Written by Shannon Weigel
The Illinois Commerce Commission has released its Final Orders for both the Supplemental and Regular 2015 Procurement. ISEA participated in the supplemental procurement planning process on behalf of its business and individual members and advocated in favor of several features that the ICC integrated into the final approved plan. Here are a couple of important details potential participants should know:
Supplemental Procurement Plan
In 2014, the state legislature passed a bill to authorize the Illinois Power Agency (“IPA”) to spend up to $30 million from the Renewable Energy Resource Fund (RERF) for a supplemental distributed generation (“DG”) solar procurement (the “IPA Act”). The RERF is funded through payments made by Alternative Retail Electric Suppliers (“ARES”) to satisfy statutory renewable energy resource procurement obligations.
The IPA has chosen to procure RECs from “new” DG solar systems. PV systems that have been energized on or after the approval date of the plan (January 21, 2015) are considered “new”. ISEA anticipates the IPA will accept countersigned interconnection agreements from the utility as well as a letter from system owners verifying the system was not energized prior to the approval date.
DG solar systems are defined as systems interconnected at the distribution system level of either an electric utility, ARES, municipal utility, or a rural electric cooperative; located on the customer’s electricity load; and limited in nameplate capacity to no more than 2,000 kW. This means all eligible systems will be located in Illinois.
Systems that participate, or have participated, in grant, incentive, rebate or tax credit programs may participate so long as that participation does not include the sale or assignment of RECs. Participation in the Department of Commerce and Economic Opportunity (“DCEO”) programs does not prohibit you from participating in the supplemental procurement. ISEA recommends double checking with funding sources to confirm ownership of RECs as some, such as the Illinois Clean Energy Community Foundation, may have taken ownership per terms of the award.
The IPA has chosen NERA Economic Consulting as the Procurement Administrator. NERA will set up the bidding event and explain the competitive bidding process. Bidders will offer a competitive bid for a 5-year REC contract. A standard capacity factor of 14.38% will be used in the bidding process to forecast the number of RECs. Bidders will use the formula below to convert bid system sizes into deliverable RECs.
Nameplate Capacity in MW *14.38% *8760 hours/year * 5 years = contracted RECs
The IPA originally proposed two categories of systems: systems less than 25kW and systems between 25kW to 2,000 kW. ISEA argued that the two categories should be broken into three to ensure diversity of participation at cost-effective prices for mid-sized commercial systems. In the final plan, the IPA did break the procurement into three distinct categories: systems < 25 kW, systems 25 kW – 500 kW and systems > 500 kW – 2 MW. The IPA will set three individual and confidential benchmarks that will be applied across all procurement events. Per language from the General Assembly the IPA will strive to buy half of RECs from systems < 25 kW. (Note: this does not mean ½ the $30 million budget.)
Systems > 25 kW must be identified to prior to bidding. Bids may be speculative for systems < 25 kW. However, the systems must be identified within 6 months of the procurement event. The IPA states that evidence may include, but is not limited to, letters of intent, signed contracts, installation certification, site data and information, system ownership information, interconnection application and net metering application.
Bidders must meet deposit requirements of $16/REC for speculative projects and $8/REC for identified projects. Half of the deposit is due at the time of bid submission and the other half is due within 14 days after bid acceptance. The IPA will refund winning bidders as part of the first payment for RECs. If a winning bidder cancels the project or fails to development milestones, the bidder will forfeit the deposit. Unsuccessful bidders will have their deposits refunded. The refund will be prorated for a bidder who is successful for only a portion of their bid.
There will be 3 procurement events with the possibility of one contingency event in early 2017.
- Budget of $5 million
- <25kW Category: 5,000 REC maximum bid size
- 25-500 kW Category: No identified goals beyond those for the >25kW Category
- >25kW Category: 500 kW maximum system size
- Budget of $10 million
- <25kW Category: No maximum bid size (targeting 50% of RECs in this procurement event)
- 5-500 kW Category: No maximum bid size (targeting 15% of RECs in this procurement event)
- >500kW Category: 2 MW maximum system size (targeting 35% of RECs in this procurement event)
Early 2017 (contingency event)
- Budget of $15 million
- <25kW Category: No maximum bid size for bids under 25 kW category
- 25-500 kW Category: No identified goals beyond those for the >25kW Category
- >25kW Category: 2 MW maximum system size for the 25 kW and above category
All bids must be at or below the appropriate confidential benchmark set by the IPA. Bids are then ranked in order of price per REC until all bids have been ranked or until the budget is exhausted. If that step ended because the budget was exhausted, in a next step, the lowest priced <25 kW systems that have not yet been ranked replace the highest priced >25 kW systems as needed to reach the objective of having 50% of the RECs for the procurement event from systems <25 kW. For the second procurement event, if needed, the same process is used to bring the >25 kW - 500 kW category up to 15% of the RECs.
