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Are You Prepared for 2025 Solar Changes? Here’s What You Need to Know

Solar industry veterans use the term “solar coaster” to describe the ups and downs of working in this industry. While the sun’s daily rise is a constant, each year brings a unique set of opportunities and challenges. Looking ahead, 2025 is shapes up to be no different, with potential changes to incentives, utility rates, and financial interest rates on the horizon. Despite these uncertainties, solar continues to be a smart and impactful investment for both homes and businesses.

In this article, we’ll explore the current state of solar, then highlight some of the key changes that are either already underway or could come into play in 2025. It will become clear that these 2025 solar changes make now an excellent time to go solar

What Are Current Solar Incentives?

Federal Solar Tax Credit

The Federal Investment Tax Credit (FITC) offers homeowners and businesses a valuable incentive: 30% off the cost of a solar photovoltaic (PV) system. This tax credit, which provides a dollar-for-dollar reduction in your tax liability, also extends to energy storage systems such as batteries.

The Inflation Reduction Act of 2022 expanded these benefits with additional tax credits for non-residential projects. These include a 10% add-on credit for systems located in designated energy communities, another 10% for solar projects using a majority of American-made components, and an extra 10% to 20% for systems installed in low-income communities. As it stands today, the tax credits from the Inflation Reduction Act are set to remain in effect until 2032.

MACRS Depreciation

Solar projects are also eligible for depreciation expenses through state and federal MACRS depreciation schedules. In many cases, the accelerated depreciation schedules can reduce the cost of a solar PV system by up to 15%.

Illinois State Incentives

Illinois residents have an extra incentive to go solar through the Illinois Adjustable Block Program, also known as Illinois Shines. This program supports the growth of new solar PV systems by facilitating the purchase of Solar Renewable Energy Credits (SRECs) from system owners. Through Illinois Shines, homeowners and businesses can sell the SRECs generated by their solar systems to Illinois utilities.

The value of SREC payments varies based on factors like system size and location. These Illinois Shines payments can significantly lower the cost of a solar PV system—sometimes by as much as 30%. 

In 2025, Illinois homeowners served by investor-owned utilities, Ameren Illinois and ComEd, can take advantage of valuable rebates to reduce the cost of solar PV systems. The Smart Inverter rebate offers $300 per kilowatt, while the energy storage system rebate provides $300 per kilowatt-hour of battery storage. For example, a typical homeowner with a 10 kW solar PV system could receive $3,000 in Smart Inverter rebates, plus an additional $4,000 from the battery rebate.

When these rebates are combined with the Federal Solar Tax Credit and Illinois Solar Renewable Energy Credits (SRECs), an Illinois homeowner can save up to 65% of the total system cost. These incentives make solar a highly affordable and impactful investment.

REAP Grants

Farmers and small businesses in rural areas could access the U.S. Department of Agriculture Rural Energy for Agriculture Program (REAP). This program can provide a grant of 25% of the cost of a solar PV system and up to 50% in certain circumstances. The Inflation Reduction Act provided more than $2 billion in funds for the REAP program through 2031, with $1 billion allocated through six quarterly applications in 2023 and 2024.

What Could Change in 2025?

Solar Tax Credits & Incentives

Federal Solar Tax Credit in 2025

The federal solar tax credit (FITC) and the tax credits from the Inflation Reduction Act were established through  legislation. As we know, bills take a long time to get through Congress to become law. With a new Congress and President, we anticipate many months of deliberation over possible changes to the solar tax credit and the Inflation Reduction Act. Even if new legislation passes, we anticipate the value of the tax credit will remain in effect for 2025 at existing levels. We will monitor changes to the federal tax credit such as elimination or an earlier phase out. Some discussions indicate that the sunset for the 30% tax credit may occur prior to 2032. 

In simple terms, if you want to take advantage of the federal tax credit, 2025 seems like the most secure moment to install solar on your home or business

REAP Grant Funding in 2025

Annual REAP funding is expected to be reduced in the coming years, making grant applications to the program even more competitive. 

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Don’t miss out on our January webinar series that dives into key 2025 solar policy changes. We’ll be joined by experts Andrew Linhares, SEIA Senior Manager – Central Region and MOSEIA Executive Director Jonathan Dolan.

