On April 3, 2018, the Illinois Commerce Commission (ICC) approved, with a number of substantial modifications, the Illinois Power Agency’s (IPA) first “long term renewable resources procurement plan” under the Illinois Future Energy Jobs Act (Illinois Public Act 99-0906, known as FEJA) enacted in December 2016. The ICC order resolves a number of issues regarding (i) long-term forward procurements of renewable energy credits (RECs) from new utility-scale renewable generation facilities, and (ii) the new Illinois Adjustable Block Program (ABP), Community Solar Generation (CSG) Program, and Illinois Solar for All Program (ISFA) mandated by FEJA.
REC Procurements from Utility-Scale Facilities
The ICC’s order emphasizes promoting the development of new utility-scale wind and solar renewable generation projects in Illinois. Agreeing with arguments made in the proceeding by developers of utility-scale renewable generation facilities, the ICC order directs the following changes, among others, to the IPA’s originally-proposed plan: (1) directs the IPA to cancel spot procurements for approximately 36 million RECs that the IPA had proposed for 2018 and 2019; (2) directs the IPA to increase its planned long-term (15-year) forward procurements of RECs from new utility-scale renewable facilities by 1 million RECs from new wind facilities and 1 million RECs from new solar facilities; (3) directs the IPA to accelerate the timing of one of the long-term forward REC procurements from new utility-scale solar facilities; and (4) directs that approximately $96 million of collected but uncommitted funds currently held by the Illinois electric utilities be used to fund long-term forward procurements of RECs from new utility-scale wind and solar facilities.
The next two long-term forward procurements under the plan will take place this summer (2018), for RECs from (i) utility-scale wind projects (approximately 2 million RECs), and (ii) brownfield solar projects (approximately 0.08 million RECs).
The approval of the IPA’s plan, including the modifications directed by the ICC, is an important step in achieving the ambitious goals of FEJA to promote the development of new utility-scale renewable generation in Illinois, in particular by providing substantial opportunities for developers to obtain long-term (15-year) REC contracts to support the financing of new projects. Developers, of course, continue to face other challenges, including the need to secure long-term energy off-take contracts (the Illinois Renewable Portfolio Standard under FEJA is now “RECs only”); obtaining local siting and zoning authorizations through increasingly contentious proceedings at the county or municipal level; and securing adequate transmission capacity to deliver the energy produced by their projects from the rural locations of the projects to load centers.
Adjustable Block Program, Community Solar Generation, and Illinois Solar for All Program
The IPA’s plan also lays out the frameworks for the new Illinois ABP, CSG Program, and ISFA Program mandated by FEJA, and the ICC order resolves a number of contested issues regarding these programs. The ISFA is designed to make solar more accessible to low-income communities. Notably, the ICC order concludes that projects located in the service territories of municipal utilities (munis) and rural electric cooperatives (co-ops) can participate in the rooftop (distributed generation), CSG, and ISFA programs.
Regarding CSG projects, which have a maximum allowable capacity per FEJA of 2 MW, the ICC order allows the co-location of two projects to “lower the risk of project development” and potentially save communities significant costs. The ICC order allows a developer to either place two-2 MW CSG projects on a single parcel, or place one-2 MW project on each of two contiguous parcels.
The ICC order adopts measures to give community solar projects with at least 50 percent small subscriber participation an increased chance of being selected for the ABP over community solar projects whose subscribers are primarily larger non-residential customers. Assuming that the ABP “Block 1” capacity is at least 200 percent subscribed, 50 percent percent of the available ABP funding will be reserved for CSG projects with at least 50 percent small subscriber participation. If the number of qualifying projects exceeds that funding amount, there will be a lottery to allocate that pool of funding. The small subscriber projects that were not selected in the first lottery will be put into a second lottery, with all other projects, for the remaining 50 percent of ABP funding.
Although the ICC order resolves a number of important issues regarding the ABP, the CSG and the ISFA programs, numerous details for these programs remain to be developed. In terms of next steps, the IPA will prepare and release an amended plan that complies with the terms of the ICC’s order, and will secure a program administrator(s) for these programs. The IPA, with the assistance of the program administrator and with stakeholder participation, is expected to develop a program manual and other details for these programs over a period of several months following issuance of the amended plan.
Under FEJA, the IPA is required to update its plan at least every two years and submit the updated plan for stakeholder comments and ICC approval following a docketed proceeding.
For more information on the ICC’s plan, please contact any member of the Schiff Hardin Energy Group.