Federal Rollbacks, Local Impacts: Solutions to Support the Illinois Clean Energy Workforce as Federal Tax Credits Expire

Overview

The recently passed One Big Beautiful Bill Act (H.R.1) significantly shortens the timeline for federal clean energy tax credits, creating uncertainty for Illinois’ clean energy businesses and workers.

The expiring credits have been central to lowering project costs and rewarding projects that pay prevailing wages and provide apprenticeship opportunities.Key federal changes include:

• Clean Energy Investment and Production Tax Credits (48E and 45Y) for solar and wind will phase out early.
  
  • Projects must begin construction by July 2026 or be completed by the end of 2027 to qualify.
    
  • Credits remain for battery storage, nuclear, and geothermal projects.
    
• Consumer tax credits for solar systems, battery storage, electric vehicles, and other clean technologies end in 2025.
  
• Foreign Entity of Concern (FEOC) restrictions and new tariffs further complicate project development.

The Climate Jobs Institute conducted listening sessions and interviews with 169 clean energy employers, workers, government officials, workforce training providers, advocates, and stakeholders to understand how these changes will impact Illinois and to identify ways the state can support affected businesses and workers.

The results are published in the report, Federal Rollbacks, Local Impacts: Solutions to Support the Illinois Clean Energy Workforce as Federal Tax Credits Expire.

You can read the full report here, and learn more below.

Project Impacts

Businesses are racing to meet construction and energization deadlines but face major challenges, including:

• Project complexity and permitting delays
  
• Lengthy interconnection and state grant disbursement timelines
  
• Financing difficulties
  
• Competition to bulk-purchase materials and “Safe Harbor” projects
  
• FEOC restrictions on key components
  
• General uncertainty over shifting federal rules and policies
  
• A limited labor pool and low consumer awareness
  

Mixed Views on the Future

Some participants believe renewable development will continue due to strong state incentives, rising electricity costs, and load growth. Others fear a boom-and-bust cycle—a surge of projects before deadlines followed by a sharp drop-off.

Solar for All and community solar projects were seen as most vulnerable, particularly for small businesses and low-income customers relying on incentives.

Business and Worker Impacts

While many businesses are racing to complete projects before tax credits expire, others have already started scaling back. Participants described a widening divide between larger firms with access to capital and smaller, locally owned companies struggling to stay afloat.

Layoffs and Uncertainty

Many firms reported they had:

• Already laid off workers
• Frozen hiring
• Or expected layoffs as soon as federal credits expire

Participants consistently identified small businesses, Equity Eligible Contractors (EECs), and recent CEJA workforce program graduates as the most vulnerable.

“We’re asking them to give up their job to enter a training program in hopes of getting a job. And what are the odds that somebody would leave something that is stable for something that is unstable?” – Workforce Program Participant

Consolidation

Participants predicted a wave of consolidation across the clean energy sector.

• Smaller firms, squeezed by shrinking margins and financing challenges, were selling off projects to larger developers.

Disproportionate Layoffs

EECs and small contractors were more likely to be laying off workers already or planning to downsize in the coming months.

• CEJA workforce graduates, especially those facing barriers to employment, were viewed as most at risk of layoffs or hiring freezes.
• These losses threaten to erode recent progress toward equity in clean energy employment.

Administrative Challenges

Navigating shifting rules and red tape was another recurring theme.

• Permitting, interconnection, FEOC compliance, and grant applications were all cited as barriers that could delay or disqualify projects from meeting federal deadlines.
• For small firms and EECs, even minor administrative hurdles could be the difference between survival and closure.

“The sky’s not falling. We’ll get through this low and get back to where we need to be — because clean, renewable energy isn’t optional, it’s necessary.” – Solar Contractor Participant

Business Resilience

Despite these headwinds, some clean energy companies are adapting:

• Pivoting to sectors with longer-lasting federal incentives (battery storage, solar leases)
• Diversifying services into energy efficiency, retrofits, or general construction
• Forming partnerships to bulk-purchase materials and “Safe Harbor” projects
• Helping each other navigate new federal and state requirements
• Leveraging state-level funding and grant opportunities

But resilience, participants noted, depends heavily on access to capital and administrative capacity — advantages that small businesses and Equity Eligible Contractors often lack.

Policy Solutions for Illinois

Participants identified four areas where Illinois can act to sustain clean energy momentum and protect workers:

1. Accelerate Project Development

• Streamline and simplify siting and permitting across jurisdictions.
• Expedite utility interconnection studies; incentivize performance.
• Accelerate CEJA pre-development grants and allow funding for Safe Harbor materials.
• Temporarily increase Illinois Shines block capacity to maximize expiring credits.

2. Fill Funding Gaps

• Adjust Renewable Energy Credit (REC) values to offset lost federal incentives.
• Expand bridge loans, revolving funds, and capitalize the Clean Energy Jobs and Justice Fund and Illinois Climate Bank.
• Increase CEJA grant funding to sustain at-risk projects.

3. Support Workers and Contractors

• Strengthen regional engagement between employers and workforce organizations.
• Focus training on cross-cutting construction skills.
• Align curricula with employer needs and emerging technologies.
• Broaden success metrics for CEJA workforce outcomes.
• Provide capital and planning support for contractors to sustain hiring pipelines.

4. Improve Information Sharing and Coordination

• Continue technical assistance for small businesses and nonprofits seeking grants.
• Consolidate clean energy program guidance into one accessible hub.
• Coordinate across agencies (DCEO, IPA, EPA, IDES, IDHS).
• Clarify and communicate evolving FEOC rules.
• Match workforce programs with employers through centralized outreach.
• Track and share progress via regional and statewide strategies.

Acknowledgements

Special thanks to the Illinois Department of Commerce and Economic Opportunity, Climate Jobs Illinois, and the Illinois Clean Jobs Coalition for their assistance with hosting the listening sessions.

More CJI Commentary on Federal Policy Changes