by Lisa Albrecht, ISEA Policy Co-Chair
A lot has been happening since the last Blog!
Many may not realize but there are currently two separate procurement plans in the works to purchase Renewable Energy Credits in 2015; the Special Procurement which we’ve discussed in previous posts, and the Regular Procurement which is part of the standard annual energy procurement the IPA hosts on behalf of the utilities. Both plans are still in draft form and we are working hard to try to negotiate a solution that will best serve all aspects of the solar industry.
I’ve detailed both the Regular and Special Procurements below but also wanted to explain the process each procurement goes through legally. The ISEA has participated in each of the following steps:
- The IPA holds public workshops when writing a new procurement plan.
- This input is used to create a Draft Plan which is published for public comment.
- The public has 14 days to submit informal comments on possible changes.
- Once received, the IPA then has 14 days to revise before submitting the final Plan to the ICC.
- Fortunately it doesn’t end there and interested parties have a chance to file legal “Objections” within 5 days. These are filed by an attorney directly with the ICC and posted on the ICC website.
- Entities have the opportunity to submit “Responses to Objections” filed, either in agreement or opposition, and make a detailed case for their response. These are due within 10 days.
- There is one final opportunity to file “Responses to the Responses to the Objections” over the next 10 days.
- At that stage the comment period ends. The ICC takes all of these comments under advisement and must either confirm or modify the plan 90 days after it was filed by the IPA.
All of this is VERY CONFUSING so we will be hosting a webinar soon to go over the details. For perspective, it helps to understand there are 3 buckets of funding (remember when we were working on the RPS Fix?)
- The Renewable Resource Budget (RRB) – the public utilities calculate their required %’s from fixed rate customers.
- The Hourly Alternate Compliance (ACP) Budget – the public utilities calculate their required $’s from hourly rate customers
- The Renewable Energy Resource Fund (RERF) – the Alternate Retail Energy Suppliers required offset.
The Regular Procurement will be spending funds from the RRB and the Hourly ACP budgets. This is ComEd and Ameren’s portion of the Renewable Portfolio Standard. The Special Procurement will be spending funds from the RERF budget.
We encourage you to look at the proposed plans but here’s a quick snap shot of where we are at this point. Please keep in mind that both Plan’s are still in draft mode and the ICC will make final determinations in about 90 days.
Regular Procurement – this is the furthest along in process above and on 10/31 ISEA will be submitting our “Response to the Responses to the Objections”. From there we wait until 12/29 to see what the ICC finalizes. The utilities will enter into contracts to purchase RECs from Aggregators. There will be 2 procurements to purchase credits from existing and new systems under contract:
- April 2015: The utilities will purchase about $13m from the RRB for single-year RECs. These will likely be existing systems that have unsold RECs and will likely be utility scale or out of state RECs. ISEA has objected.
- September 2015: The utilities will purchase about $15m of the Hourly ACP) funding.
- The goal is to purchase half of the RECs from >25 kW systems and half from < 25 kW systems. This is half the REC’s not half the budget but until there is pricing we won’t know the quantity.
- No speculative bidding will be allowed and only specifically identified systems will be accepted in bids. Unbuilt systems have until June 2016 to be completed.
- Contracts will be for 5 years. They will not be prepaid in a lump sum.
- Aggregators are required to submit a Minimum bid of 1 MW of bundled capacity. Bidders can combine projects from >25 kW projects and <25 kW projects to meet the 1 MW threshold.
- Aggregators will be required to submit a non-refundable $500 bid fee. They will also provide a $10/REC refundable credit deposit based on the # of RECs bid.
- The contracts will be between utilities and aggregators. System owners can self-aggregate if they meet the 1 MW minimum threshold. Otherwise an aggregator is just a third party – solar company, REC aggregator, municipality, non-profit – whoever has contractual rights to sell the RECs.
Special Procurement – the IPA will be submitting their final Plan to the ICC on Monday 10/28. I hesitate to list details as we are hoping for significant edits but do so because we’ve received several questions and concerns. Again, I encourage folks to read the plan which is hot linked above. The draft plan suggested:
- All bids must be for systems <2,000kW (Distributed Generation or DG systems). DG RECs as defined by Illinois statute mean they must be interconnected in Illinois, behind the meter, and used primarily to offset the customer’s usage.
- All projects must be “new” as defined by the date of each of the procurements (see below). No existing systems will be able to participate. ISEA has strongly objected to the definition of the term “new”, arguing that “new” should be systems installed on or after the date the Governor signed the bill into law.
- No speculative bidding from large systems, ever. Bidders will need proof of viability of large systems, though the exact details aren’t spelled out.
- All systems must be installed by a “qualified person” which is not part of the regular procurement. The General Assembly included wording that restricts the state definition of “qualified person” and we cannot change it. Systems built by installers who used “5 installed systems” as their qualification will be excluded from participating in the Special Procurement.
- Basically a bid will be for 1 REC/year/kW. So a 5 kW system will bid 25 RECs for the entire 5-year period and a 2 MW system = 10,000 RECs.
- The winning bidders will invoice the IPA quarterly and payment will be made after the RECs are delivered (i.e. no pre-payment).
- Bidders will have to provide $25/REC deposits for speculative RECs and $10/REC deposits for identified systems. This translates into $125/kW for speculative bids or $50/kW for identified projects.
- Aggregators are not necessary but allowed:
- System owners can participate directly as long as they meet credit and minimum bid requirements (500kW).
- Anyone can be an aggregator as long as they have the right to sell the RECs from projects, meet credit requirements, and meet minimum bid requirements. You will need to pre-qualify.
- There will be 3 procurement events with a 4th if needed:
June 2015: $5 million
- System is energized on or after June 2015 procurement date
- Under 25 kW systems: minimum bid of 500 RECs (20 5 kW systems) and a maximum bid of 5,000 RECs (200 5 kW systems)
- Over 25 kW systems: minimum bid of 500 RECs (4 25 kW systems) and a maximum systems size of 500 kW, meaning a maximum per-project bid of 2,500 RECs.
November 2015: $10 million
- System is energized on or after June 2015 procurement date.
- 500 REC minimum bid, no maximum system size.
March 2016: $15 million
- System is energized on or after November 2015 procurement date.
- 500 REC minimum bid, no maximum system size.
Early 2017: contingency