Anatomy of an Advanced Energy Win – This Time, in Illinois

Posted by Daniel Bloom on Sep 16, 2021 11:00:00 AM

IL Advanced Energy Win

On Monday, the Illinois General Assembly passed a landmark clean energy bill, which Governor JB Pritzker promptly signed into law, fulfilling a cornerstone promise from his 2018 campaign: deliver strong climate action by transitioning Illinois to 100% clean energy by 2050. It also means potential market opportunity worth an estimated $37 billion for advanced energy companies as they help Illinois meet two great challenges: decarbonizing the electric grid and lifting up every corner of the state with good jobs in the new energy economy. Read on for what the bill does, how it came about, and why it’s a huge win for the advanced energy industry.

What Does the Bill Do?

There are six core pillars embedded in SB 2408: 1) expanded renewable energy investment; 2) fully decarbonizing the electric grid by 2045; 3) electrifying the transportation sector; 4) harnessing corporate procurement of renewable energy; 5) prioritizing energy efficiency as a least-cost energy resource; and 6) aligning utility spending with clean energy outcomes.

The legislation significantly expands renewable energy investment by immediately doubling available funding for the state’s Renewable Portfolio Standard (RPS), driving toward 40% renewable energy by 2030 and 50% by 2040. The bill also includes new labor standards for renewable energy projects and jumpstarts programs aimed at deploying distributed and community solar installations. Moreover, it quintuples the size of the state’s equity solar program, creating new opportunities in disadvantaged communities disproportionately affected by air pollution.

It also sets 2045 as the firm date for closure of all fossil fuel power plants in the state, an issue that for years impeded agreement on energy reform legislation and remained contentious among labor-friendly Democrats right up to the bill’s passage.

The legislation also calls on utilities to develop comprehensive plans aimed at rapidly electrifying the state’s transportation sector. With oversight provided by the Illinois Commerce Commission, ComEd and Ameren Illinois will expedite efforts to deploy charging infrastructure for light-, medium- and heavy-duty EVs through the creation of utility-specific beneficial electrification programs. The bill also includes incentives for siting and deploying charging stations by third-party providers, as well as up to $4,000 rebates for consumers who purchase light-duty EVs in specific counties that contribute funds under the state’s Alternative Fuels Act.

Next, SB 2408 significantly expands utility requirements to save energy by extending the state’s energy efficiency resource standard (EERS) from 2030 to 2040. It also reverses the dubious exemption of large energy users from efficiency programs, allowing them to make upgrades in their own facilities as long as they meet state standards. This was a cornerstone component of AEE’s advocacy in Illinois for the past four years.

Additionally, the Illinois clean energy bill includes a provision put forward by AEE that protects voluntary buyers of renewable energy to power their operations. Fortune 100 and 500 companies, including many in AEE’s membership, are already responsible for more than one-third of the nearly 5,000 MW of wind and solar built in Illinois to date. The provision recognizes the leadership of these renewable energy buyers by reducing their obligation to pay into the utility portion of the RPS so long as they outpace state compliance targets. This policy will not only create more flexibility for existing RPS funds but also help Illinois achieve its clean energy and decarbonization goals faster and at a lower overall cost to consumers.

The sixth and final pillar of SB 2408 moves utilities toward performance-based regulation by putting an end to formula rates, and then creating a multi-year integrated grid planning (IGP) process at the ICC. The IGP process requires regulators to establish performance incentive mechanisms to align utility spending with metrics driven by reliability, equity, affordability, and clean energy goals.

In short, the Illinois clean energy bill is a transformative shift in the state’s energy future, one that is poised to position Illinois as a national leader on climate, equity, and the deployment of advanced energy and transportation technologies. 

How Did It Happen?

It’s been a long and winding road to secure passage of the Illinois clean energy bill, but one that validates AEE’s strategy for policy transformation: persistent engagement over time, providing decision-makers with credible information on the economic benefits of advanced energy, and working with allies while maintaining AEE’s distinctive business voice.  

Our work in Illinois began in 2017, when AEE started meeting with lawmakers and working with allies on the next big energy push in the state following the 2016 Future Energy Jobs Act. In early 2018, AEE launched a candidate engagement program aimed at elevating advanced energy issues in the November gubernatorial election. That program brought advanced energy companies in AEE’s membership face-to-face with all three Democratic candidates vying for the party’s nomination for governor and provided both party nominees a roadmap for advanced energy development. The goal of this program was simple: educate candidates and build relationships so that the incoming governor would be informed about the role advanced energy could play in bolstering economic development in Illinois.  

These discussions provided gubernatorial candidates with insights on the industry – what our companies manufacture and deploy – and provided companies the opportunity to highlight roadblocks in state policy that were impeding advanced energy from playing a more robust role in the Illinois market. Following JB Pritzker’s election victory in November 2018, AEE also delivered a comprehensive set of executive, legislative and regulatory actions that could be taken to overhaul Illinois’ energy system into one that prioritized advanced energy resources such as wind, solar, energy storage, electric vehicles, and energy efficiency.

Then, in 2019, AEE followed up our gubernatorial engagement with targeted legislative advocacy. Over the course of the year, we met with more than 60 legislators in the Illinois General Assembly, often going to their districts to highlight local advanced energy projects deployed by companies at the forefront of the energy transformation. At these meetings, AEE was able to highlight the more than 120,000 Illinoisans already working in the state’s advanced energy industry at the time.

