Your 2020 guide to getting solar panels for your home in Illinois
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Illinois home. Since there's a lot 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!
** What's new for 2020 **
The Illinois adjustable block grant program continues to produce strong results for homeowners and installers alike. However, we note a need for state lawmakers to get more aggressive here with a solar carve out and a more progressive RPS. The state may fail to hit its 25% renewable energy goal by 2025. Regardless, it's still a wise move to go solar as a homeowner here. 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.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Illinois, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Illinois. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Illinois.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Illinois Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Illinois|
|Solar Loans in Illinois|
|Solar PPAs in Illinois|
|Solar Purchase Payback Time in Illinois|
|Illinois Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
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:
How to pay for solar panels 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 and Illinois's new direct SREC payments, 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 solar loan or 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!
How we got these numbers
According to the U.S. Energy Information Administration, the average family in Illinois needs just over 10,000 kWh per year to run all the appliances and gadgets that they use in their life. At an average price of $.13/kWh, that electricity costs your family over $1,300. To make enough electricity to just about meet those needs, you need about twenty-three 325-watt solar panels, which adds up to a system size of 7,500 watts, or 7.5-kW.
For the purposes of the calculations below, we'll assume you have an average home with average needs. If you're spending more than $1,300 per year on electricity for your Illinois home, you're a high user, and you could save a lot more with solar! Get in touch with our expert solar partners today to see how much you could save.
If you're ready to learn more about the average solar savings for an Illinois home, read on!
Option 1: Paying cash for solar
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) payments, 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 often a better option.
With a loan, you can make monthly payments instead of putting $15,000 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 $15,000, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced over $31,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $1,175 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Here’s how the numbers work for a 7.5-kW rooftop solar system in Illinois:
- Installing a typical 7.5-kW solar system should start at about $15,000 after the Illinois Adjustable Block Program discount. That's far 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 your final system costs. That's $4,500 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $10,500.
- And during the year, your system will generate enough electricity to offset $1,179 of your bill, which means a final first-year cost of just $9,321 for solar.
- Your electricity savings will quickly pile up, meaning your system will pay for itself in just 8 years. But your panels carry 25-year warranties, and you'll see a total net profit of over $31,000 by the end of that period. The internal rate of return for this investment is a solid 14.9%—much better than a long-term investment in the stock market!
- And here's a nice bonus to consider: your home's value just increased by about $10,500, too—your expected cost after incentives.
- 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 151 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.
Option 2: Using a loan to pay for solar
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 often 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 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 $15,000, with a fixed rate of 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.
Here’s how the numbers pencil out for a typical Illinois homeowner who makes a solar purchase with a loan:
- Installing the average 7.5-kW solar system should start at about $15,000. 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 $1,179, but your annual loan payments will be $1,377, meaning you would spend about $200 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 $4,500 you won't be paying the Feds this year.
- All those incentives mean you'll come out $4,300 ahead after year 1, and it's smooth sailing from then on out. Your loan payments will actually start to be eclipsed by electricity bill savings after year 5, because the utility company raises rates but your loan payments stay the same!
- By the time you've paid off your loan in 2033, you'll see yearly savings of over $1,700. After 25 years, your total profit will be $25,578! 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—151 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.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
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 25 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 cost of the solar electricity generated by a 7.5-kW solar system should be around $997 per year, but the energy the panels generate will save you $1,179 per year. That's $182 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 25 years, our estimate shows a total savings of $7,118. 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!
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 PPA, 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 Georgia—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:
Illinois's Renewable Portfolio Standard
25% by 2025
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.
Illinois's Solar carve-out and SRECs
1.5% by 2025
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.
Illinois Electricity Prices
The average price of electricity in Illinois is 13 cents per kilowatt-hour (kWh), about half 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.
Illinois Net Metering
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.
Illinois Interconnection Rules
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.
Illinois Solar Incentives
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 26% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Illinois measures up:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
Illinois Solar Power Rebates
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.
Illinois Solar Tax Credits
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 Federal solar tax credit.
Property Tax Exemption
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?
Sales Tax Exemption
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.
Low-income Solar Programs
Solar For All Prog
Grade: ALearn more about low-income solar programs available in the U.S.
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 an 8 year payback timeframe is strong, there’s just not enough solid policy footing to guarantee that estimate for all homeowners. If the adjustable block grant program directly paid homeowners for their system’s project output, we’d be a lot happier. We’d also like to see a new RPS that extends Illinois’ goals past 25% renewables, maybe all the way to 100%.
For now, though, the sun is shining bright on Illinois, and the state’s solid B grade is well-earned.