Illinois is phasing out full retail net metering and moving to a new solar incentive structure called Smart Solar Billing on January 1, 2025. This change was codified in 2021 through the Climate and Equitable Jobs Act (CEJA), so the solar industry, utilities and other stakeholders have had four years to prepare for this substantial change. While commercial customers in Illinois have been using the Smart Solar Billing plan since 2017, residential customers will now follow suit.
Some important elements of the new rate:
- Smart Solar Billing uses “Dynamic Supply Pricing” to value energy exports based on the time of use instead of one fixed compensation percentage
- Credits now only apply to the delivery portion of the electricity bill instead of the entire bill, including delivery and taxes
- Customers under the new regime are also eligible for two new one-off upfront discounts:
- The Distributed Generation (DG) rebate gives customers $300/kW in generation capacity to offset the value added to the grid
- The storage rebate gives customers $300/kWh to help reduce energy storage costs
World of solar energy spoke with the policy director of Sunrun, the national residential installer, to learn more about this change, and how it relates to California’s highly controversial move to NEM 3.0.
This interview has been edited for clarity.
Amy Heart, VP of policy at Sunrun.
World of solar energy: Smart Solar Billing is similar to NEM 3.0 from California, so I was surprised that even the press release expressed positive opinions from the solar industry. This is a change, and it’s a little less than the full retail net measure, but it didn’t seem as stressful and worrying for the industry.
Amy Hart: Historically, you’ve used net metering in retail as a way to roughly do justice to harnessing the benefits of rooftop solar for the electric grid. And what Illinois is doing is still taking advantage of all of these benefits, but in different ways to best respond to the needs of the electric grid. This way you will feel why and how it is different from California.
I liked the time frame of knowing it’s coming and being able to adapt – a super important difference. But the other point is that there are still recognized values for rooftop solar, and that’s the huge difference between Illinois and California.
The supply rate, the value when you export electrons, will change. You can actually choose hourly prices, prices based on usage time or stable prices. But valuing the export value of solar energy will be more accurate based on the energy price at specific times. So it really encourages customers and the industry to think about adding batteries so that you create more available resources now.
So there are dynamic supply prices, but the other part is a new distribution network discount. It’s called the DG Rebate, an upfront payment to customers of $300/kW to take advantage of the benefits offered to the distribution grid. It’s really the first time we’re trying to think about, “How do we get the math right if we install a solar and battery system and avoid a transformer upgrade?”
The other piece that CEJA and the legislature have done is they’ve added a storage rebate so that the upfront cost of batteries can be reduced to give homeowners resiliency. But if you take that Storage Discount, you have to use one of those time-varying rates.
The solar market has been growing since 2017. We are now moving to rate designs that encourage storage but do not hide the entire sector.
What could be improved in this new plan? What pitfalls do you see along the way?
It’s definitely going to be a more confusing conversation at the kitchen table. It’s not that simple. It depends on customers’ usage; it does depend on the size of the system.
It will definitely be a longer conversation, and that means it’s important that homeowners have a trusted partner who knows what questions to ask, who takes the time to go through the process and think about the implications.
There are installers who are used to only using solar energy; they will not switch to batteries. I think you might see that hiccup of a volume impact, or maybe you’ll just see smaller systems because if you have a smaller system that’s just solar powered, you’re not going to export as many electrons, which means you don’t have that math as part of the return on investment or payback conversation with a homeowner.
To ensure customer confidence and a good customer experience, it is absolutely recommended to transition to these new rate designs early. We don’t want to have an experience in Illinois where someone thought they could sell a system on December 1st and somehow magically get it licensed and inspected within 20 days.
All of these new rebates – the DG Rebate, the Storage Rebate – are all available today. If people haven’t converted their sales calls at the kitchen table, they need to do so ASAP or we’ll have some confused customers at best in January.
What are the political differences that have made this relatively smooth and positive transition possible? Is it the PUC?
With the foresight of the Governor’s leadership in CEJA, the Legislature, and leadership on the Senate and House of Representatives side, to ensure that everything we do for our clean energy future works for all sectors of the industry, but also for all residents and businesses in the state.
Bringing the utilities to the table, bringing the consumer and taxpayer advocates to the table, bringing the industry to the table, taking the time to do that and think about what needs to be included in the legislation.
Having this consistent, stable direction already in the legislation that people agree on has really helped avoid distracting debates.
It certainly has the potential to be a promising way to transition a state from supporting solar-only manufacturing to solar in combination with batteries, and then using these resources in the way the technology is intended.