There’s a lot of buzz around policy changes and renewable energy lately. We recently wrote about potential national policy changes following the presidential election as well as potential implications of policy changes in Florida. Now we turn to Illinois – a state where, with the promulgation of a new energy bill, solar distributed generation is positioned to grow substantially.
Highlights from the Future Energy Jobs Bill, SB2814
The Illinois General Assembly passed a bill to amend the Public Utilities Act on December 1, 2016.
- Much of the coverage and controversy surrounding the bill pertained to providing Zero Emissions Credits to two Exelon nuclear power plants scheduled to close prematurely due to market economics.
- Another controversial proposal in the bill was ComEd’s push for mandatory demand charges for its residential customers. Solar companies, like SolarCity, were concerned that the proposed rate structure would prohibit rooftop photovoltaics (PV) from being cost effective and stunt the growth of distributed solar. The demand charges were not included in the final bill; however, it should be noted that a recent study by the Rocky Mountain Institute (RMI) found that it is possible for PV to be cost effective despite demand charges by using demand flexibility.
- Also, key for distributed solar is that the bill did not repeal net metering but instead capped it at 5% of ComEd’s peak demand (after which it will be reevaluated with consideration of costs and benefits). In addition to these more controversial topics, the bill changes the state’s Renewables Portfolio Standard (RPS) and procurement plans for the Illinois Power Agency (IPA), which has the potential to significantly affect renewable energy in Illinois over the next 15 years.
Changes to the RPS in Illinois
Enacted in 2007, the Illinois Power Agency Act set an RPS and created the IPA to develop procurement plans for the state’s large investor-owned utilities, ComEd and Ameren. Unchanged in the new bill, the RPS requires large investor-owned electric utilities and alternative retail electric suppliers to source 25% of eligible retail electricity sales from renewable energy by 2025-2026. From 2008-2012 the RPS in Illinois seemed to be working to drive new renewable capacity, but since then the state has struggled to meet its annual targets. The Illinois RPS compliance money was split across multiple funds, some of it misappropriated, and, of the funds that were used for renewable energy, most were given to out-of-state producers. The new bill rectifies this flaw in the RPS by allocating compliance money to one larger fund that can be used to back renewable development.
Changes to REC Procurement
The new bill also includes changes for how the IPA will procure renewable energy credits (RECs). In case you’re wondering, a REC, or SREC when referring specifically to solar generation, is a type of certified credit for one megawatt-hour (MWh) of renewable generation that a utility, or in this case the IPA, can purchase or trade to meet an RPS or renewable energy goal. The new bill directs the IPA to procure RECs from new wind and solar generation projects in Illinois – equivalent to approximately 2000 megawatts (MW) of new solar and 1000 MW of new wind generation by 2026. This should be a key driver for growth of solar in IL; however, the big win for distributed and community solar comes from the addition of the Adjustable Block program – like New York’s NY-Sun Megawatt Block or the California Solar Initiative – which requires that a minimum of 50% of new SRECs come from distributed or community solar projects 2 MW or less. This could equate to more than 150,000 additional homes being powered by distributed solar before 2026.
The new bill’s revisions to Illinois’ RPS with plans to procure SRECs from small-scale solar combined with continued support for net metering should be strong catalysts for distributed solar in the state. You can expect changes to come for the large utilities as well as third-party installers or solar providers such as SolarCity. As further details become available on how the distributed solar features in the bill will be implemented, we will illustrate what the economics might look like for someone powering their own home with solar in Illinois.