Are you an Illinois homeowner considering the switch to solar energy? You‘re not alone. With the state‘s ambitious renewable energy goals, favorable incentives, and falling solar technology costs, more and more Prairie State residents are discovering the financial and environmental benefits of going solar.
In this in-depth guide, we‘ll explore all the key factors that make solar an attractive investment for Illinois homeowners. From detailed cost breakdowns and savings projections to the latest solar technology advancements and state-specific incentives, we‘ll provide you with the expert insights and data-driven analysis you need to make an informed decision about solar panels for your home.
The Economics of Solar Energy in Illinois
Average Solar Panel System Costs
The first question on most homeowners‘ minds when considering solar is, "How much will it cost?" The good news is that solar panel prices have fallen dramatically in recent years, making them more affordable than ever. According to the National Renewable Energy Laboratory (NREL), the cost of residential solar systems has dropped by over 70% since 2010.[^1]
In Illinois, the average cost per watt for a residential solar panel system is around $2.73.[^2] For a typical 6-kilowatt (kW) system, which can offset the energy needs of most medium-sized homes, the total cost before incentives would be approximately:
- 6,000 watts x $2.73/watt = $16,380
However, this is just the base cost of the solar panels themselves. There are several additional factors that can impact the final price of your solar installation, including:
- Labor costs for installation
- Inverters and other necessary equipment
- Permits and interconnection fees
- Any necessary roof repairs or upgrades
On average, these additional costs can add 20-30% to the base price of your solar panels. So, for a 6 kW system in Illinois, the total upfront investment might look something like:
| Component | Cost |
|---|---|
| Solar Panels | $16,380 |
| Inverter(s) | $2,000 |
| Installation | $4,000 |
| Permitting | $500 |
| Total | $22,880 |
While this may seem like a significant upfront expense, it‘s important to remember that solar panels are a long-term investment that can provide substantial savings over their 25-30 year lifespan. Plus, with the generous incentives available in Illinois (which we‘ll detail later in this guide), the actual cost to homeowners can be considerably lower.
Electricity Rate Trends in Illinois
Another key factor in the economics of solar energy is the cost of electricity from traditional sources. The higher your current electricity rates, the more you stand to save by generating your own clean energy with solar panels.
In Illinois, the average residential electricity rate is 13.01 cents per kilowatt-hour (kWh), which is slightly lower than the national average of 13.31 cents/kWh.[^3] However, electricity rates in the Prairie State have been steadily rising in recent years, with an average annual increase of 1.5% over the past decade.[^4]
Assuming this trend continues, the average Illinois household can expect their electricity bills to look something like this over the next 25 years:
| Year | Electricity Rate (cents/kWh) | Annual Cost (1,000 kWh/mo) |
|---|---|---|
| 2023 | 13.01 | $1,561 |
| 2028 | 14.01 | $1,681 |
| 2033 | 15.09 | $1,811 |
| 2038 | 16.25 | $1,950 |
| 2043 | 17.50 | $2,100 |
| 2048 | 18.85 | $2,262 |
Over this 25-year period, the average Illinois household would spend over $46,000 on electricity. By generating your own energy with solar panels, you can insulate yourself from these rising rates and enjoy substantial long-term savings.
Solar Panel Technology Advancements
The solar industry is constantly evolving, with new advancements in panel design, materials, and manufacturing processes that are driving down costs and improving efficiency. Some of the most exciting developments in solar technology include:
-
Monocrystalline PERC cells: These high-efficiency cells feature a special reflective layer that allows them to capture more light, resulting in higher energy output and smaller panel sizes.[^5]
-
Bifacial panels: These double-sided panels can absorb light from both the front and back, increasing total energy production by up to 30%.[^6]
-
Half-cell modules: By cutting solar cells in half, manufacturers can reduce electrical resistance and improve shade tolerance, leading to higher overall panel performance.[^7]
-
Passivated Emitter and Rear Contact (PERC): This cell technology adds an extra layer that allows more light to be captured, improving efficiency by up to 6%.[^8]
As these and other innovations continue to advance, the cost of solar energy is expected to fall even further, making it an increasingly attractive investment for homeowners and businesses alike.
