The Windy City might be known for its breezes, but sunshine holds immense potential for Chicago homeowners. There are multiple incentives for residential solar in Chicago, IL. While there isn’t a single, city-wide solar program, a powerful combination of federal, state, and local incentives makes solar energy a financially attractive option.
Today, you will learn about the tax incentive for solar panels, net metering, tradable certificates, and other government stimulus for Chicago residents. By understanding Chicago solar incentives and their combined financial benefits, you will make an educated decision about going solar in Chicago, IL.
Harnessing Residential Clean Energy With Tax Assessment Reduction Program
This tax incentive for solar power lowers the taxable value of your property. While installing solar panels does increase your property value, this program can also help to reduce the portion of that value used to calculate property taxes.
The specifics of this solar panels incentive, like the amount of reduction or eligibility requirements, vary depending on your location and situation. Contact your county assessor’s office for specific information about your solar panel incentive case.
Illinois Shines Boosting Eco-Friendly Power Production
Another green initiative for people from the Windy City is the Solar Renewable Energy Certificate (SREC) program. Illinois has a robust SREC program called Illinois Shines.
This solar energy incentive uses different algorithms than the previous option. SRECs are tradable certificates representing 1 megawatt-hour (MWh) of clean energy generation. When you install a solar system in Illinois that produces electricity for the city grid, you earn SRECs based on your energy production.
These solar government incentive certificates have a market value determined by supply and demand. Illinois Shines offers a fixed price for SRECs.
But what does REC stand for? Renewable Energy Credit (REC) is an instrument that verifies the ownership of one megawatt-hour (MWh) of power generated from a renewable energy resource. After the power supplier has delivered the energy into the system, the REC can be sold on the open market as an energy product. RECs earned can be sold to other polluting companies as a carbon credit for reducing their emissions.
To make the most out of these Illinois solar incentives, you must sign a contract with an approved vendor (generally, a solar installer), who will either reduce the up-front cost of the system based on the SREC value or pay the system owner after the program makes the payment to the approved vendor.
There are two main price groups (also known as trade groups) under Renewable Energy Credit (REC): group A and group B. Group A of this incentive solar panels program suits people who use Ameren, Illinois, MidAmerican, Mt. Carmel Public Utility, and rural electric cooperatives and municipal utilities from MISO. Group B of this solar government incentive fits those in the service territories of ComEd, rural cooperatives, and PJM municipal utilities.
Beware that the REC prices vary depending on the system size and utility group. We gathered the latest pricing data for this federal incentive solar program so you can estimate your future budget. All prices listed below show a price per REC.
If you prove that you have multiple systems that service different, unaffiliated tenants, you can use small unit estimations for Chicago solar incentives. However, we recommend you communicate with the local installer team about this solar energy incentive.
But bear in mind that the local government accepts those exclusions on a case basis. It means that even if neighbors from the nearest apartment building use a “small unit” new solar panel incentive, the local authorities may refuse you.
Subscribing to community solar is a great way to achieve solar energy incentive benefits without installing panels on your roof. Some community solar projects offer specific solar incentives to low-income residents. We recommend you contact your solar provider to learn about the Chicago solar incentives available for you.
SREC’s fixed price provides predictability and reduces risk for homeowners. Knowing the compensation of this Illinois solar incentive program beforehand allows you to factor in the income from SRECs when calculating the return on investment for your solar panels.
Lowering Your Taxes With Federal Solar Tax Credit
While the federal residential solar tax credit and investment tax credit (ITC) apply nationwide, including in Chicago, it’s crucial to understand that they are not administered by the city’s authorities. This incentive for residential customers applies to your federal income taxes.
As of 2024, the solar residential tax credit covers 30% of the installation of residential solar photovoltaic systems. However, in 2033, it will decrease to 26%, and in 2034, we will see a 22% credit. January 1st, 2035, is the day of residential solar tax credit expiration unless Congress renews it.
