Illinois Solar – Everything You Need to Know


Information about Solar Panels in Illinois

If you’re thinking about going solar in Illinois, you’ve come to the right place! We’ve got everything you need to get informed. Below you’ll find info on savings, relevant state policies, and available incentives. In Illinois, solar is a great way to go, so take a look below to learn how.


#1 Are Solar Panels Worth it in Illinois?

Overall Grade
11 years Avg. Payback Time (For Cash Purchase)
9.1 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$17,259 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

Illinois’ high – and steadily rising – electricity prices mean that you can save quite a bit by installing solar. However, with few incentives beyond the federal tax credit to drop your investment cost, it takes about 11 years to recoup your initial investment, leading us to give Illinois a grade of C.

#2 Options for Buying Solar Panels in Illinois

While leases and PPAs are legal in Illinois, there is a lack of companies offering them. This means that in reality, you can choose between cash purchases and solar loans to finance your installation.

Cash Upfront

If you want to save as much as possible, cash is always going to be the way to go. Sure you have to provide the entire payment up front (which of course is no laughing matter), but once it’s paid off, you can enjoy huge savings and added home value (more on that below).

Installing solar in Illinois costs around $3.81 per watt, so an average-sized 5 kW installation costs around $19,050 before incentives, or $13,335 after accounting for the federal tax credit (see section below for more info on this tax credit).

Once your system is installed, you’ll be pumping out electricity, saving money, and seeing a return on your investment. You’ll also be able to sell off all the renewable energy credits (RECs) that your system produces, allowing you to save more and see a faster return on your investment (more on RECs later).

Over 25 years (the estimated lifespan of most solar installations) you can expect to save $17,259 after paying off your initial investment! FYI, this savings estimate includes both your utility’s average annual increase in electricity prices as well as solar panels’ typical annual drop in energy production due to aging.

Bottom Line: With the federal tax credit to lower your initial investment cost and the RECs to help you see a faster return, your payback time hovers around 11 years – which is average to good compared to other states.. However, after that, your installation has paid for itself and you can start piling on those savings!


Just like loan purchases below, solar leases allow you to go solar and see monthly savings on your bill while avoiding that high upfront cost. However, instead of owning the system, your solar company retains ownership.

With this in mind, the installer is responsible for any maintenance and repair your system might need over the length of your agreement. That is of course, very nice. However, since they are the owners of the installation, they also receive the federal tax credit, not you. Bummer.

All of this is for naught, though. While solarr leases and power purchase agreements (PPAs) are legal in Illinois, big national companies like Sunrun and SolarCity – purveyors of the solar lease – have yet to enter the Illinois market, likely due to the lack of incentives available.

Offering solar leases is capital intensive, so smaller local or regional installers really can’t offer them. This means that for all intents and purposes, residential solar leasing is dead in the water in Illinois. You certainly might be able to find a company offering solar leases, but they won’t be very common.

Bottom Line: To be honest, lack of solar leases really isn’t a bad thing. If you enter into a solar lease, you don’t add any value to your home and you’ll save less money than with a cash purchase or loan. Better to go with ownership if you can!

More: Solar Leases


If $19k seems a bit out of your price range, take a look at loans to finance your solar installation. You’ll be paying interest on the loan, so your total savings won’t be as high as a cash purchase, but you’ll still save money and see an increase in your home’s value.

Taking out a 15-year loan with 5% interest means tacking on an extra $8,066 in interest to your overall investment, bringing your total cost to $21,401 after the federal tax credit. However, after paying off your loan, you’ll still see savings of $9,193 – not nearly as much as a cash purchase, but still worthwhile when you couple your financial savings with your decreased emissions and your much smaller carbon footprint.

Bottom Line: Obviously, with a loan you will not have as much savings as with a cash upfront purchase, but for no money down, it’s not too bad.

More: Solar Loans

#3 Illinois Solar Policy Information

Illinois has passed several pro-solar policies, including an RPS with a solar carve-out, interconnection standards, and net metering for residential customers.


