On June 28, 2014, Illinois Governor Pat Quinn signed Illinois House Bill 2427 into law as Public Act 98-0672, creating the new Section 1-56(i) of the Illinois Power Agency Act (“IPA Act”). This Section called upon the Illinois Power Agency (“IPA”) to “develop a one-time supplemental procurement plan limited to the procurement of renewable energy credits, if available, from new or existing photovoltaics, including, but not limited to, distributed photovoltaic generation” using up to $30 million from the Renewable Energy Resources Fund (“RERF”). (20 ILCS 3855/1-56(i)(1)).
As required by Section 1-56(i), the IPA held a workshop on August 7, 2014 and subsequently presented its Draft Supplemental Plan for public comment on September 29, 2014. Comments were received by October 14, 2014, at which point the IPA prepared its revised plan for submission to the Illinois Commerce Commission (“Commission”). Documents related to the August 7th workshop and Draft Supplemental Plan are available here.
On October 28, 2014, the IPA submitted to the Commission its proposed supplemental procurement plan (“Supplemental Plan”). The documents submitted in the Initial ICC Filing are available here. Per the Commission, the Supplemental Plan is designed to “ensure adequate, reliable, affordable, efficient, and environmentally sustainable renewable energy resources (including credits) at the lowest total cost over time, taking into account any benefits of price stability.” (Id.).
On January 21, 2015 the Commission issued its Final Order (“Order”) on the Supplemental Plan submitted with the IPA’s October 28, 2014 petition. The Commission approved the Supplemental Plan, subject to several modifications set forth in the prefatory portion of the Order.
The Supplemental Plan defines the products to be procured as “Renewable Energy Credits (“RECs”) from new photovoltaic systems with contracts of five years in length.” The definition of “new” is defined as “energized on or after the date of approval of the Supplemental PV Procurement Plan.”
The Procurement Process will consist of three procurement events, plus a fourth contingency event, that will take place over a two year period. The three procurement events will be held as follows (as modified by the Order):
- June 2015: $5 million allocated
- For facilities under 25 kW: 500 REC minimum bid/5,000 REC maximum bid*
- For facilities including and over 25 kW: 500 kW maximum system size and 500 REC minimum bid/no REC maximum bid
- November 2015: $10 million allocated
- For facilities under 25 kW: 500 REC minimum bid/no REC maximum bid (representing 50% of RECs in this procurement event)
- For facilities including and over 25 kW to 500 kW: representing 15% of RECs in this procurement event
- For facilities over 500 kW to 2 MW: representing 35% of RECs in this procurement event
- March 2016: $15 million allocated
- For facilities under 25 kW: 500 REC minimum bid/no REC maximum bid
- For facilities including and over 25 kW: 2 MW maximum system size and 500 REC minimum bid/no REC maximum bid
If there is an outstanding balance of available funds once the three procurement events have taken place, a fourth contingency event will take place in early 2017. The IPA noted in the Supplemental Plan that this event will possibly limit the categories of systems that may participate.
Across the procurement events, there are several key provisions and requirements:
- There are two or three categories of procurement (as detailed above and as modified by the Order):
- Under 25 kW systems can include identified systems or bids for “speculative” systems.
- Over 25 kW systems must be specifically identified prior to bidding.
- A capacity factor of 14.38% will be applied to the DC nameplate capacity, which will be used to calculate the number of RECs that will be produced over the 5-year life of the contract.
- For each category in each procurement event, the minimum bid is 500 RECs (roughly sixteen 5 kW systems).
- Credit requirements for the procurement shall include a refundable deposit per REC of $16/REC ($100/kW) for “speculative” systems and $8/REC ($50/kW) for identified systems. Bidders will be required to submit half of the deposit for their bid on or before the bid date, and winning bidders will be required to deposit the balance within fourteen (14) days of the announcement of the procurement results.
- Speculative systems in the under 25 kW category will need to be identified within 6 months of the Procurement Event.
- Systems will have 12 months from the Procurement Event (or date of identification, whichever is later) to start operation.
- Revenue Grade Meters will be required for all systems.
- RECs must be tracked and delivered using either the PJM GATS or M-RETS tracking systems.
- Standard contracts and a sealed, pay-as-bid Request for Proposal will be used for each procurement event.
- All bids must be below confidential benchmarks, and bids will be evaluated in a manner that strives to achieve the goal of having half the RECs procured come from systems under 25 kW in size (however, distinct benchmarks prices will be developed for the two size categories).
Under Section 1-56(i), the IPA was charged with “solicit[ing] the use of third-party organizations to aggregate distributed renewable energy into groups of no less than one megawatt in installed capacity.” Accordingly, the IPA defined an aggregator “as a third-party (i.e., non-system owner) that (i) owns or plans to acquire either unconditioned title to or rights to legally transfer renewable energy credits from distributed renewable energy devices through contracts with multiple system owners, and (ii) is willing to contract with IPA and accepts standard Illinois terms as well as procedures for contract administration.” In addition to this definition, the IPA proposed that aggregators will be required to pre-qualify with the IPA by meeting the following provisions:
- Aggregator is registered to do business in the State of Illinois;
- Aggregator is able to ensure meter data is collected from aggregated systems; and
- Aggregator is or will be registered with PJM GATS and/or M-RETS upon contract award.
In its Order, the Commission “recommends that the IPA develop a webpage analogous to the Commission’s “Plug In Illinois” webpage to provide basic information in layman’s terms to potential participants in the SREC procurement for 25 kW PV systems.”
In its petition for the Commission’s approval, the IPA recognized that this plan “cannot address all the needs of the market, or overcome all of the barriers[,]” given the limited funds available. However, the IPA is hopeful that the procurement events will serve as a learning opportunity for the future of solar development in the State of Illinois.
The Order requires the IPA to file the final version of the Supplemental Plan, consistent with the conclusions of the Order, within 30 days of January 21, 2015.
*Please Note: The term “bid” as used throughout the Supplemental Plan refers to system owners submitting an offer to sell at a given price.