Long-Term Renewable Resources Procurement Plan

Long-Term Renewable Resources Procurement Plan August 6, 2018

Long-Term

Renewable Resources

Procurement Plan

Final Plan

Prepared to conform with the Illinois Commerce Commission’s Final

Order in Docket No. 17-0838, dated April 3, 2018, and Amendatory

Order dated May 2, 2018

August 6, 2018

Prepared in accordance with the

Illinois Power Agency Act (20 ILCS 3855), and the Illinois Public Utilities Act (220 ILCS 5)

RENEWABLE RESOURCES

Long-Term Renewable Resources Procurement Plan August 6, 2018

Table of Contents

1. Introduction ...................................................................................................................................................................... 1

1.1. Changing the RPS Planning Framework ..................................................................................................... 2

1.2. Plan Organization ................................................................................................................................................. 3

1.3. Action Plan .............................................................................................................................................................. 4

2. Legislative/Regulatory Requirements of the Plan ............................................................................................ 5

2.1. Renewable Energy Resource Procurement Prior to Public Act 99-0906 ..................................... 5

2.1.1. Original RPS—Eligible Retail Customer Load ................................................................................. 5

2.1.2. Original RPS—Hourly Pricing Customers ........................................................................................ 6

2.1.3. Original RPS—ARES Compliance ......................................................................................................... 6

2.2. Public Act 99-0906 .............................................................................................................................................. 9

2.2.1. Legislative Findings ................................................................................................................................. 10

2.2.2. Changes to the RPS ................................................................................................................................... 11

2.2.3. New Concepts and Terms ...................................................................................................................... 11

2.2.4. Long-Term Renewable Resources Procurement Plan .............................................................. 12

2.2.5. Plan Requirements ................................................................................................................................... 12

2.2.6. Items Not Included in Long-Term Renewable Resource Procurement Plan ................... 18

2.2.7. Plan Development and Approval ....................................................................................................... 18

2.2.8. Plan Updates ............................................................................................................................................... 20

2.3. The RPS and Percentage-Based Goals of the RPS ................................................................................. 21

2.3.1. Load Applicable to RPS Goals .............................................................................................................. 21

2.3.2. Eligible Projects for the Illinois RPS ................................................................................................. 22

2.3.3. Compliance Mechanism: RECs vs. “Renewable Energy Resources” .................................... 25

2.3.4. RPS Funding and Rate Impact Cap .................................................................................................... 26

2.3.5. Employment Opportunities .................................................................................................................. 27

2.4. Quantitative New Build Targets of the RPS ............................................................................................. 27

2.4.1. Quantitative Procurement Requirements ...................................................................................... 27

2.4.2. “New wind project” and “new photovoltaic project” Definition ........................................... 28

2.4.3. Initial Forward Procurements............................................................................................................. 29

2.4.4. Subsequent Forward Procurements ................................................................................................. 30

2.4.5. Balancing Expected Wind RECs vs. Solar RECs ............................................................................ 30

2.5. Adjustable Block & Community Renewable Generation Programs ............................................... 31

2.5.1. Adjustable Block Program .................................................................................................................... 31

2.5.2. Community Renewable Generation Program ............................................................................... 35

2.6. Illinois Solar for All Program ......................................................................................................................... 35

2.6.1. Illinois Solar for All—Overview .......................................................................................................... 36

2.6.2. Illinois Solar for All—Sub-programs ................................................................................................ 38

2.6.3. Illinois Solar for All—Additional Requirements .......................................................................... 41

2.6.4. Illinois Solar for All—Third-party Program Administrator .................................................... 42

3. RPS Goals, Targets, and Budgets ............................................................................................................................ 44

3.1. Statewide Goals and Allocation of Cost and RECs from RPS Procurements to Each Utility 45

3.2. Impact of the Phase out of Alternative Retail Electric Supplier RPS Obligations .................... 46

3.3. Section 1-75(c)(1)(H)(i) ARES Option to Supply RECs for their Retail Customers ................ 46

3.4. MidAmerican Volumes ..................................................................................................................................... 48

3.5. Cost Cap and Cost Recovery ........................................................................................................................... 48

3.6. RPS Compliance Procurement Priorities .................................................................................................. 49

3.7. Wind/Solar Matching Requirement and Solar Split ............................................................................ 50

3.8. REC Portfolio ........................................................................................................................................................ 51

3.9. Existing REC Portfolios - RECs Already Under Contract .................................................................... 51

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.10. Initial Forward Procurement ........................................................................................................................ 52

3.11. Statewide REC Portfolio .................................................................................................................................. 53

3.12. Loads, RPS Goals and Targets, and REC Gaps ......................................................................................... 54

3.13. Applicable Retail Customer Load ................................................................................................................ 54