Illinois Solar Incentives and Tax Credits
One of the most compelling reasons to go solar in Illinois is the wide array of incentives and rebates available to homeowners. These programs can significantly reduce the upfront cost of your solar panel system, making it more affordable to make the switch to clean energy.
Here are some of the key incentives available in Illinois:
Federal Solar Investment Tax Credit (ITC)
The federal solar tax credit is the most significant incentive for solar energy in the United States. This program allows you to deduct 30% of the cost of installing a solar panel system from your federal taxes.
For example, if you install a 6 kW system at a cost of $22,880, you would be eligible for a tax credit of $6,864 ($22,880 x 0.30). This effectively reduces the net cost of your solar installation to $16,016.
It‘s important to note that the ITC is scheduled to step down in the coming years. The 30% credit will be available through 2032, after which it will decrease to 26% in 2033 and 22% in 2034 before expiring entirely for residential systems in 2035.[^9]
Illinois Shines Renewable Energy Credit Program
Illinois Shines is a state-administered program that supports the development of new solar energy generation in the state. Through the program, homeowners can earn Renewable Energy Credits (RECs) for the electricity their systems generate.
One REC is equal to 1 megawatt-hour (MWh) of electricity. The value of these RECs varies based on market conditions, but as of early 2023, the average price for a residential solar REC in Illinois was around $70.[^10]
So, if your 6 kW solar panel system generates 7 MWh of electricity per year, you could earn approximately $490 per year ($70 x 7) through the Illinois Shines program. Over the course of your system‘s 25-year lifespan, that adds up to an extra $12,250 in income.
Solar Renewable Energy Credits (SRECs)
In addition to the Illinois Shines program, the state also has a separate Solar Renewable Energy Credit (SREC) market. SRECs represent the environmental attributes of solar energy and can be bought and sold separately from the actual electricity your panels produce.
Illinois utilities are required to source a certain percentage of their energy from solar, and they can meet this requirement by purchasing SRECs from solar panel owners. The value of SRECs fluctuates based on supply and demand, but as of early 2023, Illinois SRECs were trading at around $40 per MWh.[^11]
Using the same example as above, if your 6 kW system generates 7 MWh of electricity per year, you could earn an additional $280 per year ($40 x 7) by selling your SRECs. Over 25 years, that‘s an extra $7,000 in revenue.
Property Tax Exemption
In Illinois, any increase in home value due to the installation of solar panels is exempt from property taxes. This means that while your solar panel system may add significant value to your home, you won‘t see a corresponding increase in your property tax bill.
For example, let‘s say your $300,000 home increases in value by $15,000 after installing solar panels. Normally, this would result in an additional $450 per year in property taxes (assuming a 3% property tax rate). However, thanks to the Illinois solar property tax exemption, you‘ll continue to pay taxes based on your home‘s original $300,000 value, saving you $450 per year.
Sales Tax Exemption
Illinois also offers a sales tax exemption for solar panel systems and related equipment. With a state sales tax rate of 6.25%, this exemption can provide significant savings on the upfront cost of your solar installation.
For a 6 kW system priced at $22,880, the sales tax exemption would save you approximately $1,430 ($22,880 x 0.0625) on your initial investment.
Putting It All Together: The Financial Benefits of Solar in Illinois
Now that we‘ve explored the various incentives and savings opportunities available to Illinois solar homeowners, let‘s put it all together to see the full financial picture.
Continuing with our example of a 6 kW solar panel system that costs $22,880 to install, here‘s how the numbers shake out:
| Factor | Value |
|---|---|
| System Cost | $22,880 |
| Federal Tax Credit (30%) | -$6,864 |
| Illinois Shines RECs (25 years) | +$12,250 |
| SRECs (25 years) | +$7,000 |
| Property Tax Savings (25 years) | +$11,250 |
| Sales Tax Exemption | -$1,430 |
| Total Net Cost | $1,316 |
As you can see, when you factor in all the available incentives and long-term savings, the net cost of installing solar panels in Illinois is incredibly low. In this example, the homeowner would essentially be getting their solar panel system for just over $1,000, while enjoying 25+ years of clean, renewable energy and insulation from rising electricity rates.
