Solar Energy In Illinois A Reality!
After months of negotiations and surviving a contentious budget battle in the state legislature, the hard work of enacting Illinois’ comprehensive energy bill is underway.
The Future Energy Jobs Act calls for the installation of about 2,700 MW of solar in Illinois by 2030, a dramatic increase from the state’s current 75 MW.
“It’s going to be crazy, and it’s going to be really exciting,” said Lesley McCain, executive director of the Illinois Solar Energy Association. “We’ve seen such interest from around the country, from all types of developers focused on helping get this legislation built out correctly.”
About 40 percent of the new solar is to be utility-scale projects over 2 megawatts, about 50 percent is to be distributed and community solar and two percent is to be on brownfields, with the remaining 8 percent left up to state officials’ discretion.
The state will deal with utility-scale solar much as it has in the past — through procurements carried out by the Illinois Power Agency (IPA). The 1,300 MW of new distributed solar will be the big challenge. That includes small projects under 10 kilowatts and large projects between 10kw and 2 MW. Under the new law, distributed solar and community solar will be incentivized through SRECs, or Solar Renewable Energy Credits, with the price set through an adjustable block program similar to ones in New York and California.
The Illinois Power Agency and the Illinois Commerce Commission are in charge of setting the price of these SRECs. The price must be high enough to motivate enough entities to install solar. The cost of the SRECs will ultimately be picked up by ratepayers, and a long-standing cap mandates that compliance with the RPS cannot cause rates to rise by more than two percent.
“The key will be finding a price that will drive installations while not being so high it causes a boom-bust cycle similar to the effect seen in Massachusetts and New Jersey,” said Lisa Albrecht, vice president of the Illinois Solar Energy Association and a sales specialist at Solar Service.
“They [the IPA] can adjust prices rapidly depending on how the market responds, they’ll be watching to see how rapidly developers are using up those RECs and adjust up or down accordingly.”
She added that “smaller systems will likely have higher prices for RECs because they don’t have the same economies of scale. If you only have 10 kilowatts, you would need a higher-priced REC than a 1,000-kilowatt” system.
The IPA has been seeking input from experts and stakeholders, who say they are pleased with the process.
“We’re definitely seeing the confidence that those prices will get set at a level that solar can be doable — that the companies will be able to sell their product,” said MeLena Hessel, clean energy and sustainable business policy advocate for the Environmental Law & Policy Center. “Built into the legislation is the ability to tinker with the pricing if it looks like it’s not set perfectly. There’s a lot of good thought and analysis going into getting it right.”
More meaningful credits
Under the law, small solar installations under 10 kw will get the money from SRECs upfront, while larger distributed solar and community solar installations will get 20 percent of the money when the array is built and the rest over four years.
Albrecht said that small installers like her company will find it much easier to work with customers under the new system.
“In the past it was you may or may not get a rebate, there’s one day in October where you may get your money,” she said. “With the new program, it will be so much easier. I can see what price [SREC] is available and I can pencil that out for homeowners right when they call.”
In past Illinois procurements for distributed solar, companies that serve as aggregators have bundled small solar installations together and collected SRECs for them, passing the revenue back to the solar developer or owner in some form. Aggregators will also likely be involved in SREC distribution under the new law, though the way it plays out remains to be seen. Experts say that solar developers are likely to get the payments from SRECs and pass those incentives on through lower costs to the entities who are buying or leasing the solar installations.
Under an adjustable block program, the price of SRECs typically goes down over time as the price of solar hardware and the cost of installation decreases.
“Early adopters should get the better SREC price, and over time that declines,” said McCain. “As the equipment, as well as soft costs, continue to decline, you don’t need as big an incentive. That has proven out well in other markets, so we expect to see that same trajectory here in Illinois.”
Before the law was passed, the state’s Renewable Portfolio Standard — which had a solar carveout — could be fulfilled with the purchase of renewable energy credits from other states. Critics argued that this meant few new renewable energy installations were being built since the RPS could theoretically be fulfilled with credits from wind farms in Texas or other pre-existing and remote installations.
The new law allows for the purchase of RECs from neighboring states, but only if the purchase meets Illinois-centric criteria including that it improves the state’s air quality.
The group Environmental Defenders of McHenry County in northern Illinois is among those who hope the SRECs will make a community solar installation financially viable. Members want to do community solar on an 8-acre site where they envision solar panels surrounded by native prairie plants attracting pollinators. They are in talks with ComEd about getting the site approved, and then they will issue an RFP for developers.
Board president Nancy Schietzelt said that if the organization is able to buy its own shares in the community solar installation, it could help them become carbon neutral.
“The biggest desire of most people I talk to is to cut their electric usage and their reliance on fossil fuels,” Schietzelt said. “This is an exciting project for us.”