How Illinois solar incentives empower multifamily landlords and low-income renters

Illinois solar incentives are aptly designed to benefit landlords and tenants in multifamily buildings - potentially at no cost. Here's how...

By Aliya Bagewadi 

The Illinois Solar for All (ILSFA) program offers multifamily building owners an invaluable chance to install solar affordably while directly benefiting their tenants. As solar energy becomes a more popular feature in multifamily properties, this program makes it financially feasible, particularly for properties in underserved communities.

By stacking these incentives with specialized sub-programs like the Low-Income Multifamily Solar Program and the Bright Neighborhoods Initiative, ILSFA allows landlords to fully fund shared rooftop solar projects, drastically reducing tenants' energy bills.

This article dives into how these incentives work, eligibility, and how Allume's SolShare technology can unlock funding by over 100% for some properties, including:

Understanding the Illinois Solar for All (ILSFA) Program

The ILSFA program is designed to extend the benefits of clean energy to low-income and disadvantaged communities in Illinois.

It does this by issuing Solar Renewable Energy Credits (SRECs) for each megawatt-hour (MWh) of solar energy produced (1 MWh equals 1,000 kWh). Utilities purchase these credits, giving building owners substantial financial support to reduce solar installation costs.

To help you quantify this, a two-bedroom apartment typically consumes between 600 and 800 kWh monthly. A 20 kW solar system can produce about 24 to 28 MWh per year, enough to offset the annual electricity usage for around three to four two-bedroom apartments, depending on usage and location.

These credits are paid upfront to the landlord and roughly cover 50% of the cost for a multifamily building (see financial modeling below for more details).

How Solar Renewable Energy Credits (SRECs) pricing works

Under the ILSFA Low-Income Multifamily Solar Program, building owners must ensure that at least 50% of the solar benefits go directly to tenants.

This article will focus on SREC pricing in Group B, which is ComEd territory, and is designed to benefit lower-income households.  

Essentially, smaller systems (relevant to most low-income multifamily buildings in Illinois) generate a higher price per SREC:

• 10 - 25 kW systems: $107.72 per SREC
• 25 - 100 kW systems: $91.88 per SREC
• 100 - 200 kW systems: $89.98 per SREC
• 200 - 500 kW systems: $82.78 per SREC
• 500 - 2,000 kW systems: $78.60 per SREC
• >2,000 kW systems: $58.84 per SREC

Source: Illinois Solar for All

Federal Investment Tax Credit for solar systems

Additionally, building owners can take advantage of the Federal Investment Tax Credit (ITC), which provides a 30% credit on system costs. For projects in qualifying communities – which includes all of Chicago and most of Northern Illinois – an additional 10% ITC adder is available (Energy Community Tax Credit). 

The Bright Neighborhoods Initiative: A Streamlined Path to Solar

The Bright Neighborhoods Initiative is another ILSFA sub-program that targets designated areas in Illinois, such as Chicago's West Side, Waukegan, and the Carbondale-Marion region. This initiative simplifies solar adoption by consolidating vendor interactions and application steps, providing building owners with a single point of contact. With no upfront costs, it is particularly beneficial for smaller multifamily properties in underserved neighborhoods to help them modernize with sustainable energy options.

By combining these incentives, multifamily building owners may be able to fund the cost of a solar system by more than 100%. See financial modelling below.

Financial analysis: Cost breakdown

For a multifamily building owner considering the Illinois Solar for All (ILSFA) program, here's a cost breakdown example for a 20 kW solar system based on a high-end price of $3.50 per watt*:

1. Initial Installation Cost:

   • At $3.50 per watt, which is on the higher end of the spectrum for solar installations, a 20 kW system would cost around $70,000.

2. Investment Tax Credit (ITC):

   • Eligible projects in energy communities (such as areas previously reliant on fossil fuel industries or qualified brownfield sites) benefit from an additional 10% ITC adder on top of the standard 30% credit.
   • This 40% ITC would reduce the cost by $28,000, bringing the net cost to $42,000.

3. ComEd Utility Rebate:

   • The ComEd rebate for distributed solar generation is typically $250 per kW, totaling $5,000 for a 20 kW system.
   • Applying this rebate reduces the cost further to $37,000.

4. 15-Year SREC Income:

   • Under ILSFA's Group B SREC pricing, each REC is valued at $107.72 for systems in the 10-25 kW range.
   • A 20 kW system would generate approximately 390 RECs over 15 years, providing an income of $42,010.80.

5. Final Cost and Net Profit:

   • After accounting for incentives, the system's effective cost would be entirely covered—in this scenario, there's a net profit of approximately $6,010.80. However, ILSFA typically adjusts incentives to ensure that the financial support aligns closely with the system's actual cost, avoiding excess profit.

This scenario illustrates how the combination of ILSFA, federal tax credits, and utility rebates can make solar installations financially viable and impactful for multifamily buildings in Illinois.

*It is important to note that these figures illustrate the program's capacity to cover the system's total cost. Incentives may be calibrated to offset the installation expenses without generating additional income. This ensures that solar adoption remains accessible and equitable for building owners in low-income or underserved areas.

SolShare units at a multifamily building in Rosemont, Orlando

How Allume's SolShare Unlocks These Incentives

A unique requirement of the ILSFA Low-Income Multifamily Solar Program is that at least 50% of the solar benefits must go directly to tenants. While solutions like gift certificates have been attempted, they lack scalability.

Allume's SolShare technology provides a comprehensive, data-driven solution that monitors the exact amount of solar energy delivered to each unit. This ensures compliance and simplifies access to SREC payments, allowing building owners to take full advantage of program incentives.

Benefits of adding shared rooftop solar to your building

Going solar through ILSFA or Bright Neighborhoods is more than just a way to reduce utility bills—it's an investment that adds value to properties and enhances tenant satisfaction.

For Owners:

• Increase Property Value: Solar installations increase market appeal, attracting environmentally-conscious tenants
• New Revenue Stream: Owners may introduce a small amenity fee for solar access, creating an additional income stream
• Sustainability: Solar aligns with the rising demand for eco-friendly and sustainable housing options

For Tenants:

• Reduced Energy Bills: Direct access to solar energy translates to monthly savings
• Environmental Impact: Tenants contribute to a cleaner energy future and reduced carbon footprint

Image: Daren, tenant in a multifamily building in Mississippi who is benefitting from clean, affordable energy thanks to SolShare.

Get Started

Whether through the broad benefits of the ILSFA Multifamily Solar Program or the streamlined access of the Bright Neighborhoods Initiative, Illinois Solar for All offers unprecedented opportunities for building owners.

With Allume's SolShare technology, owners can meet compliance, monitor energy distribution, and tap into funding streams to make solar installations financially viable and beneficial for everyone involved.

If you're ready to explore how you can combine solar incentives with our solar-sharing technology, email us at info@allumeenergy.com or use the form below to provide a few details.

Request a building or portfolio assessment for your multifamily assets