Renewable Portfolio Standard

States that are serious about lowering emissions and encouraging renewables typically pass renewable portfolio standards (RPS), which are mandates that a certain percentage of electricity sold in the state must come from renewable sources by a certain time.

As of 2017, 29 states have passed RPS goals, with Illinois right in the pack. Originally adopted in 2007, Illinois’ RPS sets new annual goals for renewable energy, culminating in 2026 when 25% of all electricity must come from renewable sources. Of that 25%, 75% must come from wind and solar, with at least 6% coming from solar alone (known as a solar carve-out).

Starting in 2016, 1% of the renewable energy must come from distributed generation (aka solar on homes and businesses, not owned by the utility). Although 1% might seem small, it’s a huge step toward encouraging the growth of small residential solar systems, and few states have passed similar goals. Great job, Illinois!

More: Renewable Portfolio Standard (RPS)

Electricity Prices

More than anything else, your electricity prices are what dictates your total savings going solar. If your utility’s electricity is expensive, you can save more by producing your own electricity and avoiding paying that high cost. If your utility’s electricity is cheap, it’ll take you longer to recoup your investment and save money.

Illinois’ average residential electricity price hovers around $0.138 per kWh, about a penny higher than the national average of $0.129 per kWh. This means you’ll be able to save more money by going solar than homeowners in many other states. Great!

Current prices are only one part of the equation, however. Utility prices also increase each year, and the rate of that increase also affects your savings. The faster the increase, the more money you can save.

Analyzing EIA data on electricity prices over the past 15 years, we find that the price of electricity in Illinois has risen on average 2.5% each year, just below the national average of 2.6%.

While Illinois’ electricity prices aren’t climbing sky high each year, the fairly high current price along with that steady annual rise can mean big savings over the 25 years of your system’s life.

Net Metering

In 2007, the state of Illinois passed legislation requiring the Illinois Commerce Commission (the organization responsible for regulating utilities) to set standards for both net metering and interconnection.

Under these rules, privately-owned utilities like ComEd and Ameren are required to offer net metering to customers (municipal utilities and electric cooperatives are not required). Any excess electricity you produce at the end of the month is credited to your next bill as a kilowatt-hour credit at the full retail rate. So, if you used 800 kWh this month, but produced 850 kWh, you’d have a 50 kWh credit on your next month’s bill.

Unlike in other states, your RECs aren’t automatically handed over to the utility, so there’s another way to make a little extra money as well (more on RECs below)!

More: Net Metering

Interconnection Rules

Interconnection is the process in which your utility gives their approval to connect your solar installation to their electricity grid. To make the solar installation process as painless as possible, many states pass a standardized interconnection process that all utilities must follow.

Without this standardization, each utility individually decides how the process should go, what fees are involved, and how long it takes (and as you can imagine, some utilities can take a long time…), potentially creating a confusing mess of a situation.

In Illinois, the interconnection process is based on the size of the installation, with systems that are 25kW and under (which includes all but the largest residential systems) falling under Level 1. Level 1 is the simplest, most streamlined process.

As you install your system, your installer will likely take care of all the interconnection paperwork for you, so you actually don’t need to worry about this – just know that the process should be fast and painless!

Homeowners Associations

Illinois law blocks any HOA or other associations from banning solar installations, though they can decide the location of your installation as long as it doesn’t affect the energy production. HOAs must also respond within 90 days of any application for approval to install solar.

If you’re worried your snooty HOA might have issues with your installation, don’t give it another thought!

#4 Financial Incentives, Rebates, and Tax Credits

With the federal tax credit and the REC market, you can drop the total cost of your solar investment significantly.


Federal Tax Credit

All homeowners in the US who own their own solar installation are eligible for the 30% tax credit. If there was one single incentive you could choose for your solar installation, this is it!

As a tax credit – not a deduction – it drops your taxes down 30% of your total installation cost. This means if you spent $17k on your installation, you’ll avoid paying $5,100 come next April. In essence, that drops your total installation price to just $11,900!