3.14. RPS Goals and Targets ...................................................................................................................................... 54

3.15. Overall REC Procurement Targets (REC Gaps) ...................................................................................... 55

3.16. Procurement Targets to Meet Specific Wind-Solar Requirement and Overall RPS Targets57

3.17. RPS Budget ............................................................................................................................................................ 57

3.17.1. Utilities Budgets .................................................................................................................................................. 58

3.18. Summary of REC Procurement Targets and RPS Budgets ................................................................ 61

3.19. Alternative Compliance Payment Funds Held by the Utilities......................................................... 61

3.20. Impact of RPS Budget on Procurement Volumes .................................................................................. 62

4. Renewable Energy Credit Eligibility ..................................................................................................................... 64

4.1. Adjacent State Requirement .......................................................................................................................... 64

4.1.1. Public Interest Criteria ..................................................................................................................................... 66

4.1.2. Application Process ........................................................................................................................................... 72

4.2. Cost Recovery Requirement .......................................................................................................................... 73

5. Competitive Procurement Schedule ..................................................................................................................... 76

5.1. Statutory Requirements .................................................................................................................................. 77

5.2. Background on past REC Procurements conducted by the IPA ...................................................... 78

5.3. Updates to the Agency’s Competitive Procurement Approach ....................................................... 79

5.4. Revised REC Eligibility ..................................................................................................................................... 80

5.5. Credit Requirements ......................................................................................................................................... 81

5.6. Benchmarks .......................................................................................................................................................... 81

5.7. Procurements for RECs from New Projects vs. RECs to Meet Annual Goals.............................. 82

5.7.1. First Subsequent Forward Procurement ........................................................................................ 85

5.7.2. Brownfield Site Forward Procurement ........................................................................................... 87

5.8. Other Procurements to Meet RPS Targets ............................................................................................... 88

5.8.1. Photovoltaic Forward Procurement ................................................................................................. 89

5.8.2. Second Subsequent Forward Procurement ................................................................................... 90

5.8.3. Other Renewables 15-Year Forward Procurement .................................................................... 91

5.8.4. Community Renewable Generation Program Forward Procurement ................................ 92

5.9. Spot Procurements ............................................................................................................................................ 94

5.10. Consideration of Potential Procurements after 2019 and Through 2030 .................................. 96

6. Adjustable Block Program......................................................................................................................................... 97

6.1. Background ........................................................................................................................................................... 97

6.2. Lessons From Other Jurisdictions ............................................................................................................... 98

6.2.1. Managing Initial Demand ...................................................................................................................... 98

6.3. Block Structure .................................................................................................................................................... 99

6.3.1. Transition between Blocks ................................................................................................................ 101

6.4. REC Pricing Model ........................................................................................................................................... 103

6.5. Adjustments and Adders .............................................................................................................................. 107

6.5.1. Size Category Adjustments ................................................................................................................ 107

6.5.2. Co-location of Distributed Generation Systems ........................................................................ 108

6.5.3. Community Solar ................................................................................................................................... 108

6.5.4. Adders to Adjust for Changing System Revenue ...................................................................... 109

6.6. Payment Terms ................................................................................................................................................ 110

6.7. Contracts ............................................................................................................................................................. 111

6.8. Adjustments to Blocks and Prices ............................................................................................................ 112

Long-Term Renewable Resources Procurement Plan August 6, 2018

iii

6.8.1. Net Metering Cap Adjustment .......................................................................................................... 113

6.8.2. Smart Inverter Rebate ......................................................................................................................... 114

6.8.3. Federal Solar Investment Tax Credit Adjustment .................................................................... 114

6.8.4. Tariffs on Foreign Photovoltaic Modules and Cells ................................................................. 115

6.9. Approved Vendors .......................................................................................................................................... 117

6.10. Program Administrator ................................................................................................................................ 120

6.11. Program Launch .............................................................................................................................................. 121

6.12. Project Requirements .................................................................................................................................... 121

6.12.1. Technical System Requirements ..................................................................................................... 121

6.12.2. Metering Requirements ...................................................................................................................... 122

6.13. Customer Information Requirements/Consumer Protections .................................................... 123

6.13.1. Systems Energized Prior to Finalization of Consumer Protection Requirements .. 126

6.13.2. Community Solar ................................................................................................................................... 127

6.13.3. Monitoring of Consumer Complaints ............................................................................................ 127

6.14. Application Process ........................................................................................................................................ 128

6.14.1. Batches ....................................................................................................................................................... 128

6.14.2. Systems below 25 kW .......................................................................................................................... 129

6.14.3. Batch Size .................................................................................................................................................. 129

6.14.4. Batch Review ........................................................................................................................................... 130

6.14.5. Converting System Size into REC Quantities .............................................................................. 130

