Solar energy involves turning sunlight into electricity that can be used to power homes, businesses, and devices. The most common way sunlight is converted into energy is through solar panels, referred to as photovoltaic, or PV, panels. These panels can be placed on rooftops or in open spaces. When sunlight hits the cells, it creates a reaction that causes electrons to move. This movement creates electricity.
Once electricity is generated from solar energy, it can be used in two ways:
- Immediately to run appliances or charge devices, including an electric vehicle.
- Stored in batteries for later use, like at night or during a power outage.
All solar energy systems have an inverter to convert the electricity from direct current, DC, which is the type of electricity solar produces, to alternating current, AC, which is what the electrical grid uses.
The parts of a solar panel include the frame, glass cover, polymer sheets, solar cells, and backing material.
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Types of solar projects
Solar energy can be captured and used in many ways. Solar panels can be mounted on schools, parking lots, landfills, and even on farms with grazing animals. These projects can generate energy locally or for large utility-scale projects that power homes across a region. There are three main types.
- Distributed Solar
- Residential: 5-10 kW
- Commercial: 10 kW - 1 megawatt (MW)
- Community Solar: 1-5 MW
- Utility-Scale Solar: 5-200+ MW
Types of solar projects: Distributed, community, utility-scale
Distributed Solar
These solar panels are installed where power is used. This could be on the roof of a home, school, business, or a community building, instead of a large utility-scale project. These systems generate electricity locally.
This helps lower energy bills, reduce reliance on the energy grid, and when combined with battery storage, backup power. Because the energy is produced close to where it’s needed, this can reduce energy loss that can happen during long-distance transmission.
Community Solar
If you want to benefit from solar energy but can’t install your own system due to living in an apartment, upfront costs, a shaded roof, or other barriers, community solar may be a good fit for you. It allows you to enjoy the benefits of solar energy without installing panels at your residence.
When you subscribe to a community solar program in Illinois, you receive net metering credits on your utility bill based on how much energy your share of the community solar project produces.
How it works:
- A community solar project is built in your utility’s service area
- The project owner covers the upfront costs to build, maintain, and connect the project to the grid
- You subscribe to a portion of the solar farm’s energy and pay the owner for your share of electricity produced
- Each month, the owner reports how much electricity your share produced to your utility company
- Your utility company applies bill credits to your electric account based on your portion of electricity produced
- These credits reduce the amount you owe on your monthly electric bill
For example, if your home uses 700 kilowatt-hours (kWh) of electricity in a month, and your share of the solar farm produces 650kWh, you’ll receive a credit on your bill for those 650kWh. In this case, you would only need to pay your utility for the remaining 50kWh.
You still pay the solar farm for your monthly electricity usage, but it is typically at a lower rate than what your utility charges for electricity. By subscribing to a community solar project, you can support local clean energy and lower your energy bill.
Community Solar, State Programs
Illinois offers two state-run programs that support community solar subscriptions created under the 2016 Future Energy Jobs Act. These programs, administered by the Illinois Power Agency, work with approved vendors and provide consumer protection support.
State programs provide a way for Illinois consumers to support newly developed local solar energy projects. For both programs, you must subscribe to a project within your same electric utility service territory.
Illinois Shines Community Solar
- All Illinois residents
- Goal is to expand solar access, market-driven program
- Savings are dependent on the size of the subscription and how much energy the solar farm produces
- No upfront cost
- Receive credits applied to utility bills
Illinois Solar For All Community Solar
- Income of 80% or less of the area median income
- Goal is to provide affordable, clean energy access
- Guaranteed savings and reduction in electricity bills
- No upfront cost
- Receive credits applied to utility bills
Utility-Scale Solar
These are large-scale solar power plants that generate electricity for the grid. These projects range from 1 megawatt (MW) to several hundred MW in capacity. The largest solar project in Illinois is Double Black Diamond, in Morgan and Sangamon counties. It covers 4,000 acres and can power 100,000 homes. The project went online in late 2024.
