Facing coronavirus and a ‘cliff,’ can Illinois solar survive?
- May 4, 2020 10:40 pm GMT
Photo Credit: EE Image Database / Flickr / Creative Commons
Written by: Kari Lydersen
Legislation that sought to boost the shrinking fund for solar incentives is on hold, as are many installations across the state.
Illinois’s solar industry, which until recently had been booming, could be decimated by the coronavirus pandemic, according to experts and developers who are scrambling to prepare for the uncertain future.
The state’s 2017 Future Energy Jobs Act sparked a boom in distributed solar installations and local solar companies and jobs, and also created a program to spur solar and energy efficiency jobs for low-income and marginalized communities. But those efforts are now in jeopardy given the stay-at-home restrictions through at least May 30, the economic recession triggered by the pandemic, and the stalling of proposed legislation considered essential to maintaining clean energy momentum.
Dorian Breuer, co-founder of Ailey Solar in Chicago, had a thriving business before the pandemic hit. Now he figures the company has enough work and savings to survive for six months, and after that it’s uncertain. The company has already laid off five installers, bringing their total workforce to nine.
“Once the story started coming out of China, it started freaking people out, and we didn’t have sales coming in, we went from two crews to one small crew,” Breuer said. “We basically can keep them busy, but not much else.”
Lesley McCain, executive director of the Illinois Solar Energy Association industry group, said the pandemic is “like a one-two punch” for local solar companies that started up after the Future Energy Jobs Act passed but were already facing a feared “cliff” as money for distributed solar under the law has nearly run out.
Developers and advocates were pinning their hopes on proposed legislation to create more funding for incentives, but the legislative session is now on hold.
“Everybody’s impacted, but the particular spot the Illinois solar industry is in is unique,” McCain said. “The angst really is about how difficult it is to be making business decisions based on the future. The heartbreaking part is we just don’t know what sits on the other side of COVID for the solar industry. How do they make a decision on retaining their crews and their internal staff not knowing if there’s anything to sell at the other side of this?”
An April fact sheet from the national Solar Energy Industry Association says that the solar industry could “lose up to half of its 250,000-strong workforce in coming weeks,” and cites business analysts now pegging the market at 18% to 28% smaller in 2020 than previously projected. It says “a majority of companies are laying off workers, slashing hours or cutting contract workers.”
McCain said solar energy is considered an essential business under the “critical trades” section of Gov. J.B. Pritzker’s March 20 executive order calling for all nonessential businesses to halt operations, though the order doesn’t specifically mention solar. But while solar companies are allowed to keep working, some municipalities have halted work needed to issue permits and carry out final inspections that “bookend” the solar installation process, as McCain put it.
Josh Lutton co-founded the company Certasun because of the Future Energy Jobs Act, and since 2018 they’ve done hundreds of residential installations in Illinois with a workforce of 50 employees. Since coronavirus hit they halted operations completely for three weeks, furloughed some employees and are now trying to keep business alive despite customers canceling orders.
“We wanted to take the time to carefully revamp our procedures and wait out the incubation period,” Lutton said. “Now we’re installing again in some jurisdictions, running fewer smaller teams, and taking a number of measures: hand sanitizer, masks, social distancing.”
He noted that some Chicago-area municipalities are not doing the inspections required to activate a solar system, so “we won’t even start those jobs. There’s no point in installing it if we can’t turn it on.”
Breuer said Ailey Solar’s customers have faced the same issue.
“We don’t go inside at all, no matter what. Most people don’t want us in their homes, so it’s mutual. With some people we can finish the entire installation and turn on the system without entering the house. But a lot of people have to wait a month, maybe several, with a 95% installed system — since we can’t get inside, they can’t turn it on. That’s definitely a struggle.”
Fulton said they’ve had no problems with permitting, and that some jurisdictions are now allowing documents to be submitted by email instead of hard copies, a welcome change under any circumstances. McCain noted that the Chicago suburb of Naperville recently did a solar inspection via Facebook live, and she hopes more will follow suit.
“Getting your permits is tenuous, it seems to be evolving and there’s no linear response from the municipalities,” McCain said. “They’re figuring it out as time progresses.”
Coronavirus and the cliff
Proposed new energy legislation would increase funds for distributed solar, avoiding the dreaded cliff. Some advocates say they are still hopeful a bill will be passed this year, as Pritzker promised in his January state of the state address.
But Lutton is pessimistic about a major bill passing, and hopes the legislature can make a smaller fix to existing energy policy. Currently funds that are collected from ratepayers to fund renewable energy expire if the planned projects aren’t built in a certain time frame. Advocates and developers would like to see those deadlines lifted.
“Barring any brand new truly disastrous news, I think we’re at the bottom at least as far as COVID is concerned, but there is an even bigger problem than COVID,” Lutton said. “Given the fact the legislature is rightfully preoccupied, I’m concerned they won’t take up those large bills and the hundreds of layoffs that have happened in solar already due to COVID are unintentionally going to turn into thousands due to the cliff.”
Solar advocates worry the pandemic and funding cliff are coming at the worst possible time, just as the state solar industry has ramped up, job trainees have hit the market and the complicated programs created under the Future Energy Jobs Act were starting to take effect. McCain said the Illinois Solar Energy Association held a job fair shortly before the pandemic set in, and had “robust” participation.