6.14.6. Batch Contract Approval .................................................................................................................... 131

6.15. Project Development Timeline and Extensions .................................................................................. 132

6.15.1. Development Time Allowed .............................................................................................................. 132

6.15.2. Extensions ................................................................................................................................................ 132

6.15.3. Project Completion and Energization ........................................................................................... 133

6.15.4. Additional Requirements for Community Solar Projects ..................................................... 134

6.15.5. REC Delivery ............................................................................................................................................ 135

6.16. Ongoing Performance Requirements ...................................................................................................... 135

6.16.1. Credit Requirements ............................................................................................................................ 136

6.16.2. Options to Reduce REC Delivery Obligations ............................................................................. 137

6.17. Annual Report ................................................................................................................................................... 138

7. Community Renewable Generation Projects ................................................................................................. 140

7.1. Statutory Overview ........................................................................................................................................ 140

7.2. Eligible Generating Technologies and Procurement/Program Eligibility ............................... 143

7.3. Co-location of Projects .................................................................................................................................. 143

7.3.1. Co-location Standard ............................................................................................................................ 144

7.4. Eligibility of Projects Located in Rural Electric Cooperatives and Municipal Utilities ....... 146

7.5. Types of Community Renewable Generation Projects .................................................................... 148

7.6. Subscriber Requirements ............................................................................................................................ 149

7.6.1. Small Subscriber Participation ........................................................................................................ 149

7.6.2. Marketing to Small Subscribers ....................................................................................................... 150

7.6.3. Marketing Claims Related to the Ownership of RECs and Community Renewable

Generation Subscriptions ....................................................................................................................................... 153

7.7. Utility Responsibilities .................................................................................................................................. 154

8. Illinois Solar for All Program ................................................................................................................................ 156

8.1. Overview ............................................................................................................................................................. 156

8.2. Design Considerations .................................................................................................................................. 156

8.2.1. Relationship with the Adjustable Block Program .................................................................... 156

8.2.2. Economic Benefits ................................................................................................................................. 157

8.3. Program Launch .............................................................................................................................................. 158

Long-Term Renewable Resources Procurement Plan August 6, 2018

8.4. Funding and Budget ....................................................................................................................................... 159

8.4.1. Renewable Energy Resources Fund Funding Available ........................................................ 159

8.4.2. Utilities Annual Funding Available ................................................................................................. 160

8.4.3. Section 16-108(k) Funding ................................................................................................................ 161

8.4.4. Setting Budgets ....................................................................................................................................... 162

8.4.5. Payment Structure ................................................................................................................................ 163

8.5. Programs............................................................................................................................................................. 164

8.6. Setting Incentive Levels ................................................................................................................................ 165

8.6.1. Low-Income Distributed Generation Incentive ........................................................................ 166

8.6.2. Low-Income Community Solar Project Initiative ..................................................................... 168

8.6.3. Incentives for Non-Profits and Public Facilities ....................................................................... 170

8.6.4. Low-Income Community Solar Pilot Projects ............................................................................ 171

8.7. Providing Guidance and Education .......................................................................................................... 173

8.8. Illinois Solar for All Program Administrator........................................................................................ 173

8.9. Quality Assurance ........................................................................................................................................... 175

8.10. Coordination with Job Training Programs ........................................................................................... 175

8.11. Additional Requirements for Approved Vendors .............................................................................. 177

8.12. Application Process ........................................................................................................................................ 178

8.13. Customer Eligibility ........................................................................................................................................ 179

8.13.1. Income Guidelines ................................................................................................................................. 179

8.13.2. Determining Income Eligibility ........................................................................................................ 182

8.14. Consumer Protections ................................................................................................................................... 183

8.15. Environmental Justice Communities ....................................................................................................... 184

8.15.1. Definitions ................................................................................................................................................ 184

8.15.2. Proposed Approach for Defining Environmental Justice Communities.......................... 187

8.15.3. Environmental Justice Community Designations ..................................................................... 189

8.15.4. Environmental Justice Communities 25% Goal ........................................................................ 189

8.16. Program Changes ............................................................................................................................................ 189

8.17. Evaluation........................................................................................................................................................... 190

Tables

Table 3-1: Utility REC Cost Allocations ......................................................................................................................... 45

Table 3-2. REC Procurement Cost Cap Rate by Utility ........................................................................................... 49

Table 3-3. Ameren Illinois Existing REC Portfolio ................................................................................................... 51

Table 3-4. ComEd Existing REC Portfolio .................................................................................................................... 52

Table 3-5. MidAmerican Existing REC Portfolio ....................................................................................................... 52

Table 3-6. Initial Forward Procurement RECs .......................................................................................................... 53

Table 3-7. Statewide REC Portfolio ................................................................................................................................ 53