Will Solar Panel Tariffs Raise Solar Prices?

American industrial policy encourages domestic production of solar cells, modules, and components for solar PV systems through a combination of tariffs and domestic incentives. In recent years, tariffs on imported solar components and modules have increased, with the Biden Administration doubling tariffs on Chinese solar wafers and polysilicon in December 2024.

At the same time, domestic solar manufacturing is on the rise. According to the Solar Energy Industries Association, the U.S. now has 44 gigawatts of module manufacturing capacity online—enough to meet most of nation’s demand in 2024. While tariffs could slightly raise the cost of solar modules in 2025, this impact is expected to be offset by the growing availability of American-made solar panels and components entering the market soon.

What Do 2025 Utility Rates Look Like?

Ameren Rate Increases Proposed

Both Ameren Illinois and Ameren Missouri have announced plans for rate increases in 2025. For Ameren Missouri customers, the Missouri Public Service Commission is reviewing their proposed 15% rate increase. Meanwhile, Ameren Illinois has submitted a proposal for a $334 million multi-year increase extending through 2027.

Over the last three years, utility rate increases have outpaced both wage growth and inflation with no signs of slowing down. Additionally, capacity pricing increases from utility grid operators MISO and PJM are further driving up electricity costs, ensuring that rates will continue to climb in the coming years.

Solar Locks Electricity Rates Now

A solar PV system can lock in the cost of electricity to your home or business. This concept, known as the levelized cost of energy (LCOE), is calculated by simply dividing the net cost of your system (cost after incentives) by the kilowatt-hours produced by your system.
After incentives, the levelized cost of energy for a solar PV system, held constant for 25+ years, can be significantly lower than the current electricity rates charged by the utility. Learn more about LCOE in Illinois and Missouri.

Imagine if you could lock in all your prices at the rates from the year 2000—future you will thank you for getting started with solar today! 

Shift to Time of Use Rates

The investor-owned utilities plan to transition their customers to time-of-use pricing (also referred to as on-peak and off-peak), where electricity costs more during peak periods—typically afternoons and evenings—when demand is highest. These are the times you’re most likely to need power for your home or business. Conversely, electricity will cost less during off-peak hours, such as when you’re at work or sleeping. The rate structure transition already occurred for Ameren Missouri customers.

By installing a solar + battery system, you can store solar energy during the day and use it during those expensive peak hours. This allows you to save even more money without having to change your busy routine or lifestyle.

Will Solar Be Affordable in 2025?

Solar Financing Outlook is Strong

Absolutely—and there’s even more good news on the way. The Federal Reserve lowered their interest rates in 2024, with further reductions anticipated in 2025. StraightUp Solar offers competitive financing options for your solar PV system through the Clean Energy Credit Union.

In autumn of 2024, Clean Energy Credit Union dropped its loan interest rates, following the decrease initiated by the Federal Reserve. The credit union specializes in loans for clean energy investments such as solar PV systems, battery storage, and electric cars, offering highly competitive rates. One standout feature is their single-loan option, which provides low payments for the first 15 months and the option to re-amortize the loan by applying your federal tax credit.

When combined with the current level of federal and state incentives, the lower interest rates makes solar more affordable in 2025.

Don't Wait—Start 2025 Off Bright with Solar Savings

While the future may seem cloudy, the 2025 outlook for solar is bright if you act soon. Federal tax credits, depreciation allowances, and state incentives are firmly in place today, offering solid support for your solar investment. Interest rates are at their lowest in years, meaning your monthly payments for your solar PV system can potentially be lower than your current electricity bill. With low-cost refinancing and re-amortization from Clean Energy Credit Union, you can easily adjust your loan if rates change down the road.

By starting your clean energy transition today, you can lock in energy savings for decades and protect your home or business against ever-increasing utility rates. Starting a solar proposal today with a StraightUp Solar Project Developer ensures your system is optimized for current incentives and utility rates, giving you the best value for your solar investment.

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Take the first step today with a free quote. Solar energy is a proven, brighter energy choice that leads to a healthier, more resilient future for homeowners and businesses alike.

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