The solar industry is rapidly growing these days. More people are now educated in solar energy, especially in its benefits both to ordinary people’s finances and the condition of our environment, and more government leaders are making huge strides in integrating solar energy into their legislations.
Illinois is one of the states in the U.S. that are actively trying to convince its residents to convert to solar energy. And it seems like the government in Illinois is doing a great job because there are now several solar rebate programs, solar tax credits, and other solar incentives available in the state. For that reason, if you are in Illinois and you are interested in solar energy, now is the perfect time to install a solar panel system on your property.
First Things First: How Much Is a Solar Panel Installation in Illinois?
According to Energy Sage, the average solar panel cost in Illinois as of October 2020 is $3.09/W. Sometimes, the cost can be as low as $2.63/W or as high as $3.55/W, depending on your solar installer. Additionally, the overall cost of the system is highly contingent on several factors, such as the size of the system and the equipment needed.
For that reason, the usual ballpark of the total solar installation cost in Illinois ranges from $13,132 to $17,768.
What Solar Rebate Programs, Tax Credits, And/Or Solar Incentives Available in Illinois?
Knowing that solar right now is cheap and that it will continue to get cheaper over time is good news. But an even better piece of news is that you can still reduce your overall costs through solar rebate programs, solar tax credits, and other solar incentives.
These rebate programs, tax credits, and other incentives vary from one region to another, so here are the available incentives in Illinois.
The Federal Investment Tax Credit (ITC)
The Federal Investment Tax Credit (ITC), also known as the federal solar tax credit, is a program that allows a person to deduct a certain percentage of the cost of their solar installation costs from their federal taxes. The ITC is applicable to both residential and commercial systems, and there is no cap on its value.
The Energy Policy Act of 2005 originally established the ITC, and it was supposed to expire at the end of 2007. But the Congress has extended its expiration date numerous times because they believed this program would help the country’s transition to a renewable energy economy. Now, the ITC is available to people in some form through 2021.
Over the years, the percentage of the solar installation cost that you can deduct from your taxes has changed.
- From 2016 to 2019: The tax credit was 30% of the cost of the system.
- 2020: Owners of new residential and commercial solar can deduct 26% of the cost of the system from their taxes.
- 2021: Owners of new residential and commercial solar can deduct 22% of the solar installation cost from their taxes.
- 2022 onwards: Owners of new commercial solar panel systems will be able to deduct 10% of the cost of the installation from their taxes. There will be no federal credit for residential solar energy systems.
How to Claim the ITC
So long as you own the solar energy system installed on your property, you are eligible for the ITC. You have to make sure that you paid for the system using cash or a loan because if you sign a lease or PPA with a solar installer, you’re not considered the owner of the system, thus disqualifying you from the ITC.
You claim the ITC for solar when you file your yearly federal tax return. If you have an accountant, let them know that you have a solar energy system installed on your property. If you file your taxes on your own, you should complete the IRS Form 5695 (this form validates your qualification for renewable energy credits; you can get this form online) and then add your renewable energy credit information to your typical Form 1040.
The Adjustable Block Program
The Adjustable Block Program, or more commonly known as Illinois Shines, is a state-administered incentive program that supports the development of new solar energy generation in Illinois.
You are eligible to participate in this program in one of two ways. First, you may host a new solar energy system on your property, thus directly offsetting your energy usage. Or you may participate as a subscriber to a community solar project (a large, centralized solar project for which you “subscribe” to a share of its output).
Illinois Shines provides payments in exchange for 15 years of Solar Renewable Energy Credit (SRECs) from a utility contracted to buy the SRECs from your approved solar installer. These payments to your approved solar installer will help offset the cost of your new solar energy system or your community solar subscription.
Illinois’ Net Metering Policy
Illinois has implemented a net metering policy that allows the utility to buy back any excess electricity that your solar energy system generates. Net metering makes sure that you benefit from the full value of your solar system. It is also a great way to balance out your electricity production and consumption, which don’t always happen at the same time.
ComEd Commercial Solar Rebates
ComEd is one of Illinois’ largest utility companies, and they provide rebates for commercial and industrial customers to help decrease the high costs of solar installations.
If you’re a ComEd customer and you have installed a solar energy system on your business, you’re eligible for $250 per kilowatt (kW) of installed solar. To get the rebate, your solar energy system shouldn’t be larger than 2000 kW in capacity.
Property Tax Break
One problem that people who are interested in going solar face is the possibility of their property tax bills going up because the solar energy system will add value to their home.
Luckily, Illinois has a program called the Special Assessment for Solar Energy Systems that will allow people with solar systems to be taxed as if the panels were not even there.
With more people embracing the mindset of using sustainable energy, the solar industry is becoming more popular now. Illinois, in particular, has started to put solar energy into good use, as seen in the government’s attempt in implementing tax credits and incentives that will convince people to install a solar energy system on their property.
The estimated cost of a solar installation in Illinois is around $13,132 to $17,768, but after accounting for the rebates, tax credits, and other incentives, these costs can drastically reduce.
In Illinois, there are various programs that will help prospective solar buyers in saving money. The most popular is the Federal Investment Tax Credit (ITC), which allows you to deduct 26% of the total solar installation cost from your federal taxes. In addition to the ITC, Illinois also offers the Adjustable Block Program, a net metering policy that benefits the people with solar installations, solar rebates for commercial solar, and a property tax break.
Because of all these programs, going solar in Illinois should be easier now. If you are an Illinois resident and you’re interested in going solar, then you should consult solar companies in Illinois to ask for more details.