11.833¢/kWh for the first 800 kWh (down from 12.236¢/kWh) and 9.374¢/kWh for usage above 800 kWh (previously 9.777¢/kWh).
The Impact on Solar Energy Decisions
Understanding these rates is essential for those considering solar energy in Illinois. The financial benefits of solar, such as reduced electric bills and potential earnings through net metering, need to be weighed against the existing utility rates. With the recent rate increases, particularly in delivery charges, the case for switching to solar becomes even stronger, as solar energy can provide a hedge against these rising costs.