Illinois Solar Panel Incentives: Rebates, Tax Credits and More

Solar panels are at a steep discount in Illinois -- after you factor in all the available government incentives.

Illinois residents may qualify for a host of federal, state and local programs to potentially shave thousands of dollars off the cost of a new solar array. One program that sets Illinois apart from other states is Illinois Solar For All, which helps qualified low-income households install solar panels at no upfront cost. 

Along with generous net metering policies, property tax breaks and subscription-based community solar programs it's no wonder Illinois ranks as one of CNET's top states for solar incentives. 

Here's your guide to finding solar incentives in the Prairie State. 

Read more: Best Solar Panel Installation Companies in Illinois

Comparing Illinois incentives for solar panels

*Estimated value calculated by using a national average of $24,000 for installing solar panels, an national average cost of $3.00 per watt and 2.7% for average Illinois property tax

What sets Illinois apart from other states

Illinois has been investing in solar energy for more than a decade. In 2007, the state adopted a renewable portfolio standard that requires utilities to generate a certain amount of energy from renewable sources. Around this time, there were only about 80 megawatts of solar projects operating in the state, according to information provided by the Illinois Power Agency.

But the state's Future Energy Jobs Act of 2016 became "a turning point" for solar usage in Illinois, said Scott Vogt, the vice president of strategy and energy policy at Commonwealth Edison, the largest utility in the state.

The new law "changed the way incentives for solar would work in Illinois," Vogt said. "Since that period of time is when we've seen solar really accelerate."

Through initiatives like Illinois Shines and Illinois Solar For All, residents can get some or all of their upfront solar costs covered. The state also authorized community solar projects that allow residents to use solar energy without installing panels on their properties. And with its Climate and Equitable Jobs Act, the state committed to generating 100% sustainable energy by 2045. 

Today, there's more than 2,100 megawatts of solar operating in Illinois for more than 45,000 commercial and residential projects, according to the IPA. All told, the state has invested $3.8 billion in solar energy and has helped solar prices fall by 43% over the past 10 years.

Read more: Just looking for an emergency backup? Check out our guides to portable solar panels and solar generators.  

Illinois state solar tax credits, exemptions and loan programs

Here's a rundown of some of the best solar incentives across the state of Illinois. 

Statewide solar panel incentives in Illinois

These programs are open to all Illinois residents who invest in solar energy systems and meet eligibility requirements. 

Solar renewable energy credits: Illinois is one of the few states that offers renewable energy credits, which allow you to earn money for the electricity generated by your solar panels. In Illinois, you can earn one solar renewable energy credit for every 1,000 kilowatt-hours produced by your solar panels. You can then sell your credits or participate in the Illinois Shines program. (More on that below.)

Illinois Shines: Illinois Shines, also known as the Adjustable Block Program, will give you payments now in exchange for the SRECs your solar system is expected to generate in its first 15 years of operation. To participate, you'll need to work with an approved vendor who may either 1) lower the upfront cost of your system based on its SREC value, or 2) pay you after Illinois Shines makes its payment to the vendor.  

Illinois Solar for All: The Illinois Solar For All is a statewide program that helps low-income households install solar panels at no upfront cost. Instead of paying for the panels and the installation, residents who qualify will pay a reduced monthly fee for the power produced by their solar panels. The program is available to all income-qualifying residents as well as nonprofits, public facilities and community solar projects that serve low-income areas. 

Solar property tax adjustment: If you install solar panels and the value of your home increases, you can ask for a property tax adjustment. The tax assessor will calculate your property's value as the lesser of whether it had the solar system or a conventional heating and cooling system. 

Local solar panel incentives in Illinois

In addition to statewide solar programs in Illinois, you may qualify for local incentives as well. These include:

Chicago's Green Building Permit Program: City residents who are installing solar panels may qualify for a same-day permit approval at a reduced rate. To qualify, a solar contractor will need to help you create plans and submit them for approval. After the contractor installs the panels, the city will inspect the system for final approval and same-day permitting. There could be backlogs and waitlists, though. 

Cook County Sun and Save: This initiative is currently on hold, but you can join the waitlist in case more funding becomes available. Through the program, Cook County's Department of Environment and Sustainability installs solar panels at no cost for income-eligible residents. The home can have up to four units, as long as the applicant lives in one of them, and it must be located within Cook County. 

Solar group buy programs: These programs allow home and business owners to secure group discounts and other price breaks on solar arrays. Participants usually attend "solar power hours" to learn about the basics of solar and the costs involved, and then get the chance to sign up for group rates, rebates and other available benefits. In Illinois, there are solar group buys in Urbana-Champaign and the greater Chicago area.

Local rebates for solar appliances in Illinois

Beyond the solar incentives at the state level, a few local governments and organizations offer additional incentives for Illinois residents who go solar. 

Commonwealth Edison (ComEd) Solar Rebate: ComEd gives its residential customers a rebate of up to $300 for each kilowatt of solar capacity. Customers can also receive a rebate in the same amount for installing a solar energy storage device. 

City of Naperville Electric Utility solar installation rebates: Naperville's municipality-owned utility offers rebates of up to $3,000 for residential customers who install either a roof-mounted solar energy system or a solar water heating system. You'll need to submit an application for the rebate within six months of passing the final inspection.

Federal solar tax credits and incentives for Illinois residents

The Inflation Reduction Act includes the residential clean energy credit, which covers up to 30% of the cost of new, qualified clean energy improvements in your home. To use the credit toward solar panels, you'll need to:

• Own your home. (If you're a renter, then your landlord may          qualify for the credit.)
• Purchase solar panels that are new or being used for the first time.
• Own the solar panels. (You won't qualify if you lease the panels or enter into a power purchase agreement because your system is owned by a third party.)

There's no limit on how much you can claim. If you install a $24,000 solar panel system, for example, then you'd qualify for a federal tax credit of $7,200. That means your tax bill in the following year would be lowered by $7,200. You can carry forward any excess unused credit for future tax years. 

The tax credit can cover the costs of:

• The actual solar panels.
• Labor for installation and assembly.
• Any necessary electrical work.
• Soft costs, like permitting fees. 

Illinois net metering rules for solar energy

When your solar panels produce more electricity than your home uses, any excess energy flows back to the power grid and joins your utility's supply. With net metering, the utility company gives you credits for the solar energy you feed into the grid. These credits can lower your utility bill. 

In Illinois, utility companies Commonwealth Edison, the Ameren Illinois Utilities and MidAmerican Energy Company are required to provide credits on your bill at the full retail rate. Other utilities may offer this option as well. Credits carry over from month to month and typically expire at the end of the year.

Community solar projects in Illinois

In 2016, Illinois authorized community solar programs, which allow residents to join a nearby shared solar garden for a monthly subscription fee. This means you can use solar energy without installing solar panels on your property. 

Here's how it works: A utility or an organization builds a solar array at a community site. Eligible participants -- usually utility customers -- subscribe to shares of that solar array. As the solar garden produces energy, the utility provider will credit each subscriber's account based on their share. 

There are many community solar gardens throughout the state, with some special options for low-income residents through Illinois Solar For All. Some power companies in Illinois, such as Ameren and ComEd, provide discount programs for residential customers just for signing up.

Illinois Shines maintains a list of more than 100 community solar projects across the state. To download the list, head to the Community Solar page and click "Find a Community Solar Project."