Table 3-8. Retail Customer Load Applicable to the Compliance Year.............................................................. 54

Table 3-9. Statewide RPS Goals and Targets .............................................................................................................. 55

Table 3-10. Statewide Overall REC Gap ........................................................................................................................ 55

Table 3-11. Statewide REC Portfolio and Minimum REC Procurement Targets ......................................... 57

Table 3-12. Ameren Illinois RPS Budget ...................................................................................................................... 59

Table 3-13. ComEd RPS Budget ....................................................................................................................................... 60

Table 3-14. MidAmerican RPS Budget .......................................................................................................................... 60

Table 3-15. Statewide RPS Budget ................................................................................................................................. 60

Long-Term Renewable Resources Procurement Plan August 6, 2018

Table 3-16. Statewide REC Gap and Available RPS Budget .................................................................................. 61

Table 4-1: Natural Gas-Fired Generation Emissions Rates .................................................................................. 67

Table 4-2: Wind Duration/Direction Factors ............................................................................................................ 68

Table 5-1: 2018 and 2019 Forward Procurements Summary ............................................................................ 84

Table 6-1: Illustrative Block Opening Volumes (MW) ........................................................................................ 102

Table 6-2: Block Group REC Prices ($/REC) ........................................................................................................... 105

Table 6-3: Size Category Adjustments ....................................................................................................................... 107

Table 6-4: Community Solar Adders .......................................................................................................................... 109

Table 7-1: Federal Statutes that Apply to Community Solar ............................................................................ 151

Table 7-2: Illinois Statutes that Apply to Community Solar.............................................................................. 151

Table 8-1: Utility Funding ............................................................................................................................................... 161

Table 8-2: Illinois Solar for All Budgets ..................................................................................................................... 163

Table 8-3: Delivery Year 2018-2019 Illinois Solar for All Funding Allocations ....................................... 165

Table 8-4: Incentives for the Low-Income Distributed Generation Program, 1-4 unit buildings ..... 167

Table 8-5: Incentives for the Low-Income Distributed Generation Program, 5+ unit buildings....... 167

Table 8-5: Incentives for Low-Income Community Solar Projects ($/REC) .............................................. 169

Table 8-6: Incentives for Non-Profits and Public Facilities ($/REC) ............................................................ 171

Table 8-7: HUD Income Limits ...................................................................................................................................... 180

Table 8-8: Eligibility Guidelines for LIHEAP and WAP in Illinois .................................................................. 180

Table 8-9: Summary of CalEnviroScreen 3.0 Identification Methodology .................................................. 186

Figures

Figure 3-1. Statewide Applicable Retail Load, REC Portfolio and Overall REC Gap ................................... 56

Figure 4-1: Pollution Score Calculation ....................................................................................................................... 69

Figure 4-2: Fuel and Resource Diversity Score ......................................................................................................... 70

Figure 4-3: Reliability and Resiliency Score ............................................................................................................... 71

Figure 4-4: CO

Score Calculation ................................................................................................................................... 71

Figure 6-1: Group A Blocks ............................................................................................................................................. 106

Figure 6-2: Group B Blocks ............................................................................................................................................. 106

Figure 8-1: Springfield Qualified Census Tracts .................................................................................................... 181

Figure 8-2: CalEnviroScreen Formula ........................................................................................................................ 188

Appendices

Appendix A: Legislative Compliance Index

Appendix B: Summaries of Goals and Targets, RPS Portfolios, and Budgets

Appendix C: Review of Other Programs

Appendix D: Renewable Energy Credit Pricing Model Description

Appendix E: Renewable Energy Credit Pricing Models

Appendix E-1: Adjustable Block Program Distributed Generation Pricing Model

Appendix E-2-a: Adjustable Block Program Community Solar Pricing Model

Appendix E-2-b: Adjustable Block Program Community Solar Pricing Model (Co-located)

Appendix E-3-a: Illinois Solar for All Distributed Generation Incentive Pricing Model (5 or more

units)

Appendix E-3-b: Illinois Solar for All Distributed Generation Incentive Pricing Model (1-4 units)

Long-Term Renewable Resources Procurement Plan August 6, 2018

Appendix E-4-a: Illinois Solar for All Community Solar Pricing Model

Appendix E-4-b: Illinois Solar for All Community Solar Pricing Model (Co-located)

Appendix E-5: Illinois Solar for All Non-profit and Public Facility Pricing Model

Appendix F: Income Eligibility Guidelines for Illinois Solar For All

Long-Term Renewable Resources Procurement Plan August 6, 2018

1. Introduction

This is the first Long-Term Renewable Resources Procurement Plan (“Plan”) developed by the Illinois

Power Agency (“IPA” or “Agency”) pursuant to the provisions of Sections 1-56(b) and 1-75(c) of the

Illinois Power Agency Act (“Act” or “IPA Act”), and Section 16-111.5 of the Public Utilities Act (“PUA”).