Proposals for residential solar power tax credits fit those families who buy their panels so they can count as their owners. If they sign a lease, they rent panels from the solar company. In this situation, you can’t ask for federal residential solar tax credit as you don’t legally own the system. However, the leasing company owns this system, so they can ask for ITC. The federal incentive for solar panels may lower your payments, so you can redeem this loan faster than expected.
Beware, the residential solar energy tax credit is a reduction, not a refund. The ITC doesn’t necessarily translate to a direct check from the government. The residential federal solar tax credit simply reduces the amount of federal income tax you owe. So, this isn’t the way to earn money, but an opportunity to save them.
If the solar incentive tax credit amount exceeds your annual tax liability, you can use the excess for future tax years. You can also combine ITC with financial incentives offered by the state of Illinois. This solar panel tax incentive makes eco-friendly power an even more attractive investment for Chicago homeowners.
Looking for the best residential solar power system in Chicago, IL? Fill out this form to get a solar quote and learn how you can benefit from going solar.
Net Metering
It is a valuable incentive for solar panels, which you can use with most private Illinois utility companies, including those serving Chicago. Here, you can sell excess electricity back to the grid. But, this government solar incentive is different from Illinois Shine’s.
While with REC, you get only a pre-estimated compensation, with the metering solar incentives, you can get a fair reimbursement. In this case, the electricity you send back to the grid will be credited at the same rate that you are charged for electricity. If you produce more electricity than you take from the grid in a given month, you can roll excess credits from this solar panel incentive program over to the next month.
Beware that the remaining credits will expire once per year, either in April or October. We recommend picking the April expiration date for government solar energy incentive programs like net metering, as it gives you the most time to use built-up credits from the previous summer.
So, if you send $200 worth of solar energy to the grid, you earn credits from your utility company that covers the same amount in your electricity bills. This means that if you save up to $300 worth of credits in summer, you can use those credits to lower your winter bills while you use the grid.
Some may say you can earn money with this government solar incentive program, but that’s not exactly the case. You won’t receive the actual cash from your utility company. This solar power incentive simply helps you to lower your bills. Customers of a municipal utility or electric cooperative should contact their providers to determine the local net metering rates.
Additional Government Incentive Solar Programs for Chicago Residents
The City of Chicago offers several programs to incentivize green building practices within the city limits. The Green Permit Program (GPP) is a well-known program designed for Chicagoans.
This solar panel government incentive has a tiered structure and can apply to residential, institutional, industrial, and commercial buildings. So, if you are a Chicago resident looking to power your home or business in an eco-friendly way, this program can help you lower your fees.
Wrapping Up: Is Solar Worth It in Chicago?
It’s a worthwhile investment for homeowners who want to produce eco-friendly electricity to power their utilities and cars. Chicago solar incentive programs can lower your taxes, reduce upfront installation costs, reduce bills, and provide income for you.
Solar systems increase the property market value while providing environmental benefits for your neighborhood. However, you should consider roof characteristics, financial situation, and even your average electricity bill. The higher your bills, the more you can save with solar power.
Looking for the best solar power system in Chicago, IL? Fill out this form to get your solar quote right away!
Frequently Asked Questions
What are the eligibility criteria for participating in Chicago solar incentive programs?
There are multiple Chicago solar incentives available for the city residents. If you want to get the residential solar panel tax credit, you should own the panels. However, you can participate in most other incentives like Illinois Shines or metering if you loan your panels and don’t fully own them.
How does the application process for the incentive program work?
It depends on the incentive. Contact local, county, or federal authorities for permission to participate in the chosen program. We recommend you collaborate with installers who contact them instead of you. It will ease your eco-friendly journey.
What financial benefits can homeowners expect from installing solar panels through these programs?
Net metering will lower electricity bills, while solar credit significantly reduces the upfront investment. Illinois Shines (SREC program) offers tradable certificates (SRECs) for solar energy generation. It provides a fixed price for SRECs, guaranteeing additional income on top of your panels’ electricity. Property Tax Assessment Reduction offers a reduction in the taxable value specifically because of the panels. It translates to lower property taxes year after year.
