2024 is the final year for full net metering for Illinois solar homeowners and businesses. Investor-owned Illinois utilities (like Ameren Illinois) will be paying significantly less for solar credits as they drop from a retail rate net metering to supply rate.
What is net metering? It is essentially a financial exchange compensating solar owners for the excess energy their solar array produces during peak solar hours that is exported to the utility grid. Currently, this excess energy from the grid is credited at a full-price retail rate on their utility bill, coming in handy when they use energy from the grid. After 2024, the value of the energy export will drop.
Watch the webinar recording to hear Shannon Fulton, StraightUp Solar Vice President of Development and Illinois Solar Energy Association Board Member, discuss:
For Illinois residents considering solar, this year provides the final opportunity to lock in full retail net metering rates. After January 1, 2025, Illinois investor-owned utilities (Ameren Illinois and ComEd) will pay less for energy sent to their grid.
Net metering is the financial exchange between the owner of a solar PV system and their utility. The utility pays the solar homeowner for the excess energy produced by the system. Currently, Illinois investor-owned utilities provide a credit equal supply and delivery rates charged to the homeowner or business. This is called full retail net metering or 1:1 net metering.
On January 1, 2025, Ameren Illinois and ComEd will only pay the supply rate for excess energy. the homeowner and business will not be compensated with the delivery rate, lowering the value of the net metering credit. Homeowners and businesses installed prior to that date are considered legacy systems. They can lock in full net metering and shield their home and business from escalating utility rates. Electricity rates are estimated to increase on average 3% a year.
The change in net metering was included in the Climate Equity and Justice Act of 2021. The law set the date for transition to a new net metering schedule and eliminated the uncertainty when the net metering cap for each utility will be reached. The law included a Smart Inverter Rebate incentive of $300 per kilowatt to lessen the impact of the net metering change. The law also allows net metering credits to be carried forward during the life of the system, instead of an annual reset. When a home with a solar PV system is sold, the net metering credits stay with the home and the new homeowner receives the benefits.
Let’s walk through an example of how the new net metering schedule will work. Our homeowner would like to build a 10KW system. Currently, they pay a supply rate of $0.100 and a delivery rate of $0.031, for a total electricity rate of $0.131.
Here’s is how all the incentives and net metering schedules will apply in 2024 and 2025. In our example, the cost of a new 10KW solar PV system is $35,000. After 30% federal tax credit and the Illinois Solar Renewable Energy Credit (based on energy production), the net cost of the system would be:
In 2025, our example system would cost the same at $35,000. However, now the homeowner would be eligible for the smart inverter rebate in exchange for partial net metering. Their upfront costs would be:
The net metering schedule at the supply only rate compensates the home excess energy at 10 cents. In the first year, the homeowner saved $1,260 and $54,900 for the 30-year life of the system. Both scenarios include a 3% increase in utility rates, but without compensation for delivery charges, the homeowner could be exposed to even higher escalating rates.
Let’s put both examples side by side:
Note: Chart does not account for net present value of money
In summary, if you currently have a solar PV system, you earned lifetime enrollment in full net metering, a 1:1 payback of supply plus delivery rates. Congratulations, you can enjoy full retail net metering and buffer yourself (and future owners of your home) from rising electricity rates for the next 30 years! The longer you stay in your house the longer the savings.
If you are contemplating solar today, consider purchasing your system in 2024 to reserve your home in the current net-metering system, like all current solar homeowners. You don’t want to be jealous of your neighbors.
If you wait unit next year, you will have lower upfront costs to purchase your system through the smart inverter rebate, but you will lose out on the opportunity to secure your energy costs savings of the life of the home’s array. You do not have long-term control of your future energy costs and will experience a reduction of energy savings.
