McHenry County solar panel installers ‘dead in the water’ without state financing fix, company owner says

Incentives offered by the state to help finance solar power development across Illinois were fully depleted last month, stranding businesses focused on panel installations such as Johnsburg’s Magitek Energy Solutions.

“We’re dead in the water,” Magitek owner Paul LaBarbera said.

Renewable energy industry leaders urged Illinois lawmakers to fix the fallout this month during the General Assembly’s lame duck session by approving a policy that would increase a charge on the supply portion of electric utility bills to 4% from 2% by 2030 to fund the state program.

That effort was unsuccessful, however, and this week’s session ended without a fix.

But state Sen. Craig Wilcox, R-McHenry, said he thinks the incentives program could be replenished as part of a larger bill addressing other energy and utility rules he expects to come forward later this year.

The state program allowed some of the existing 2% charge on power bills to go toward cutting the costs of installing solar arrays at residential, commercial and utility scales, thereby shortening the amount of time it took for homeowners and businesses to see returns on investments in a generation system.

Nate Shanklin, a managing partner for Woodstock-based Wolcott Energy Group, which works in utility scale solar development across the country, suggested that any future incentive program be limited to providing financing for residential and commercial projects, instead of also including incentives for some utility scale projects.

Utility scale solar developers, Shanklin said, would prefer easier access to delivery grids and prioritizing that in legislation, rather than the chance to capture the state incentives. He said focusing the incentive program on the small-scale solar projects installed at homes and businesses would be smart.

“It’s not that the utility-scale developers don’t want the credits. But the residential guys are the ones that are going to benefit from the state level credits,” Shanklin said. “If we’re looking at limited funds being available in Illinois, the best use of them is putting it toward residential and light commercial projects.”

Wilcox agreed that there may be ways to legislatively make it easier for utility scale projects to move forward without the ratepayer funding, and said the incentives may not be put to their best use when applied to large, multi-megawatt solar developments.

“A lot of the frustration on the utility scale projects was the role utility companies played in the connection costs,” Wilcox said.

He hopes to pass legislation that would force the electric utilities to share more information with solar developers regarding the costs of onboarding potential generation projects at different locations on their grids, so developers have a better idea where the most profitable spots to put panels are.

Additionally, Wilcox wants to add rules into the state incentives program for solar development that would prioritize the funding going toward projects by companies that have had a prolonged presence in Illinois and can demonstrate their plans to stay active in the state, rather than to business groups that may pull back their employment levels in Illinois when incentive financing runs dry.

LaBarbera said he is confident legislators will at some point find a way to continue the program, but while he waits, work is thin.

About 3,500 jobs in the state’s solar industry were lost in 2020 due to the COVID-19 pandemic and the state funding cliff, said Lesley McCain, executive director of the Illinois Solar Energy Association industry group. That number could grow if the lack of funding is not solved soon.

“Illinois just lost a proven tool to create jobs and economic growth,” Nakhia Morrissette, central region director for the Solar Energy Industries Association, said in news release. “While Illinois delays, clean energy jobs and investment are moving to other states with more stable energy policies.”

Solar industry leaders have said up to 1,000 more jobs in the state are at risk of being lost.

Illinois has reached only 8% renewable energy generation despite statutory requirements to reach 25% by 2025, according to the release shared by industry leaders. More than 1,000 solar projects that applied for state incentives have been waitlisted due to lack of funding for the program.

“We have signed contracts on a few right now that are basically on hold until funding becomes available again,” LaBarbera said. “We can’t guarantee a person an incentive because we don’t know what that incentive is, and we can’t guarantee they’re going to get it. If I’m a homeowner, the last thing I’m going to do is put $10,000 of incentive money on the line on an if. Solar is all about return on investment. Unless we can prove a return of between five to seven years, people aren’t going to do it.”

Crystal Lake-based Althoff Industries, which has developed six solar power projects, employing 13 people to do so, has also been hit, McCain said.

“We’ve been able to put people to work installing solar over the past few years for a lot of businesses, but currently there is a lack of funding for buildable projects,” Althoff project manager Dov Isaacman said through McCain in a statement. “We have customers who want to install solar, but without funding, they won’t be moving forward. This issue is affecting solar installers all across the state. We are hoping our investment in training up our staff pays off, but we will need a fix to the current funding issue first.”

At least one area business is pushing forward with panel installations while much of the industry is stalled without legislative action.

Trey Branham, who is a partner in the company Illinois Solar Power, which has a Crystal Lake office, said his company has been able to continue to perform installations during the incentive depletion because it is able to offer leases of renewable generation systems, rather than only outright purchases.

With a lease of a rooftop solar panel array, he said, there is “a lot less risk for the homeowner.”

The leases, he said, are able to be offered in addition to purchases of solar arrays because of his company’s connection to Sunrun, the country’s largest solar power developer.

“If the state decides to not extend [the incentives] for whatever reason, the homeowner obviously wouldn’t get that incentive from the state, putting them a situation where the savings wouldn’t come until down the road, eight to 14 years,” Branham said. “With the lease, Sunrun takes that risk, gives the customers savings and the customers if they want, they can always purchase that system down the road.”

State incentives, once they are restored by lawmakers, can be captured for projects completed now by solar installers, industry leaders said.

LaBarbera, however, is worried about small businesses like his getting outdone by companies with connections to financiers holding enough capital to continue panel setups during this time with no sure access to incentives.