This Plan is the result of Public Act 99-0906 (“P.A. 99-0906”), enacted December 7, 2016, which

substantially revised the Illinois Renewable Portfolio Standard (“Illinois RPS” or “RPS”). Public Act

99-0906 took effect on June 1, 2017 and provided for the Agency to develop a draft Plan within 120

days of that date.

The release of the draft Plan on September 29, 2017 fulfilled that requirement.

Interested parties had 45 days to comment on the draft Plan, and the Agency then had 21 days to

revise the Plan to prepare it for filing for with the Illinois Commerce Commission (“Commission” or

“ICC”). The Agency filed a revised Plan with the Commission on December 4, 2017 fulfilling that

requirement. Under Section 16-111.5(b)(5)(ii)(C) of the PUA, the Commission then had 120 days to

review this Plan and enter its Order confirming or modifying this Plan. That Order was issued on

April 3, 2018, with the Commission issuing an Amendatory Order in response to an IPA Motion for

Clarification on May 2, 2018.

This Final Plan reflects changes resulting from the Commission’s Order and has been revised from

the filed Plan consistent with the IPA’s understanding of the Final Order and Amendatory Order

issued by the Commission in Docket No. 17-0838. While the IPA has strived to fully and accurately

reflect the Commission’s Orders in this document, in the case of any unintended inconsistencies

between this Final Plan and the Orders issued by the Commission in Docket No. 17-0838, the

Commission’s Orders ultimately govern and should be followed. This Plan addresses how the Agency

will undertake a variety of programs and procurements for Ameren Illinois Company (“Ameren

Illinois”), Commonwealth Edison Company (“ComEd”), and MidAmerican Energy Company

(“MidAmerican”) to meet their annual obligations to purchase Renewable Energy Credits (“RECs”) to

meet the goals of the Illinois RPS. It also describes how the Agency will develop and implement the

Illinois Solar for All Program, which utilizes a combination of funds held by the Agency in the

Renewable Energy Resources Fund (“RERF”), and funds supplied by the utilities from ratepayer

collections, to develop a program to support the development of photovoltaic (“PV”) resources that

will benefit low-income households and communities.

Prior to the development of this Plan, the planning for the procurement of renewable energy

resources by the Agency was contained in the Agency’s annual procurement plan. With the enactment

of Public Act 99-0906, the Agency is tasked to develop this separate Plan for the procurement of RECs

for the utilities, while the annual procurement plan now focuses on the procurement of electricity

and other “standard wholesale products” for the utilities (in addition, the Agency has developed a

separate Zero Emission Standard Procurement Plan for the procurement of zero emission credits

pursuant to the new Section 1-75(d-5) of the Act).

This Plan covers the Agency’s proposals for procurements and programs to be conducted during

calendar years 2018 and 2019. The Agency expects that as part of its procurement planning process

conducted in calendar year 2019 for implementation starting in calendar year 2020, the Agency will

Section 16.111.5(b)(5)(ii)(B) of the Public Utilities Act (220 ILCS 5) provides that the draft Plan shall be published “no later than 120

days” after the effective date of the Act, while Section 1-75(c)(1)(A) of the Illinois Power Agency Act (20 ILCS 3855) provides that the draft

Plan “shall be released for comment no later than 160 days” after the Act’s effective date. To ensure compliance with either provision, the

Agency released its draft Plan for comment 120 days after the effective date of the Act.

Long-Term Renewable Resources Procurement Plan August 6, 2018

update this Plan and propose procurements and programs (or refinements to existing programs) for

subsequent years. These proposals are specifically designed to meet the Illinois RPS goals for the

delivery years

2017-2018 through 2019-2020 as well as to begin to put into place contracts for REC

deliveries for future delivery years that will help to meet those future years’ RPS goals.

1.1. Changing the RPS Planning Framework

With the changes to the Illinois RPS contained in Public Act 99-0906, there are several key impacts

on the RPS which inform how the Agency has developed this Plan. These include:

• The phase-out of RPS obligations for Alternative Retail Electric Suppliers, and the associated

phase-in of programs and procurements conducted by the Agency to cover the RPS

obligations of all retail customers rather than just the eligible retail customers (the

residential and small commercial customers who remained on utility default service). While

overall RPS annual percentage goals remain the same, this change significantly increases the

quantity of RECs under consideration in this Plan compared to previous procurement plans

developed by the Agency.

