Q&A: What you need to know about the switch to Smart Solar Billing in Illinois

Illinois is phasing out full retail net metering and transitioning to a new solar incentive structure called Smart Solar Billing on January 1, 2025. This change was set forth 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 on the Smart Solar Billing plan since 2017, residential customers will now follow suit.

Some key elements of the new tariff:

Smart Solar Billing uses “Dynamic Supply Pricing” to value energy exports based on time of use rather than one set rate of compensation
Credits will now apply only to the supply portion of the electric bill instead of the entire bill, including delivery and taxes
Customers under the new regime are also eligible for two new one-time upfront rebates:
The Distributed Generation (DG) Rebate gives customers $300/kW of generating capacity to compensate for value added to the grid
The Storage Rebate gives customers $300/kWh to help reduce the cost of energy storage

Solar Power World talked to national residential installer Sunrun’s VP of policy to learn more about this change, and how it compares to the highly contested California switch to NEM 3.0.

This interview has been edited for clarity.

Solar Power World: Smart Solar Billing seems similar to California’s NEM 3.0, so I was surprised that even the press release expressed positive opinions from the solar industry. This is a change, and it is a little less than full retail net metering, but it didn’t seem as stressful and upsetting to the industry.

Amy Heart: Historically, you used retail net metering as a way to do rough justice in capturing the benefits of rooftop solar to the grid. And what Illinois is doing is still capturing all of those benefits, but in different ways to best respond to the needs of the grid. That’s how you will sense why and how it’s different from California.

I liked the time frame of knowing it’s coming and being able to adjust — super key difference. But then the other piece is that there are still recognized values to rooftop solar, and that is the huge difference between Illinois and California.

The supply rate, the value when you export electrons, will change. You can actually go on hourly pricing, or time-of-use pricing or stable pricing. But valuing the export value of solar is going to be more accurate based on the price of energy at specific times. So it’s really encouraging customers, and it’s encouraging the industry, to think about adding batteries so you now create more dispatchable resources.

So there’s dynamic supply pricing, but the other piece of it is there is a new distribution grid rebate. It’s called the DG Rebate, which is an upfront payment to customers of $300/kW to capture the benefits that are provided to the distribution grid. It really is, for the first time, trying to think about, “How do we get the math right when we put in a solar and battery system and we’re able to avoid a transformer upgrade?”

The other piece that CEJA and the legislature did is they added in a Storage Rebate, so that is helping to reduce the upfront cost of batteries to bring resilience to homeowners. But when you take that Storage Rebate, you have to go on one of those time-varying rates.

The solar market’s been growing since 2017. We are now transitioning to rate designs that encourage storage, but don’t pull the rug out from the full industry.

What could be better in this new plan? What pitfalls do you see down the line?

It certainly is going to be a more confusing conversation at the kitchen table. It’s not as simple. It does depend on customers’ usage; it does depend on the size of the system.

It’s definitely going to be a longer conversation, and that means it’s important for homeowners to have a trusted partner, knowing what questions to ask, taking your time to walk through the process and thinking about the implications.

There are installers who are used to doing solar only — they’re not going to be making the transition to batteries. I think you may see that hiccup of an impact to volume, or you may just see smaller systems, because if you have a smaller solar-only system, you’re not going to export as many electrons, which means you’re not using that math as part of the return on investment or the payback conversation with a homeowner.

To provide customer confidence and a good customer experience, transitioning early to these new rate designs is absolutely recommended. We do not want to have experiences in Illinois where somebody thought that they could sell a system on December 1 and somehow magically get it permitted and inspected in 20 days.

All of these new rebates — the DG Rebate, the Storage Rebate — all of that’s available today. If folks haven’t transitioned their sales conversations they have at the kitchen table, they need to do that ASAP, because otherwise we’re going to have some confused-at-best customers, come January.

What are the political differences that made this pretty smooth and positive transition possible? Is it the PUC?

Having the foresight from the governor’s leadership in CEJA, the legislature and the leadership on the Senate side and the House side making sure that anything we’re doing for our clean energy future is working for all sectors of the industry, but also all residents and businesses in the state.

Bringing the utilities to the table, bringing the consumer advocates, the ratepayer advocates, bringing the industry to the table, taking the time to do that and think through what should be included in legislation.

Having this consistent, stable direction already in legislation that folks have agreed on has been really helpful to avoid any distracting debates.

It certainly has some potential to be a promising way to transition a state from supporting solar-only growing into solar paired with batteries, and then using those resources in the way the technology is meant to be used.