You apply for this credit yourself after your installation is complete. If your tax liability isn’t high enough in a single year to take advantage of the full amount, you can break the credit down and claim portions over several years.

More: Solar Federal Tax Credit

State Tax Credit

Illinois offers no statewide tax credit.

Utility Based Incentives

No utilities in Illinois offer incentives for homeowners going solar.

Solar Renewable Energy Credits (SRECs)

Solar homeowners in Illinois can sell the Renewable Energy Credits (RECs) that their installation produces over 5 years. 1 REC equals 1,000 kWh, so over 5 years you can expect to produce about 32 RECs from your average-sized 5kW installation. Since RECs are bid on in a competitive marketplace, the actual prices you’ll receive can fluctuate, but one Illinois REC aggregator sets a conservative estimate of $110 per REC, so 32 RECs would equal around $3,520.

RECs are really the icing on the cake, but over $3k tastes pretty sweet, right?

Property Tax Exemption

While Illinois doesn’t necessarily exempt solar installations from property tax, they do allow a special assessment of the property value. After filing for this claim, the county assessor will compare two values: the value of your home with solar and the value of your home with traditional measures. Whichever is less will be used to calculate your property tax.

We know. This seems vague, right? Many states just offer a 100% tax exemption on the solar installation, but to each his own.

Sales Tax Exemption

Many states also offer sales tax exemptions for solar equipment and possibly even installation costs. While this usually only adds up to a few hundred dollars in savings, hey, money’s money right?

Unfortunately, Illinois doesn’t offer any sales tax exemptions for solar.

General Increase in Home Value

As we mentioned before, installing solar not only saves you money on your utility bill, it also adds value to your home – as long as you actually own the installation.

In 2015, the Lawrence Berkeley National Lab studied home values in 6 different states and found that homebuyers were willing to spend a premium, typically $4 per watt, for homes with solar installations owned by the homeowner (leases and PPAs add no value to the home).

Of course, that price fluctuates based on the age of the installation, but this means your 5kW system could add an extra $20k to your home value.

More: Buyers Will Pay More for Solar Homes

If you’d like to dig in even more on local incentives and rebates, check out the DSIRE database.

#5 Chicago and Downstate Solar

If you’re in the Chicago area and want to install solar, great! Here are a couple extra titbits for you.


Are solar panels worth it in Chicago? Yes, they are! Just like elsewhere in the state, you’ll benefit from statewide net metering and interconnection standards, as well as the federal tax credit.

The City of Chicago also has standardized and streamlined its solar permitting process, a move they’ve deemed the Chicago Solar Express. In the past, acquiring a solar building permit took 30 days and $375. Today, it takes just a single day and costs only $275. If you’re in the city limits, you’re in luck!

One important note: ComEd actually charges residential customers about $15 in flat monthly fees. This means that, no matter how much electricity you use, you’ll have to pay that $15 each month. Obviously, $15 isn’t much, but it can certainly eat into your savings, especially if you’ve taken out a loan to finance your installation. Be sure to study all savings estimates carefully, as well as how installing solar will affect your utility bill.

If you live in southern Illinois, Ameren also offers net metering and an easy interconnection process. Residential customers don’t need to pay any additional connection fees (though there is a $50 application fee). As with any other utility operating in the state, Ameren must offer bill credits for an excess generation added to the grid by net metered customers. With Ameren’s different rate zones, it’s a bit more difficult to give general savings estimates (beyond our state average savings estimate above). If you want to move forward with solar in southern Illinois, you’ll need to contact a local installer for a customized estimate.

What to Do Next?chicago-buildings

If you’re installing solar in the Chicago area, or any area of Illinois for that matter, the best advice we can give is to talk with a few experienced installers who know your utility’s rate structure, and who can provide a customized savings estimate for your home.

Going solar in Illinois can be a great financial decision, but be sure to talk to a few installers, take advantage of all the incentives you can, and choose your financing carefully!

Image Credit under CC License via Pixabay - 1, 2, 3, 4, 5

  • by Ryan Austin
  • |
  • June 12, 2017
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