Illinois Solar Energy Rebates, Tax Credits, and Incentives

[...] Illinois [...]

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

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.

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

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

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.

what credit would a do-it yourself person get.

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.

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

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?

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.

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.