While large-scale solar power plant projects do not always deliver power locally, they provide other benefits, including tax revenue, community benefit programs, land-lease payments, local jobs, and more.
For questions about permitting and siting for utility-scale solar, review energy planning resources.
Utility-Scale Solar, Agriculture
Agrivolatics is the practice of using the same land for both solar production and agriculture. Since solar panels and crops benefit from flat, sunny land, combining the two can reduce the competition for space and ease the challenges of siting solar energy systems on farmland.
By placing solar panels above crops or livestock grazing areas, agrivoltaics makes it possible to produce renewable energy while maintaining agricultural productivity. This dual use supports sustainable land management, helps farmers diversify income, and reduces the pressure to convert farmland solely for energy production.
University of Illinois is exploring the potential of agrivoltaics through the SCAPES project, Sustainably Colocating Agricultural and Photovoltaic Electricity Systems, which studies how crops and solar panels can be paired to increase crop production, generate energy, and increase farm profitability.
Utility-Scale Solar, Other
Solar energy systems are highly adaptable and can be installed in many environments, not just farms. Examples include:
- Solar canopies over parking lots
- Floatovoltaics, or floating solar panels, on water
- Installations on capped landfills or other underutilized spaces
Whether as utility-scale arrays, community solar projects, or smaller distributed systems, solar energy’s flexibility allows it to serve a wide range of energy needs. Learn more in the recorded webinar From Parking Lots to Landfills: Funding Solar Projects That Empower Your Community.
Solar and crops
Crops can be co-located underneath or adjacent to solar panels. Solar panels can reduce plant drought stress and increase food production, especially for more drought-prone crops.
Solar and landfills
Solar panels on landfills can provide many benefits, such as local power, reduced energy costs, and local tax revenue. The City of Urbana worked with a developer to install a Community Solar project on its closed landfill.
There are specific guidelines to follow when installing solar on landfills. Depending on the status of the landfill, the developer will need to ensure that the panels wouldn't interfere with any of the environmental monitoring and control systems, and additional permits may be needed to ensure that the panels wouldn’t interfere with any of the environmental monitoring and control systems.
For landfills in the post-closure phase, developers should ensure that the panels do not compromise the landfill's final cover system. To learn more about permitting requirements on landfills, please review Illinois EPA guidelines.
Solar and livestock
Solar projects can come with an abundance of grass. Instead of deploying lawn mowers, some projects are turning to sheep or goats to mow the grass. During the summer months, livestock can benefit from the shade provided by the panels.
Solar and natural pollinators
In a state where only .01% of original prairies remain, supporting local pollinators and native plants is important. Solar projects can be paired with native plants to support local ecosystems. Incorporating native plants into solar energy projects provides many possible benefits, such as improved soil health, increased water retention, and reduced runoff.
When a community solar project is built in your utility's service area, the project owner covers the upfront costs to build, maintain, and connect the project to the grid. People can subscribe to a portion of the solar farmer's energy and pay the owner for their share of the electricity produced.
Each month, the owner reports how much electricity your share produced to your utility company. The utility company applies bill credits to your electric account based on your portion of electricity produced. These credits reduce the amount you owe on your monthly electric bill.
Illustration by Ben Arthur, University of Illinois Extension.
What happens when the land lease ends?
Most solar energy systems are young, with 70% of them being built since 2017 (source: International Energy Agency). The estimated lifespan for a PV module is about 30 to 35 years.
There are two main options for when a solar project is done:
- Repowering: The PV system will be refurbished or replaced, and the project will operate at the same location for another lease cycle. There are varying levels of repowering, ranging from a full repower to a partial repower or a retrofit package/software upgrade.
- Decommissioning: The system is deconstructed, removed, and the land is either made ready for redevelopment or returned to its original use. When considering a solar land lease contract, make sure to address who will be the responsible party for covering the cost of removing solar equipment and restoring the land to its original condition.