• The introduction of a new public interest criteria for RECs from facilities in adjacent states,

along with a prohibition on RECs from facilities that have their costs recovered through

regulated rates, together decrease the pool of eligible RECs for IPA administered

procurements. Combined with a more general goal to emphasize the procurement of RECs

from new projects, the design of the range of procurements contained in this Plan, while

building on previous procurements conducted by the Agency, focuses on “Forward

Procurements” that seek RECs from new projects.

• While the RPS previously contained percentage-based carve-outs for specific technologies,

the RPS now contains specific quantity-based targets for RECs from new wind and new solar

and brownfield site solar projects. These goals must be considered and balanced with the

need to meet annual percentage-based goals.

• In a change from the competitive procurement model previously employed by the Agency

(which was based, in part, on how the Agency procures power to serve the utilities’ eligible

retail customers), the Agency is now directed to develop and implement an Adjustable Block

Program for photovoltaic distributed generation and community solar that includes

administratively determined REC prices rather than prices determined through pay-as-bid

competitive procurements. The Agency also will now be managing an ongoing program

rather than discrete procurement events.

• Recognizing the growing interest nationally in community solar, the Agency is now tasked

with developing a community renewable generation program (to encompass both

community solar as well as other renewable generating technologies). Community renewable

generation projects allow residential and business customers to participate directly in the

renewable energy economy even if they cannot host solar panels (or other renewable

An energy delivery year (“delivery year”) runs from June 1 of a given year to May 31 of the following year. The Agency has historically

interpreted and used the phrasing (e.g.) “2020 delivery year” to mean the 2020-2021 delivery year, and Public Act 99-0906 codified that

interpretation by defining “delivery year” in Section 1-10 of the IPA Act ("the consecutive 12-month period beginning June 1 of a given

year and ending May 31 of the following year”).

In its Plan originally filed with the Commission, the Agency also proposed “spot procurements” to meet the annual RPS percentage goals

found in Section 1-75(c)(1)(B) of the Act. However, in its Order approving the Plan, citing “the serious risk Spot Procurements can pose to

the budget which may prevent the IPA from meeting its statutory long-term new build requirements,” the Commission granted “various

parties’ requests to cancel the Spot Procurements.” Docket No. 17-0838, Final Order dated April 3, 2018 at 42.

Long-Term Renewable Resources Procurement Plan August 6, 2018

generation devices) on-site by subscribing to shares of a facility located within their electric

utility service territory.

• To provide opportunities for low-income customers and communities, the Illinois Solar for

All Program creates a separate set of incentives designed to overcome the barriers to

participation in renewable energy programs that low-income customers have historically

faced.

While this is not a comprehensive list of all changes to the Illinois RPS, it provides a high-level

overview of the most significant items and constitutes a broad and ambitious vision for setting the

Illinois RPS back on track and helping make Illinois a national leader in developing its clean energy

economy. Given the scope of these changes and that this is the first Plan developed by the Agency to

meet these new goals, the Agency views this Plan as a starting point. While it sets in place the

approach and direction the Agency intends to take in the years to come, this Plan is subject to a

regulatory approval process before the Commission during which the proposed approaches may

evolve. Further, the Agency notes that the Plan will be updated in two years’ time, which will allow

the Agency to adjust and adapt to what it learns as this initial Plan is implemented.

1.2. Plan Organization

This Plan contains eight chapters.

Chapter 1 is this Introduction. It contains a brief overview of the Plan and a set of Action Items that

the Agency requests that the Commission expressly adopt as part of its approval of this Plan.

Chapter 2 provides an overview of the legislative/regulatory requirements contained in the Illinois

Power Agency Act and the Public Utilities Act (particularly those that result from the enactment of

Public Act 99-0906) that lead to the development of this Long-Term Renewable Resources

Procurement Plan and the implementation of the resulting programs and procurements by the

Illinois Power Agency.

Chapter 3 contains calculations of RPS targets, summaries of RPS portfolios, and summaries of RPS

budgets.

Chapter 4 discusses the eligibility of RECs for use in the Illinois RPS. In particular, it addresses two

new requirements of the RPS: eligibility of RECs from resources in adjacent states, and the

requirement that RECs do not come from facilities that recover their costs through regulated rates.

Chapter 5 describes the competitive procurements the Agency proposes to conduct.

These include:

• First Subsequent Forward Procurement (new utility-scale wind RECs)

• Brownfield Site Photovoltaic 15-Year Forward Procurement

• Photovoltaic Forward Procurement (new utility-scale photovoltaic RECs)

• Second Subsequent Forward Procurement (new utility-scale wind RECs)

• Community Renewable Generation Program 15-Year Forward Competitive Procurement for

Non-Photovoltaic Projects

In Chapter 5 of the Plan filed for Commission approval, the Agency had originally also proposed “Spot Procurements” for the 2017-2018,

2018-2019, and 2019-2020 delivery years and an Other Renewables 15 Year Forward Procurement (for generating technologies other

than wind or photovoltaics). Consistent with the Commission’s Order approving the Plan in Docket No. 17-0838, those proposed

procurements are no longer included in the Plan. (See Docket No. 17-0838, Final Order dated April 3, 2018 at 42, 52).