Of course, your actual savings will depend on factors like your system size, energy usage, and local incentives, but this example illustrates the incredible financial benefits that solar can provide for Illinois homeowners.
The Environmental Impact of Solar Adoption in Illinois
In addition to the financial rewards, going solar in Illinois also has a profound environmental impact. By generating clean, renewable energy, you‘re helping to reduce reliance on fossil fuels, lower greenhouse gas emissions, and combat climate change.
According to the U.S. Energy Information Administration (EIA), the average Illinois household consumes about 9,000 kWh of electricity per year.[^12] Based on the state‘s current electricity mix, which includes a significant amount of coal and natural gas, this results in annual carbon dioxide (CO2) emissions of approximately 5.4 metric tons per household.[^13]
By installing a 6 kW solar panel system, which can generate around 7,000 kWh of clean electricity per year, you could reduce your household‘s CO2 emissions by over 4 metric tons annually. That‘s equivalent to:
- Planting 105 trees every year[^14]
- Taking 0.9 cars off the road each year[^15]
- Saving 452 gallons of gasoline annually[^16]
Over the 25-year lifespan of your solar panel system, you would be preventing over 100 metric tons of CO2 from entering the atmosphere – a significant contribution to the fight against climate change.
But the environmental benefits of solar energy in Illinois go beyond just reducing greenhouse gas emissions. Solar power also helps to conserve water (since it doesn‘t require the vast amounts of water needed for cooling in traditional power plants), improve air quality, and reduce the need for destructive fossil fuel extraction practices.
As more and more Illinois homeowners embrace solar energy, these environmental benefits will only continue to grow, helping to create a cleaner, greener future for the Prairie State and beyond.
Solar Industry Job Growth and Economic Impact in Illinois
The growth of solar energy in Illinois isn‘t just good for the environment – it‘s also a major driver of economic development and job creation in the state.
According to the Solar Energy Industries Association (SEIA), Illinois currently has over 200 solar companies, including 33 manufacturers, 83 installers/developers, and 93 other related businesses.[^17] These companies employ over 5,000 workers across the state, with solar jobs increasing by a remarkable 37% from 2019 to 2020 alone.[^18]
As the state continues to ramp up its solar ambitions, this job growth and economic impact is only expected to accelerate. Illinois‘ solar industry is projected to add over 3,000 new jobs by 2025, bringing the total solar workforce to over 8,000 strong.[^19]
This growth is being driven by a combination of factors, including the state‘s ambitious renewable energy goals, supportive policies and incentives, and the falling cost of solar technology. With major utility-scale and community solar projects in the pipeline, along with the continued adoption of residential and commercial solar, Illinois is poised for a solar boom that will create thousands of good-paying jobs and inject billions of dollars into the state‘s economy.
Conclusion
As we‘ve seen throughout this guide, solar energy represents an incredible opportunity for Illinois homeowners to save money, reduce their environmental impact, and contribute to the state‘s growing clean energy economy.
With some of the most generous incentives in the country, including the federal tax credit, Illinois Shines RECs, SRECs, and property tax and sales tax exemptions, the financial benefits of going solar in the Prairie State have never been more compelling. By making the switch to clean, renewable energy, you can slash your electricity bills, insulate yourself from rising rates, and even earn extra income through the sale of RECs and SRECs.
At the same time, going solar allows you to make a meaningful difference in the fight against climate change, reducing your household‘s carbon footprint and helping to conserve precious resources like water and land.
And as the solar industry continues to expand in Illinois, your investment in clean energy will help to create thousands of jobs, drive economic growth, and build a more sustainable future for generations to come.
So if you‘re an Illinois homeowner considering solar panels for your home, there‘s never been a better time to make the leap. With expert guidance from local installers, financing options to fit any budget, and an array of compelling incentives to sweeten the deal, solar energy is a smart choice for savvy Prairie State residents looking to save money and make a positive impact on the environment.
