Solar backers are hoping lawmakers will offer more flexibility on how soon Future Energy Jobs Act funds need to be spent.
UPDATE Thursday, May 21, 5:45 p.m. CDT: This article has been updated to include comments from Ameren Illinois Chairman and President Richard Mark.
CORRECTION: Illinois Power Agency Director Anthony Star’s testimony was before a state senate committee. An earlier version of this story misstated where his comments were made.
Hundreds of millions of dollars earmarked for Illinois solar projects could be refunded to ratepayers if state lawmakers don’t pass a statutory fix this week during a three-day legislative session that ends Friday.
Illinois solar advocates and developers were confident before the pandemic of passing sweeping legislation this year to expand funding for renewables and fix problems with the 2017 Future Energy Jobs Act.
But the legislature was suspended in March, and now solar backers are making a last ditch effort to pass a relatively small change that would allow unspent money collected under the program to be rolled over into future years.
As state law currently stands, about $200 million collected from ratepayers since 2017 to fund renewable energy development will be returned to ratepayers because solar projects cannot be constructed before deadlines enshrined in the Future Energy Jobs Act, or FEJA.
The deadlines were unrealistic to start with, experts say, and the problem was only worsened by delays in implementing the law and more recently by the pandemic stalling much of the industry.
Without a legislative change, starting in June 2021 utilities will begin the process of returning funds to ratepayers. Since incentives for solar created by FEJA are paid out over time, that means there isn’t time to build and pay for new solar projects, with the possible exception of small residential projects.
Solar advocates and developers have proposed extending the deadline by two to five years, so money collected since 2017 can be “rolled over” to fund future utility-scale, brownfield, distributed and community solar projects.
There’s also concern that there won’t be enough money to buy renewable energy credits from existing solar projects that were promised the right to sell the credits under FEJA. Advocates have proposed a legislative change so that money needed to pay these existing contracts would be subtracted from the pot of money slated to be returned.
In March testimony before an Illinois state senate committee, Illinois Power Agency Director Anthony Star said that there will likely not be enough money to pay existing renewable credit contracts in the 2021-22 and 2022-23 delivery years, if the deadline for rolling over funds is not extended. He said that the contracts can still be paid by tapping a reserve fund of past payments from customers of alternative retail electricity suppliers. But that situation would ensure that no new projects are funded, he testified.
The Power Agency is responsible for utility-scale solar procurement and running the adjustable block program to incentivize distributed and community solar. In February, the Illinois Commerce Commission authorized the agency to do additional utility-scale and brownfield solar procurement, and to launch additional rounds of adjustable block grant funding, if funds are available. That depends largely on whether the deadline for using money already collected is extended.
“Tentatively the rollover would allow us to open up some additional capacity for the program,” Star said.
Small residential projects under 10 kilowatts can likely still receive incentives in the coming year even if the deadline is not extended, since they receive their renewable energy credit payments all upfront, rather than over four to 15 years as is the case with larger projects.
But this upfront funding model also raises challenges that need to be addressed in the future, Star told the committee, since it results in uneven spikes of funding that could become untenable once the rollover deadline is passed, and the state only has available the funds it brings in each year. Currently about $230 million a year is collected from ratepayers for renewable energy, though that amount could decrease if electricity use declines because of the pandemic-related recession or increased efficiency.
The state’s utilities have reportedly opposed the proposed deadline changes over months of negotiations, including before it was clear larger legislation would not pass, according to stakeholders. ComEd did not respond to requests for comment by the time this story was published.
Richard Mark, chairman and president of Ameren Illinois, said the utility’s position is that unused funds should be returned to customers “as currently required by FEJA.”
In an emailed statement, Mark continued: “These solar advocates knew the rules when this legislation was crafted and they actually helped write them. The RPS, program has been costly and inefficient and there is no indication that it will ever deliver the intended results in the future if things stay as is. At a time when many Illinois residents are experiencing economic hardship due to COVID-19, we need to do anything we can to give them a boost. Returning their money is the right thing to do.”
Solar advocates say that while returning money to ratepayers is attractive especially in light of the pandemic, spending the money as intended confers greater benefits.
“The envelope math is about $15 for the average ratepayer and wouldn’t start hitting pocketbooks until August 2021,” said John Delurey, Midwest director of the advocacy group Vote Solar. “While some of the utilities are arguing that this is consumer relief in the time of COVID, it’s simply too little too late. Instead, these funds could be used to protect solar jobs for four to six months while we prepare for a long-term solution.”
Vote Solar and other groups have long been pushing the proposed Clean Energy Jobs Act, while the solar industry has backed a bill called Path to 100. Both promise to get the state to 100% renewable energy and to fix problems with solar incentive funding formulas in the Future Energy Jobs Act. Without new legislation, solar experts have long warned the industry will fall off a “cliff,” likely starting this year. Larger legislation could still be passed next year, but without quicker action many fear local solar companies will be decimated, and jump-starting the industry in the future would be harder.
The legislature is not scheduled to meet again until a six-day veto session in November. The legislature could extend the funding deadline during this session or early in the 2021 session, but no new solar projects will be funded and companies will likely suffer serious harm in the coming months if the fix is not made this week, experts say.
“These are real people with real jobs,” Delurey said. “The one-two punch of the budget shortfall and COVID could be easily mitigated” with the statutory change, which involves “no new money, no new RPS [renewable portfolio standard], just changes in a few dates and some direction to the IPA [Illinois Power Agency] to ensure the funds are immediately available to support the solar workforce.”
“It’s most important for the large DG [distributed generation] installers and their employees — that money ran out about four months ago — they’re already past their cliff,” Delurey added.
In his testimony before the senate committee, Star stressed that FEJA has already been a “tremendous success,” sparking a 30-fold increase in Illinois solar capacity, with as much as 2,500 MW added within the next two years.
“Illinois has moved from a laggard to a leader in new solar development,” Star testified. But “due to limited funding and structural hurdles, the RPS faces a funding crunch over the coming two to three years that will restrict additional new project development beyond the end of this calendar year, if not sooner.”