“Solar companies touch every corner of the state, there’s been an awful lot of hiring out of the job training programs which was very exciting and heartening to see,” she said. “Many companies have hired out of those programs and don’t want to go backwards. Now we’re looking at further job losses, we don’t see a stable market moving forward. I’m not saying the new hires would be the first ones to go, but … that would be really sad.”
She said that over the years the renewable energy industry has had “a tendency to go forward and then sink back again. We hope this is a moment where it’s recognized that we just need to stay alive. Clean energy should definitely be a big part of growing the new economy.”
Along with incentives for commercial, community and rooftop solar, the Future Energy Jobs Act created a program called Illinois Solar for All specifically to make solar available and create solar jobs in low-income and environmental justice communities.
Certasun is moving forward in coming weeks with several installations on the South Side of Chicago through Illinois Solar for All, wherein customers pay nothing upfront for installations and are guaranteed energy savings. Elevate Energy, the organization that administers Illinois Solar for All, put out a call in March — despite the pandemic — for community organizations to let their constituents know about the program, which still has several years of funding.
The developer of Illinois Solar for All projects shoulders some risk since they need to deliver the energy savings. But Lutton said the program is a relatively bright spot in the currently dim landscape, and encouraged more customers to apply.
Christopher Skalnik, Nicholas Skalnik and Eddie Moreno of Nick & Eddie Construction at their Christmas party. (photo courtesy of Nicholas Skalnik)
Energy efficiency takes a hit
Illinois Solar for All created job training programs for energy efficiency as well as solar for under-served communities, including people returning from the justice system and alumni of foster care. But that industry is suffering too, as carrying out efficiency upgrades is even more difficult than installing solar in the midst of infectious disease concerns.
Nicholas Skalnik is president of the family company Nick & Eddie Construction, which does weatherization in the Chicago area and has hired people through Illinois Solar for All. Their work has been largely stalled since the pandemic, except for emergency maintenance calls. In preparation for ramping back up, Skalnik said, their company has spent $4,000 on protective equipment, including Tyvek bodysuits and shoe covers and masks, bought at an exponentially marked-up price. They also purchased large amounts of disinfectant spray to be able to disinfect homes before and after they work, and installed a water station on their truck.
“So clients feel comfortable and our guys will feel safe as well,” said Skalnik, noting only time will tell when and if their business goes back to pre-pandemic levels. “Everybody wants to get back to work.”
James Minsky, managing director of Chicago-area weatherization contractor Ecotek, saw business drop from three to four jobs a day to one a month. Their revenue is down to about $3,000 instead of $50,000 monthly. He doubts their business will revive any time soon, though the company is certified to “fog” businesses like restaurants and hotels for pathogen control, a sector that may grow.
“All you can do is cross your fingers,” Minsky said. “We were doing fantastic. Now I just hope that a month from now, we’re still here.”
A little help, a lot of confusion
Elevate Energy, the organization that administers Illinois Solar for All, has helped some businesses with small grants and connects workers and business owners with any resources they can find.
Elevate associate director of workforce development Jeanine Otte noted that the state is offering low-interest small business emergency loans of up to $50,000, and a separate program offers loans meant to stabilize downstate businesses. The city of Chicago also offered small business aid, and nonprofit organizations working on clean energy might be eligible for support from foundations, she added.
“We’re looking at emergency funding to help folks survive and also get some additional skills and knowledge so once things come back online, they are prepared,” Otte said.
Breuer said their company applied early for the federal Small Business Administration’s Paycheck Protection Program, but they got conflicting messages from their bank and are still uncertain whether they will receive funds. The program’s initial round of money was depleted in a matter of days. If Ailey Solar gets the funding, which basically pays two months’ of wages, it will “extend our runway” but not guarantee their future survival, Breuer said. Certasun likewise applied for the federal program, but has heard nothing back.
Shannon Fulton, vice president of development for StraightUp Solar which works outside the Chicago area, did get PPP funds, allowing the company to restore its 75 employees to full pay. The funds did not, however, help rehire the 10% of employees who had already been laid off because of the pandemic.
“It’s almost like paralysis by analysis,” said Christopher Skalnik, treasurer of Nick & Eddie Construction. “There’s so much that’s being stated as available, but when you read some of the fine print, it seems like you almost get locked into a certain course of action and lock yourself out of something else because they’re non-compatible. It takes a lot of time for any business that’s trying to continue to operate to read through all the fine print.”
On the national level, the Solar Energy Industry Association is asking Congress to help the solar industry survive with several key measures. They want customers and developers protected from delays causing them to lose the Investment Tax Credit, by extending the “safe harbor” period during which projects can be built. And they want the tax credit offered as cash, since people may be paying less taxes and need the money up front. They’re also asking Congress to invest in solar manufacturing, a move that could benefit a state like Illinois with deep manufacturing history and infrastructure.
Despite the grim outlook, some see signs of hope. On the energy efficiency side, they note that the crisis and stay-at-home order shows more than ever the importance of a healthy and comfortable living environment where one isn’t paying more than necessary for utilities. And solar developers say they are still getting inquiries, perhaps as people have more time at home to research and think about future projects.
“People are online more, they’re shopping more, they’re thinking about it,” said Fulton, noting that the company has hosted recent webinars with robust attendance. “But the decision-making process is just taking longer. People are in a ‘let’s wait and see what happens’ mindset.”
Breuer likewise said they’ve still been getting inquiries about future projects.
“There are little shoots of optimism,” he said. “There are still people who realize there’s a lot of chaos going on but ‘I really want solar.’”