Illinois Shines and the Approved Vendor Model

Illinois Shines (statutorily called the Adjustable Block Program) was originally established through the
Future Energy Jobs Act (Public Act 99-0906, or “FEJA”) which took effect in June of 2017. Illinois Shines
opened for program applications at the beginning of 2019. The program structure was originally
developed to the conform with FEJA’s requirements, and the program has subsequently been updated
to conform with changes driven by the Climate and Equitable Jobs Act (Public Act 102-0662, or “CEJA”)
which took effect in September of 2021.

A key pillar of the program is that it is not a grant or a rebate program. Instead, as outlined in Sections 1-
75(c)(1)(K) and (L) of the Illinois Power Agency Act (20 ILCS 3855), the program creates incentives by
requiring Illinois electric utilities (ComEd, Ameren, and MidAmerican) to purchase the Renewable Energy
Credits (“RECs”) that participating solar projects generate. RECs represent the environmental attributes
of clean energy and can be bought and sold separately from the actual energy a project generates. The
purchase and “retirement” of RECs is a common tool used by states to meet state renewable energy
goals. The Illinois utilities measure progress toward our state’s clean energy goals by comparing the
number of RECs retired to the total amount of electricity that the utility delivered to customers. This
model of utilities buying and retiring RECs is also used in Illinois to support the development of large-
scale solar and wind farms.

The contract to sell RECs to the utilities is complicated and lasts for 15 or 20 years. Under Illinois law, the
REC contracts must ensure that the solar project generates the correct number of RECs, and the
contacts include ongoing collateral requirements in case the solar project does not. 1 The seller must be
able to register the solar project in an applicable “tracking system” for the generation of RECs and enter
into a non-severable “standing order” to ensure their delivery across the full contract term. To
safeguard against fraud and abuse, no payment under the contract is allowed until the system is
confirmed as energized and operating through the seller’s submission of an extensive “Part II” solar
project application. This “Part II” application requires equipment information, interconnection approval
documentation, the identity of the certified distributed generation installer used to install the project,
Prevailing Wage Act compliance documentation and affirmations, and other key project and installation-
specific details. Post-energization, the Seller must provide Annual Reports back to the Buyer confirming
ongoing performance and compliance with contract terms.

After an extensive stakeholder process across 2017-18, including a regulatory proceeding before the
Illinois Commerce Commission, the IPA adopted the model where “Approved Vendors” sell the RECs to
the utilities. “Approved Vendors” can manage the risks associated with ensuring RECs are delivered to
the utilities, and also manage the complex contract and credit requirements. The Approved Vendor
model—where a solar project development company sells the RECs and is the direct recipient of state-
administered incentive funds—is now firmly codified within Illinois law. Illinois law expressly requires
that the IPA “establish a registration process” for entities that want to receive REC payments and
“establish baseline qualifications for vendor approval.” 2 That is, entities that want to sell RECs through
Illinois Shines (and directly receive the incentive payment from the utility) must apply and be approved

1
Section 1-75(c)(1)(L)(v) of the Illinois Power Agency Act.
2
Section 1-75(c)(1)(M) of the Illinois Power Agency Act.

1
by the Program Administrator. The program’s administrator “may charge application fees to
participating firms to cover the cost of program administration.”

The Approved Vendor model is also the foundation for requirements that drive important public policy
objections, such as the state’s “Minimum Equity Standard” (used to ensure that a growing percentage of
the clean energy workforce is comprised of “equity eligible persons”). 3 The IPA “shall prohibit
participation in procurement programs by an approved vendor or designee . . . [that] failed to meet the
minimum equity standards for the prior delivery year.” Compliance with the Minimum Equity Standard
takes place at the company level, rather than the customer level. If an Approved Vendor fails to meet
these worthy objectives, the response available to the IPA is the withdrawal of the entity’s status as an
Approved Vendor (and ability to receive incentive payments).

There are both benefits and drawbacks to the Approved Vendor model, where incentive funding is
provided directly to a solar company (with the present Eco-Solar Solutions case clearly highlighting a
major drawback). One benefit is the flexibility in how and when the value of the incentive is passed
through to the customer. Some Approved Vendors use the expected value of the REC incentive payment
to offer lower upfront prices. For example, instead of a customer paying out $26,000 and then, possibly
several months later, receiving a payment of $6000, the customer might pay $20,000 up front. This
indirect pass-through is also used if the customer is not actually purchasing the solar project. Many
Approved Vendors offer leases—where the solar company owns the solar project, but the customer
pays a monthly lease payment—or “power purchase agreements”—where the solar company owns the
solar project, and the customer pays for the actual amount of electricity generated. The REC incentive
allows the Approved Vendor to set a lower lease payment or electricity price.

The IPA strongly encourages customers to shop around and be deeply familiar with offer and contract
terms. To simplify that process, the IPA has developed robust standardized disclosures required for
every supported project which expressly outline both the overall state-administered incentive payments
and the share of that payment to be passed along to the customer.

The vast majority of Approved Vendors in Illinois Shines do comply with program requirements.
Participation rates and customer complaint rates demonstrate that the program has produced tens of
thousands of satisfied customers; a positive experience is the norm. Unfortunately, a bad actor with no
intent to pass through promised payments to customers is likely an entity acting with deliberately
fraudulent intent. That behavior is not unique to Illinois Shines or the solar industry and likely falls
under the jurisdiction of the state’s Consumer Fraud and Deceptive Business Practices Act.

Under Illinois law, if the Illinois Shines program receives complaints that “implicate the jurisdiction of
the Office of the Attorney General,”4 the Agency is directed to “refer complaints to [that entity] as
appropriate.” The Agency referred the Eco-Solar Solutions issue to the Consumer Fraud Bureau of the
Attorney General’s office at least as early as February 2022 and has forwarded related consumer
complaints to the Attorney General’s office as they are received. The Agency also discussed the Eco-
Solar situation in detail with the Investigations Division of the Attorney General’s office in June 2022.
Since then, the Agency has provided information and updates to the Attorney General’s office regularly.

3
Section 1-75(c-10) of the Illinois Power Agency Act.
4
Section 1-75(c)(1)(M)(vii) of the Illinois Power Agency Act.