Long-Term Renewable Resources Procurement Plan August 6, 2018

Chapter 6 describes the Adjustable Block Program. This includes details on the structure of the

blocks, REC (and adder) prices and pricing model development, the application process, payment

terms, the process for adjusting prices, the process for approving vendors, project specifications,

consumer protections, delivery requirements, and more.

Chapter 7 describes the Community Renewable Generation Program including standards for co-

location, eligibility of projects located in municipal utilities and rural electric cooperatives, subscriber

requirements, consumer protections, legal issues around marketing claims related to RECs, and the

responsibilities of utilities.

Chapter 8 describes the Illinois Solar for All Program including the program funding and design;

customer terms, conditions, and eligibility; and an approach to designating environmental justice

communities.

1.3. Action Plan

In this Plan, the IPA recommends the following items for ICC action as part of the Plan’s approval:

1. Approve the RPS targets, and budget estimates for Ameren Illinois, ComEd, and MidAmerican

for the delivery years 2017-2018 through 2019-2020 contained in Chapter 3.

2. Approve the Agency’s proposed approach for considering and weighting the public interest

criteria related to facilities located in adjacent states that is contained in Chapter 4.

3. Approve the proposed procurements contained in Chapter 5.

4. Approve the design of the Adjustable Block Program contained in Chapter 6, including the

block design, schedule of REC prices (and adders), and program terms and conditions.

5. Approve the design and terms and conditions of the Community Renewable Generation

Program contained in Chapter 7.

6. Approve the design and terms and conditions of the Illinois Solar for All Program contained

in Chapter 8.

The Illinois Power Agency respectfully files its Final Long-Term Renewable Resources Procurement

Plan, reflecting the Commission’s Order approving this Plan in Docket No. 17-0838 and Amendatory

Order entered thereafter, and modifications of any items related thereto, including the approval of

specific action items listed above, which the Commission has found “will reasonably and prudently

accomplish the requirements of Section 1-56 and subsection (c) of Section 1-75 of the Illinois Power

Agency Act” as required by Section 16-111.5(b)(5)(ii)(D) of the PUA.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2. Legislative/Regulatory Requirements of the Plan

This Chapter of the IPA’s Long-Term Renewable Resources Procurement Plan describes the

legislative and regulatory requirements applicable to the Long-Term Renewables Plan. A Legislative

Compliance Index, Appendix A, provides a complete cross-index of regulatory/legislative

requirements and the specific sections of this plan that address each requirement identified.

2.1. Renewable Energy Resource Procurement Prior to Public Act 99-0906

Public Act 99-0906 did not introduce a Renewable Portfolio Standard into Illinois law, and this Plan

is not the first Plan that the Agency has produced addressing renewable energy resources

procurement. Instead, the Agency has been producing procurement plans addressing renewable

energy resource procurements since 2008 and conducting renewable energy resource procurements

since 2009, and it is helpful to understand the background of the Illinois RPS’s original structure and

subsequent challenges in understanding the changes made through P.A. 99-0906 and the choices

made in this Plan.

Prior to P.A. 99-0906, the Illinois RPS effectively had three compliance mechanisms depending on a

customer’s supply source: eligible retail customer procurements, Alternative Retail Electric Supplier

(“ARES”) compliance, and hourly pricing customer compliance payments.

2.1.1. Original RPS—Eligible Retail Customer Load

Of the three former RPS compliance mechanisms, the compliance pathway that looked most like the

revised RPS enacted through P.A. 99-0906 was that which applied to “eligible retail customers,” or

those customers still taking default supply service from their electric utility (ComEd and Ameren

Illinois, and starting in 2015, MidAmerican). The Agency’s annual procurement plans (developed

primarily to propose procurements intended to meet the energy, capacity, and other standard

wholesale product requirements of eligible retail customers) also were required to include

procurement proposals intended to meet annually-climbing, percentage-based renewable energy

resource targets. As with block energy procured by the Agency, the applicable utility would be the

counterparty to any resulting contracts.

Sub-targets were also introduced to the overall procurement volumes: of the renewable energy

resources procured, 75% were required to come from wind, 6% from photovoltaics, and 1% from

distributed generation. Prior to June 1, 2011, resources from Illinois were expressly prioritized

(looking next to adjoining states if none was available, and then to elsewhere); after June 1, 2011, the

RPS required looking to Illinois and adjoining states together as a first priority, and then to elsewhere.

