Illinois solar rebates and incentives: 2024 guide

Solar panel systems in Illinois are expensive, but incentives help a lot. Between the federal tax credit and other Illinois-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Illinois.

As an Illinois homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The four below are some of the most impactful ways to bring down your solar costs.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax. 

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Illinois Shines Program

The Illinois Shines program provides a one-time payment in exchange for Solar Renewable Energy Certificates (SRECs). You earn one SREC for every megawatt-hour (MWh) of electricity your solar panel system is expected to produce over 15 years. 

The amount you earn for each SREC depends on your utility company and the size of your solar panel system. There is limited availability each year and the SREC rate declines slightly every year, so the sooner you go solar, the higher your payment will be. The block for small systems under 25 kW, which applies to most residential systems, is full for 2023-2024, but you can apply now to be put on the waitlist for 2024-2025 funding. 

The 2024-2025 rates have been proposed but likely won't be released until late spring or early summer. You can expect them to be slightly lower than the 2023-2024 rates below:

To participate in Illinois Shines, you need to select a solar installer that's an Approved Vendor or Designee, meaning the program has vetted them. Most homeowners receive payment a little over a year after installation due to processing and waitlists.

Illinois Solar For All program

Illinois Solar For All is an alternative choice to the Illinois Shines Program program that's designed to make solar more accessible to lower-income households. If you own a single-family home and your household income is 80% or less of the Area Median Income (AMI), you should qualify. 

With Illinois Solar for All, you won't owe any money upfront for your solar panel system. You're also guaranteed to save on your electricity bills–a claim that you should normally be wary of, but in this case it's legitimate. Your monthly costs and fees for your system won't be more than half the value you receive from the energy it produces. For example, if your solar panels produce $100 worth of electricity in a month, you won't owe your solar company more than $50.

Similar to Illinois Shines, you must choose an Approved Vendor or Designee to participate in Illinois Solar For All. Depending on the Approved Vendor you choose, you have different financing options for your system:

• Take out a solar loan: You'll own the system. The loan payments must be less than half the value of the energy produced. The loans cannot come with pre-payment penalties or result in potential liens on your property.

• Lease your system: You won't own your system and your lease payments must be less than half the value of the energy produced.

• Power Purchase Agreement (PPA): You won't own your system but you'll purchase the electricity generated by the project. Your PPA payments must be less than half the value of the energy produced. 

The Approved Vendor that installs your system gets the Renewable Energy Credits (RECs) associated with it, which they can sell for a profit. The program may even provide additional incentives to help you with any repairs necessary to go solar, like electrical and roof work through the Home Repairs and Upgrades initiative.

Smart inverter or distributed generation rebate

As a ComEd or Ameren customer, you can get an upfront rebate if you install or already have a solar panel system and/or a battery storage system with a smart inverter. You'll earn $300 for every kW of solar or kWh of energy storage you install. For a 5 kW solar panel system, you'd earn $1,500. For a 5 kW solar panel system with a 10 kW battery, you'd earn $4,500.

If you're a ComEd customer, you need to select its Rate Basic Electric Service-Hourly as your electric supply service to qualify for the battery rebate. Similarly, if you're an Ameren customer, you have to choose Real Time Pricing or Power Smart Pricing as your electric supply service, or participate in its demand response program called Peak Time Rewards to qualify for the battery rebate.

The big catch is that if you take the rebate, you'll only receive net metering credits in the supply and transmission sections on your bill. They won't count against your delivery charges. Unless you're installing a battery with your solar panels to avoid pulling electricity from the grid, it's almost always better to sign up for full net metering instead of the rebate.

In addition to the great rebates and incentives above, Illinois also offers tax exemptions for solar panel systems. The solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

If you're a ComEd, Ameren, or MidAmerican customer and you connect your solar panel system to the grid, you can currently benefit from net metering, one of the best solar panel incentives available in Illinois. But it's about to become much less valuable.

With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels.

As we explain above, if you're a ComEd or Ameren customer and take the smart inverter or distributed generation rebate, your credits will only apply against supply and transmission charges, not delivery charges.

And, if you don't interconnect your solar panel system before January 1, 2025, net metering credits automatically won't apply delivery charges. This means you'll miss out on thousands in savings unless you go solar ASAP. Here's how to lock in Illinois' current net metering policy for your system's lifetime:

• Get quotes as soon as possible so you have time to compare and shop around. Before choosing an installer, make sure to ask if they have the capacity to install your system on time. They may not be able to guarantee it, but they should feel confident.

• Choose an installer and sign a contract. We recommend doing so by the end of September at the latest. This timeline may get even shorter as demand spikes.

• Get your system installed by December 13, 2024, and make sure your installer completes and submits all of the required documentation (including Witness Testing) by 5 p.m. Central Time. Both ComEd and Ameren have guaranteed that as long as you meet these criteria, you'll receive full net metering benefits.

• Don't make any major changes to your system's size once it's installed. Doing so will cause you to lose your net metering status; otherwise, you'll be locked in for your system's lifetime. If you move, the status will transfer to the new homeowner.

Learn more about Illinois' net metering programs:

In addition to solar incentives, Illinois also offers some great battery incentive programs to bring down the price of energy storage. As we said above, you can earn $300/kWh of battery storage if you're a ComEd or Ameren customer and participate in the qualifying supply plans or Ameren's demand response program. You can also earn credits on your electric bills by participating in Ameren's demand response program. 

All batteries above 3 kWh are eligible for the 30% federal tax credit.