- Balance of available funds
- Possible limitation on categories of systems that may participate
If your bid is selected
Bidders might win contracts for only some of their projects. Installers must build systems within 12 months of the procurement, with a potential 6 month extension, granted at the IPA’s discretion. Systems must be installed by a “qualified person” and the bidder must certify that a qualified person was used for the system installation. Per legislative language as modified in the IPA Act, the definition of “qualified person” is slightly different than that required by the ICC for DG Certification. See reference below.
The winning bidder may request to substitute a system with one or more systems so long as the total size is of similar nameplate capacity. The IPA has the discretion to grant or deny substitution requests.
Systems > 25 kW will be required to have a revenue-quality meter as part of their installation. The Commission decided it is the IPA’s discretion as to what meters are required for < 25 kW systems. Both the IPA and Commission have stated they do not want to add unnecessary costs to < 25 kW systems and unintentionally create a barrier to participation. Additional details will be provided during the next few months.
RECs must be delivered via GATs or M-RETs tracking system and transferred to the IPA’s account prior to invoicing. Bidders will invoice IPA quarterly and IPA will pay after RECs are delivered.
The IPA will draft procurement documents for stakeholder comments and hold informational sessions. Per ISEA’s suggestion, the IPA will develop a webpage similar to “Plug in Illinois” to provide basic information to potential participants.
2015 Regular Procurement Plan
The IPA will also procure, on behalf of the utilities, SRECs from new and existing systems through two energy procurement events in 2015. This is technically how the REC procurement event had been intended to work and was triggered by the need to purchase standard electricity for Ameren. Any year that the IPA purchases conventional power for the utilities they are also required to purchase renewable energy per the IPA Act. Given the small budget amounts and that the solar market is behind previously stated targets, the IPA has elected to focus the 2015 procurement solely on solar asset procurement and will not be purchasing wind RECs in the plan.
The first procurement event will occur in April 2015. The procurement will use about $13 million from the Renewable Resources Budget (RRB) for a one-year SREC contracts. Participants will likely be utility-scale existing systems with unsold RECs.
The second procurement event will be in September 2015 for RECs from DG resources. DG resources are defined as systems interconnected at the distribution system level of either an electric utility, ARES, municipal utility, or a rural electric cooperative; located on the customer’s electricity load; and limited in nameplate capacity to no more than 2,000 kW. By definition, all systems will therefore need to be installed in Illinois. Half of the RECs will come from systems < 25 kW.
The utilities will purchase about $15 million from the Hourly ACP fund. Contracts will be for 5 years, paid annually beginning at the date of the first meter read registered in the appropriate tracking system. Successful bidders have until June 2016 to complete the system installation.
Bidders must aggregate projects to a minimum bid of 1 MW. Aggregators and system owners can combine projects < 25 kW and > 25 kW to meet the 1 MW threshold. A bidder can designate REC prices specific to individual systems. Within the 1 MW bid, the IPA may award all, none or some systems. No speculative bidding is allowed. Bidders must submit a non-refundable $500 bid fee and a $10/REC refundable deposit.
Qualified Person– definition per Section 1‐56(i)(1)
For the purposes of this paragraph (1), "qualified person" means a person who performs installations of photovoltaics, including, but not limited to, distributed photovoltaic generation, and who: (A) has completed an apprenticeship as a journeyman electrician from a United States Department of Labor registered electrical apprenticeship and training program and received a certification of satisfactory completion; or (B) does not currently meet the criteria under clause (A) of this paragraph (1), but is enrolled in a United States Department of Labor registered electrical apprenticeship program, provided that the person is directly supervised by a person who meets the criteria under clause (A) of this paragraph (1); or (C) has obtained one of the following credentials in addition to attesting to satisfactory completion of at least 5 years or 8,000 hours of documented hands-on electrical experience: (i) a North American Board of Certified Energy Practitioners (NABCEP) Installer Certificate for Solar PV; (ii) an Underwriters Laboratories (UL) PV Systems Installer Certificate; (iii) an Electronics Technicians Association, International (ETAI) Level 3 PV Installer Certificate; or (iv) an Associate in Applied Science degree from an Illinois Community College Board approved community college program in renewable energy or a distributed generation technology.
For the purposes of this paragraph (1), "directly supervised" means that there is a qualified person who meets the qualifications under clause (A) of this paragraph (1) and who is available for supervision and consultation regarding the work performed by persons under clause (B) of this paragraph (1), including a final inspection of the installation work that has been directly supervised to ensure safety and conformity with applicable codes.
For the purposes of this paragraph (1), "install" means the major activities and actions required to connect, in accordance with applicable building and electrical codes, the conductors, connectors, and all associated fittings, devices, power outlets, or apparatuses mounted at the premises that are directly involved in delivering energy to the premises' electrical wiring from the photovoltaics, including, but not limited to, to distributed photovoltaic generation.