Huge increase in residential 'solar systems'

Federal and state incentives provide major financial offsets

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By Maria Maxham

Over the past decade or so, Forest Park has seen maybe one or two permit applications per year for additions of solar energy systems to residences, according to Steve Glinke, director of the Department of Public Health and Safety. In the past year, though, there have been at least 15. 

A growing concern for the environment is certainly one explanation for the rising interest in solar energy, as is the increasing cost of electricity. 

But the other major reason is financial and dual-faceted: the expiration of the federal income tax credit at the end of the year and Illinois-specific incentives, including an advance of 15 years of solar credits upon installation.

On the federal level, 2019 is the last year homeowners can take advantage of the 30 percent tax credit on systems and installation. The federal Investment Tax Credit (ITC) step-down, which gradually decreases the federal tax credit available to homeowners for solar energy systems, is in place. After 2019, the percentage amount homeowners can deduct from their taxable income will be reduced to 26 percent in 2020 and 22 percent in 2021. In 2022, only businesses will be able to claim a federal solar tax credit of 10 percent. 

Although there are groups campaigning to extend both the 30 percent federal tax credit and resident tax credits past 2021, experts say it is unlikely this will happen.

In addition to the federal tax credit, Illinois offers financial enticements for installation of solar power as well. Through Illinois Shines, an incentive program that supports development of new solar energy generation in Illinois, homeowners who install residential solar power through an approved vendor can sell Solar Renewable Energy Credits (SRECs) back to a utility company such as ComEd. The program opened on Jan. 30 and has made solar energy more attractive from a financial standpoint.

An SREC represents the environmental benefits of one megawatt-hour of electricity that a solar system generates. The Illinois Power Agency, established by the state of Illinois in 2007, dictates that in most cases the utility must pay a homeowner for 15 years of SREC production in advance, when the system is installed. This can provide a major offset to a homeowner purchasing a system.

Over time, however, the dollar value for SRECs will decrease. According to Illinois solar installer Certasun's website, "While the Illinois Power Agency has estimated the initial SREC price at $72.97, this will only last for the first 5,000 to 10,000 systems. Once that block of systems has been installed, the price will decline further. If you want the largest incentive, you should install your solar system now."

Residents John Cunningham and Rob Sall recently installed solar panels on their house and garage. They began the process in March of 2018, researching different companies, including Tesla and Costco's solar panels and installers. They wanted panels on their garage, which would necessitate digging a trench through their yard to carry power to the house, as well as on their house, including a section of roof that some companies considered too flat for installation.

Cunningham and Sall finally chose a company called Headline Solar and ended up with 30 panels total, including nine on their garage, for a nine-kilowatt system.

The couple also installed Tesla Powerwall batteries, which are charged by the solar panels and can power the house if there is an electricity outage. Contrary to popular belief, a solar power system will stop providing electricity to a home if there is a local power outage. But batteries, which function as generators, can store energy and provide it for days, depending on usage, and can be recharged through solar energy.

For Cunningham and Sall, this was an essential part of their system because they run an electric sump pump, and if the power went out, it would stop working. Now they are protected from flooding even if there's a blackout.

"Recently there was a power outage, and we only knew about it because people were complaining about it on Facebook. We didn't notice it at all," said Cunningham.

Their system and installation cost $38,500, higher than the average cost of a residential solar system, but that includes the Tesla Powerwall batteries, which can add a lot to the cost but provide the ability to use energy even during a power outage.

And that figure is before tax incentives. Cunningham and Sall financed their system, and after the 30 percent income reduction on their taxes and the state of Illinois' SRECs advance, they will be paying $125 in loan payments, as opposed to the $165 average monthly electric bill they were paying previously. 

They've done their research. They said electric costs have been increasing at 4 to 7 percent annually. In 20 years, at this rate of increase, their electric bill without solar energy would have been around $430. Instead, they'll be in their final year of repaying their loan at $125 per month. And in year 21, they'll have paid off the system and will be paying virtually nothing in contrast to the estimated monthly electric bill of $450 per month.

Adam Perri from Windfree Solar in Chicago agrees that, in addition to the environmental benefits of a residential solar system, it's a great financial decision right now.

"There are a lot of incentives available both state-wide and federally that make it a good option at this time," said Perri. "The return on investment for a homeowner is great."

He predicts that most people who install solar energy systems and purchase upfront will pay off their system quickly. "If your house is in a sunny location, with a good south-facing roof, the system will definitely pay for itself in six years," he said.

"The price tag is not the most important thing to consider when you're thinking of going solar," he added. Finding an established company, especially a local one, is essential. He recommends choosing a company from Illinois so if your system goes down, it can be quickly fixed. And, he said, special attention should be paid to the kind of inverter that comes with the system.

The average cost of a system is around $25,000, he said, but that number is definitely not set in stone and depends on many different factors, including your average monthly electric bill and how much sun exposure your home gets.

Residents Julieta Aguilera Rodríguez and her husband, Andy Johnson, recently installed solar panels on their house as well. 

"I'm so excited," said Rodríguez. "I can't stop smiling."

They had researched solar installation for years and finally decided the time was right. It made financial sense, given the federal and state tax incentives.

They also used Headline Solar and found the experience fairly straightforward and simple. They estimate that with the federal tax credit, advance payment of SRECs and monthly electricity savings, they will have paid off their system within six years.

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