Learn more about the repowering and decommissioning process.
Paying for solar
There are three main options available to municipalities and individuals to pay for solar.
- Buy outright: You own the system and get the full financial benefits. This means you can claim tax credits, rebates, and other incentives that come with solar ownership. While the upfront cost can be high, in the long term, you keep all the energy savings.
- Lease: A third party owns the system, and you pay a fixed monthly amount for the system. Solar lease payments are designed to be lower than your pre-solar electricity bill, saving between 10-30% on monthly energy payments. This allows you to benefit from solar without the upfront cost, but you don’t receive tax credits or rebates. It’s the third-party owner that can claim those incentives.
- Power Purchase Agreement: You pay for the electricity the system produces, typically at a rate lower than your utility’s. A third-party developer installs, owns, and operates the system on your property, and you agree to buy the power it produces. Like leasing, you don’t receive tax credits or rebates; those go to the third-party owner.
Renewable Energy Credits
When solar panels generate electricity, they also produce Renewable Energy Credits, one for every megawatt-hour (MWh) of renewable energy generated and delivered to the grid.
Illinois has two main programs that offer incentives through the sale of Renewable Energy Credits:
- Illinois Shines: Open to all Illinois residents and businesses.
- Illinois Solar for All: Available to households earning at or below 80% of the Area Median Income.
Both programs use Approved Vendors that install solar systems and handle the sale of Renewable Energy Credits to Illinois utilities.
- If you buy your system, the vendor may lower your upfront cost or give you a rebate based on the REC value.
- If you lease or use a purchase power agreement (PPA), the REC value may be used to lower your monthly payments.
Renewable Energy Credits are not the same as net metering. Renewable Energy Credits are tied to incentives from the state. Net Metering, see below, is a separate utility program that gives bill credits for any excess energy your system sends back to the grid.
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Net Metering in Illinois
Net metering is a program that allows Illinois residential customers of Ameren, ComEd, and MidAmerican to receive credits for generating excess electricity using renewable energy sources such as solar, wind, and other forms of distributed generation. When you produce more electricity than you consume, the surplus is sent back to the grid, and you receive credits that offset your utility bill.
Customers of municipal utilities or rural electric cooperatives should contact their suppliers to check if they offer net-metering. Rural electric cooperatives and municipal utilities may limit access to net metering or may offer a different approach for crediting customers. The Illinois Climate and Equitable Jobs Act requires municipal utilities and co-ops to publish their net metering policies.
Important changes to Illinois' net metering took effect Jan. 1, 2025.
Full retail net metering
Before Jan. 1, 2025
Under the previous system, customers received a 1:1 credit for every kilowatt-hour (kWh) of electricity generated by their solar panels or other renewable sources. These credits applied to the supply, delivery, and taxes/fees of the electric bill.
Customers who enrolled in this system before the change will continue to receive credits for the lifetime of their system. If you had net metering prior to Jan. 1, 2025, you will still be in the program and will retain these benefits.
Check with your utility provider for specific requirements on the new rebates and how they affect your net metering rate.
Supply only net metering
After Jan. 1, 2025
Starting Jan. 1, 2025, new rules change the way credits are applied. Now, customers will only receive credits for the supply portion of their bill for excess energy sent back to the grid. This means you’ll still receive some compensation, but it will not cover the full bill like it used to.
Distributed Generation/Smart Inverter Rebate: To qualify for a smart inverter rebate, your system must use a smart inverter that helps transfer electricity from your solar panels to your home. Customers can receive a rebate from the utility of at least $300 per installed kW of solar capacity, provided all required paperwork is submitted within 60 days. There is a similar rebate for installing energy storage/batteries with renewable energy generation.
Credits Roll Over Monthly: One benefit of the new system is that net metering credits will no longer expire at the end of the year. Instead, they will roll over from month to month, allowing you to accumulate credits during the sunny summer months to offset higher winter bills when your system generates less energy.