By Shannon Weigel, ISEA Board Member
Saturday, June 28th, Governor Quinn signed House Bill 2427 authorizing the Illinois Power Agency (IPA) to direct a one-time $30 million procurement of RECs.
In anticipation of the Governor’s signature, the IPA held a preliminary stakeholder workshop on June 12th, to discuss the program design for implementing the Supplemental PV Procurement Plan. Many questions were raised about the role of aggregators, treatment of new vs. existing systems, need for credit requirements, contract terms and overall procurement process. The IPA solicited written comments, which were due on Monday, July 21st. and can be found on the IPA website (http://www2.illinois.gov/ipa/Pages/Plans_Under_Development.aspx). The program design is officially underway at this stage and will evolve through a series of public workshops and program drafts from the IPA before being submitted to the Illinois Commerce Commission (ICC) later this year.
ISEA submitted comments with the over-arching theme to keep the one-time procurement simple and transparent to ensure success and create consumer and legislative confidence with the aim of demonstrating a working, long-term solution for the RPS program.
ISEA recommends creating 3 subcategories for the procurement. The first subcategory would be for large commercial projects between 400 kW – 2 MW. Although the ISEA comments did not officially comment on pricing techniques, it has been recommended by others that the procurement process for this subcategory should be a competitive bid process for a 5 year contract for RECs. The payment would be a performance-based incentive (paid out for 5 years based on system production).
The second subcategory would be for commercial systems between 25 kW – 399 kW. ISEA recommends flexibility be allowed with regards to payment type (upfront payment or PBI) and that system owners could chose the payment terms.
The third subcategory would be for systems < 25 kW, typically residential projects. The < 25 kW procurement would be set up like a Declining MW Block program. The declining block structure allocates specific capacities and provides incentives, which decline according the amount of PV deployed based on the capacity targets. The IPA would determine the money available for each block and the corresponding SREC price. The system owner would receive upfront payments when the system is energized. Half of the recs procured will from systems smaller than 25 kW.
ISEA suggests that the IPA hire a Third Party Administrator to handle the procurement, contract execution and other administrative functions.
ISEA also recommends that eligible systems be required to be completed no later than 12 months after the date of the SREC contract. Applicants can apply for a 6 month extension, which would be reviewed by the IPA or Third Party Administrator. Eligible projects that are not initially selected should be placed on a waiting list.
With regards to new vs. existing systems, ISEA recommends that existing systems be defined as those that were energized between July 1, 2013- June 30, 2014. New systems should be defined as those that were energized after July 1, 2014. It is important that “new” be related to the passage of HB 2427 as opposed to the final definition of both process and terms by the IPA. Existing systems in the < 25 kW category would be priced below the lowest “declining block” as the value to the industry is the lowest having already been built.
The IPA is hosting a public workshop on August 7th, 2014 from 10am-3pm. Please plan to participate as stakeholder input is important.
The IPA will release the draft plan on September 29th and public comments will be due on October 14th. The IPA will revise the draft plan and submit the revised plan with the Illinois Commerce Commission by October 28th. The ICC has a deadline of January 26th, 2015 to approve the IPA’s plan.