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The website for Lisa Albrecht’s one-woman solar company brims with sunny enthusiasm, describing her as a “climate warrior” who “believes in rainbows and unicorns, is optimistic even when uncertain.”
But by late summer, even Albrecht felt her business outlook was dark. The legislation that was needed to restart the state’s solar market had still not passed, more than a year after solar incentives had run out just as the pandemic hit. Albrecht wondered how long she could even keep her company going.
“I was running on my last fumes. My solar opportunities were drying up,” she said.
In September, the legislature finally passed the Climate and Equitable Jobs Act, with substantial funding for solar incentives. Now Albrecht feels her prospects are again bright. She is ready to hire a new employee, and projects that had been put on ice are ready to ramp up.
“I’ve closed over a million dollars in projects since the legislation passed and I’m just a small company,” said Albrecht, a 14-year veteran of the solar industry who launched All Bright Solar in 2018 and works with several companies who do installation. “When we talk about the opportunity being massive, we mean it. If I can do that, companies that have bigger teams can do even more.”
Other solar developers in Illinois are similarly hopeful, with a new round of incentives in the form of renewable energy credits becoming available by December, and a funding stream that is expected to keep the program going at a steady clip for years to come.
“It feels like, finally, we have something we can bank on,” Albrecht said. “The biggest variable is just going to be … market demand, but more and more people are waking up to climate change and the business community is recognizing their responsibility in being part of the solution. I feel really optimistic and excited that Illinois is going to do its part and we can build an incredible industry.”
Clearing the waitlists
After solar incentives created by the 2017 Future Energy Jobs Act abruptly ran out, scores of planned residential, commercial and community solar projects were put on waitlists.
Now, with incentives restarted by the new law, most of those projects should in coming months receive the right to sell renewable energy credits. (The Illinois Power Agency, which administers the program, is hosting a series of webinars to explain the new law and timeline.)
A new “block” that opens by mid-December will fund renewable credits for 75 megawatts each of small (up to 25 kilowatts) and large (up to 5 MW) distributed solar installations, 50 MW on schools and 10 MW of community-driven community solar, as well as 250 MW of community solar taken solely from the waitlist.
The new law created a carve-out for “community-driven” community solar that is initiated and run by a local institution, as opposed to the larger community solar projects where developers seek subscribers. The community solar program created by the 2017 Future Energy Jobs Act was especially popular, with big developers scrambling to participate and incentives running out quickly in a chaotic lottery-driven process.
The December funding block also includes 10 MW for projects developed by contractors who meet equity and diversity requirements, with equity being a major focus of the entire law.
The Illinois Power Agency’s waitlists show about 54 MW worth of installations smaller than 25 kW, representing more than 7,000 individual projects. That means the 75 MW worth of incentives for small projects should be more than enough to clear those waitlists. In the large distributed solar category, the waitlists are also expected to be cleared, and new projects will have a chance at incentives. There are no waitlists for community-driven community solar or equity-driven projects, so new projects can begin seeking incentives from those categories too.
The law also tasks the Illinois Power Agency with procuring 10 million renewable energy credits — each representing 1 megawatt-hour of power — for utility-scale solar this year.
Taking a longer view
The price for renewable credits in the block opening by December is being set at 4% less than the last block that was completed before funding from the Future Energy Jobs Act ran out. Then the Illinois Power Agency will begin the process of deciding how to set credit prices for future annual blocks of funding. That is a different model than used under the 2017 law, when an unexpectedly high demand for credits caused a boom and then bust as the funding was used up more quickly than expected.
Dawn Heid, CEO of ReThink Solar, said she thinks the Illinois Power Agency “has done a really good job” designing a solar incentive program that will avoid the pitfalls of the Future Energy Jobs Act.
“They tried to iron out and smooth out some of those bumps in the road, especially the timing of the funds, and the length of time they are available,” she said. “This is a market that gives us all a chance. It’s a much longer runway. You can’t build a company off something that drops off in a year or two; you need a steady enough runway to try out other markets, grow and diversify your company.”
The new law increased the cap on money collected on utility bills to fund renewable energy from 2% to 4.25%, boosting predicted annual funding from $235 million to $597 million, according to the Illinois Power Agency.
Amy Heart, senior director of policy for Sunrun, said the block offered in December will “make sure the solar industry can get back to work and talking to their customers, being able to solidify plans for next year. Then a lot of work needs to be done on the implementation side for updating the [renewable energy credit] prices, creating rules and guardrails around the new program.”
Increasing equity, moving forward
Along with renewing and increasing incentives for community, commercial and residential solar, the new law boosted funding for Illinois Solar for All, the program created by the Future Energy Jobs Act in 2017 to make solar panels accessible to environmental justice communities, residents of multifamily buildings, low-income residents and other groups who’ve had trouble accessing the market.
The new law increased Illinois Solar for All funding from $11 million to $50 million a year. Shannon Fulton, vice president of development for StraightUp Solar, said the company has projects ready to go under the component that funds solar for schools and municipal buildings in qualifying areas.
She and other developers also expect demand to expand for qualifying residential projects. Fulton noted that Illinois Solar for All funds for multifamily homes were one of few buckets of funding under the 2017 law that were not fully tapped.
“It’s been very difficult for people to finance those, but now it’s looking good,” she said of the multifamily projects, which can help renters and condo-dwellers who meet equity-related criteria access solar.
As the Illinois Power Agency hashes out the renewable credit prices and related details, the legislature’s rules committee, the Illinois Commerce Commission, the Illinois Department of Commerce and Economic Opportunity, and other agencies will be figuring out how to implement other parts of the law.
Though there may be rough patches ahead, developers agree that the demand for solar in Illinois is as robust as ever and growing, and the new law will help realize the potential.
“With this market certainty we’ll be able to offer the cool stuff you can do for your employees,” Fulton said. “Moving toward our goal of employee ownership, expanding benefits, really getting more engaged on the workforce side of things — the ancillary wonderful aspects of running a business rather than being worried about the bottom line each day.”
Pete Gray, an industry consultant who works with solar developers, said that industry leaders are “really optimistic about making this policy work and be really effective. A lot of folks are rooting for it. And a lot of folks are depending on wind and solar companies to get it done. If we’re going to hit 40% or 50% renewables” — as called for in the law, by 2030 and 2040, respectively — “that’s resting on the shoulders of the people building these projects.”