In December of 2016, Illinois Governor Bruce Rauner signed into law the Illinois Future Energy Jobs Act (Energy Act). One principal purpose of the Energy Act is to add a new Zero Emissions Credit to Illinois’ existing Renewable Portfolio Standard (RPS). The new Zero Emissions Credit received a lot of media coverage because it is designed to provide additional compensation to Illinois’ operating nuclear power plants. Because the costs for the credit will be paid for as a pass-through charge via a tariff by Illinois’ electric utilities, Illinois businesses will undoubtedly see their costs for procuring electricity increase.
In addition to creating the credit, the Energy Act also implemented major reforms for Illinois’ RPS. As part of those reforms, the Energy Act also created new solar programs. Of particular interest to Illinois businesses and building owners/landlords is the new Adjustable Block Program. The Adjustable Block Program directs the Illinois Power Agency (IPA) to procure renewable energy credits (RECs) from distributed solar photovoltaic (PV) projects and from new community solar projects. The IPA’s new Adjustable Block Program presents an opportunity for Illinois businesses and building owners to offset some of the higher costs associated with new Zero Emissions Credit program by investing in their own electricity supply. The Energy Act also created a Community Solar Program that permits subscribers to join together to take advantage of new solar projects.
On September 29, 2017, the IPA released a proposed Long-Term Renewable Resources Procurement Plan that includes a proposed approach for the new Adjustable Block Program. The IPA’s proposed Adjustable Block Program features administratively set prices for RECs, and, if approved by the Illinois Commerce Commission, would permit applications on an open, rolling basis.
Under the IPA’s proposed procurement plan, businesses would be permitted to submit applications for on-site solar PV projects of up to 2 MW. The projects would be eligible for 15-year contracts at pre-set prices for RECs generated by the projects. The 15-year contracts would also be eligible for upfront payments over the first five years of the contracts: 20% paid out at the time of project interconnection and energization, with the balance paid over the succeeding four years. The business could then use the electricity produced by the solar project itself to offset its regular electric demand.
The creation of the solar Adjustable Block Program in the Energy Act creates a potential unique opportunity for Illinois businesses and building owners to obtain substantial subsidies to support the development of on-site solar projects. For example, businesses with large roof tops, such as distribution facilities, could deploy solar panels on the roofs to participate in the Adjustable Block Program. Building owners could do the same. Likewise, businesses with access to ample acreage could build ground solar facilities to take advantage the 15-year agreements under the Adjustable Block Program.
Alternatively, businesses could combine with each other and hire a solar project developer to construct a solar project by becoming subscribers to the project under the new Community Solar Program. The project would also be eligible to receive a 15-year contract.
Combining the subsidies provided under the Adjustable Block Program and/or the Community Solar Program with the 30% federal Investment Tax Credit available to owners of solar generation facilities could make an investment in on-site generation make sense, either to offset the higher costs of electricity that will result from the pass through of costs from the Zero Emissions Credit program, or a as a price hedge against potentially higher future wholesale energy prices. In any case, interested Illinois businesses should look into the opportunity now, as some of the incentives will be reduced for projects that begin after 2019.
Comments on the draft plan must be submitted to the IPA by November 13, 2017. Businesses that are interested in this unique opportunity to offset some of their electric costs should review the draft plan and consider submitting comments.