When trying to move a bill of this magnitude there are always going to be competing views on how to achieve the outcomes, even when allies agree on the final goals. One such issue was the treatment of Exelon’s nuclear fleet in the state and the interaction of those plants with the PJM capacity market. At the outset, both Exelon and a host of clean energy advocates were backing a fixed resource requirement (FRR) in response to FERC’s Minimum Offer Price Rule (MOPR – now in the process of being rolled back), handing over capacity procurement for all of Northern Illinois to the Illinois Power Agency.

Across the advanced energy industry, the FRR was viewed as a flawed solution that would harm competitive opportunities for the development of cost-effective renewable energy and stymie development of demand side resources like demand response and energy efficiency. AEE opposed this proposition in our advocacy before the legislature and the Pritzker Administration highlighting the unknown, and we believe negative, consequences FRR could have for the industry. We urged the Governor’s office to find other market-driven solutions to preserving Illinois’ robust clean energy portfolio.

After years of back and forth, Exelon ultimately relented on its desire to pursue capacity market reform, and instead focused on securing hundreds of millions of dollars in state subsidies to keep their uneconomic nuclear plants afloat. Then there was (and still is) the federal investigation into the lobbying practices of Exelon subsidiary ComEd, the utility company responsible for delivering electricity to Northern Illinois, including the City of Chicago. Shortly thereafter came the resignation of longtime Speaker Mike Madigan for his connection to the ComEd scandal, which ushered in new leadership in the Illinois House for the first time in four decades. When those impediments were finally overcome, labor organizations from across Illinois flexed their muscle with Democratic legislators to keep certain coal-fired power plants in operation, which would have undercut power sector decarbonization, the central component of legislation being pushed by the state’s environmental advocates.

Throughout this complex and dynamic four-year process, AEE stayed its own course, knowing that if we were to be successful in passing comprehensive clean energy policy in Illinois, the business community would need to remain steadfast and engaged. In January 2020, AEE brought 10 member companies to meet with Deputy Gov. Christian Mitchell and First Assistant Deputy Gov. Bria Scudder. At that time, we delivered a letter addressed to Gov. Pritzker laying out the principles we thought should inform the development of comprehensive clean energy legislation.

Then, in the spring of 2020, shortly after the coronavirus pandemic threw a new wrench into the works of public policy in Illinois, AEE presented the Pritzker administration with hard data on the economic benefits of advanced energy deployment. That analysis showed that investing $45 billion public dollars in Illinois, allocated across a range of advanced energy technologies, would return more than $350 billion in cumulative economic benefit to the Illinois economy. This included not just hundreds of billions of dollars buoying Gross State Product, but also the portion attracted from private investment, creating more than 2 million new jobs (measured in job-years), over $30 billion in increased tax revenues to local and state governments, and more than $16 billion in annual consumer savings.

Following the release of AEE’s economic stimulus report for Illinois, we produced an analysis highlighting how supportive EV policies could further grow the state’s already expansive electric vehicle supply chain. The report showed that Illinois’ EV-related industries already employed more than 5,000 workers at 560 businesses statewide and was poised to grow to roughly 9,500 workers by 2024. Moreover, the Illinois EV supply chain contributed $850 million to Gross State Product in 2019 and offered new job opportunities to another 70,000+ workers in adjacent industries that had lost nearly 16,000 jobs between 2014 and 2019.

AEE continued to build on previous engagement with the Governor’s office by participating in energy stakeholder meetings held by the Administration in the fall of 2020. Going into 2021, AEE doubled down on our advocacy with Illinois lawmakers and the Governor’s office by holding a virtual advanced energy roundtable in April that featured companies from across our membership speaking to the broad economic benefits associated with deploying our technologies. Even as lawmakers left the Capitol at the end of the spring legislative session without a clean energy bill, AEE continued to engage with lawmakers such as Senate President Don Harmon, who played an instrumental role in shepherding his caucus to support the legislation when it finally emerged in early September. Ultimately, Exelon got its nuclear subsidies – indeed, its declared deadline for mothballing the plants provided the final push for the bill – but advanced energy won big as well. 

The Work Ahead in Illinois

As big a success as this multi-year effort was, AEE’s work in Illinois is far from done. We will stay deeply engaged through the implementation process, which will be carried out by a plethora of state agencies, including the IPA and ICC. And we will continue to pursue additional policies that give Illinoisans increased access to advanced energy resources, including addressing the electrification of medium- and heavy-duty EVs as manufacturers like Rivian choose Illinois for their operations.

For years, incumbent fossil fuel technologies have dominated the Illinois energy landscape, but with the passage of SB 2408, that paradigm is about to undergo a monumental shift. At AEE, we are working to take on the energy industry status quo by bringing our members and technologies directly to the table with decision-makers. We’re finding that those conversations – focusing on the benefits our technologies provide to their districts and the role policy plays in creating a level playing field – are essential to removing impediments and expediting advanced energy growth. 

AEE knows that states are the breeding ground for transformative change in the energy landscape. We remain as focused as ever in that pursuit and look forward to continuing to leverage the expertise of our members to deliver advanced energy victories in Illinois and across the country well into the future.

AEE has published advanced energy economic impact reports on Illinois and 11 other states. Download one or all of them by clicking below.

Download State Economic Impact Reports

Topics: State Policy, Legislative