Funds available for use under RPS contracts were subject to a rate impact cap—a fixed bill impact

cap percentage (2.015% of 2007 rates), which was then applied to eligible retail customer load to

produce a renewable resources procurement budget.

This system may have worked more effectively had Illinois not experienced significant volatility in

the size of its eligible retail customer load. But it did, primarily for the following reason: upon the

establishment of the IPA in 2007, the General Assembly required that the electric utilities enter into

relatively long-term energy supply contracts (known as the “swap contracts”) to serve eligible retail

customer load. But in the years that followed, energy prices plummeted in the wholesale market, and

these agreements served to inflate the default supply rate well above that which could be offered by

a competitive supplier. From 2011 to 2013, massive waves of default supply customers switched to

Long-Term Renewable Resources Procurement Plan August 6, 2018

ARES, often through opt-out municipal aggregation (municipalities, whether individually or in a

coalition with others, leveraging economies of scale to negotiate favorable electric supply rates for

their residents, under authority of Section 1-92 of the Act), and eligible retail customer load

dwindled—with the annual available renewable resources budget declining correspondingly.

As part of its 2009 Annual Procurement Plan, the Agency proposed, and the Commission approved, a

procurement for “bundled” (energy and REC) long-term contracts from renewable energy suppliers.

These contracts were executed through a 2010 procurement event, with winning suppliers receiving

20 year bundled contracts to help meet future years’ targets in the RPS. While this helped facilitate

significant new renewable energy development in Illinois (especially in the form of wind projects), it

also provided a floor of annual payment obligations under the renewable resources budget for future

years.

As the annual renewable resources budget declined due to customer switching, not only was funding

unavailable to conduct additional renewable energy resource procurements, funding was no longer

available to meet the full commitments in the Long-Term Power Purchase Agreements (“LTPPAs”)

described above—resulting in two years in which ComEd’s LTPPAs were curtailed, or payment not

made through the renewable resources budget for the full expected output. And while some load has

switched back to default supply service in recent years, future budget uncertainty made entering into

any additional long-term agreements unworkable (especially if such contracts were junior to the

existing 2010 LTPPAs). As a result, outside of distributed generation (“DG”) procurements (which

were statutorily required to be at least 5 year contracts) the Agency’s annual procurement plans after

the 2010 LTPPAs proposed only the procurement of one-year contracts to meet each upcoming

delivery year’s renewable energy resource obligations—as the Agency simply did not and could not

have visibility into budgets available in future years.

2.1.2. Original RPS—Hourly Pricing Customers

For hourly pricing customers, Section 1-75(c)(5) of the Act required that the applicable electric utility

apply “the lesser of the maximum alternative compliance payment rate or the most recent estimated

alternative compliance payment rate for its service territory for the corresponding compliance

period” to hourly pricing customers. Those funds were held by the electric utility—and thus not

subject to the transfer, sweep, and appropriation risks facing special state funds—and subject to the

Agency’s annual procurement planning process.

In recent years, because contracts with distributed generation systems required contracts of at least

5 years, the IPA used these hourly Alternative Compliance Payments (“ACPs”) to serve as the funding

source for DG procurements, including its most recent DG procurements approved in the IPA’s 2017

Annual Procurement Plan.

2.1.3. Original RPS—ARES Compliance

Lastly, adopted in 2009, the ARES RPS compliance mechanism was more complex. Under Section 16-

115D of the Public Utilities Act, each ARES carried a percentage-based renewable portfolio standard

requirement similar to the Section 1-75(c) requirement as a percentage of its sales, but could satisfy

its obligation by making alternative compliance payments at a rate reflecting that rate paid by eligible

The Agency understands that any remaining ACP funds will be rolled into the available RPS budget for planning purposes, but as funds

are already collected, would not count against the rate impact cap.

Long-Term Renewable Resources Procurement Plan August 6, 2018

retail customers for no less than 50% of its obligation, and could self-procure RECs for the remainder

(with a requirement that any RECs be produced by facilities within the regional transmission

territories of PJM Interconnection, L.L.C. (“PJM”) and Midcontinent Independent System Operator,

Inc. (“MISO”), a relatively broad geographic footprint).

With ARES competing with one another for customers (and, for residential and small commercial

customers, also against default supply service), this paradigm created an incentive for an ARES to

comply at the lowest cost possible.

Thus, alternative compliance payments were generally made for

the minimum 50% amount (as the rate applicable to those ACPs reflected more expensive

procurements made by the Agency to serve other ends, such as through the 2010 LTPPAs), and the

self-procurement obligation was simply not structured in a way that was likely to lead to the

development of new renewable energy generation in Illinois.

Alternative compliance payments were deposited into the IPA-administered Renewable Energy

Resources Fund. Leveraging this fund for procurements carried significant challenges. As the IPA

explained in its Supplemental Photovoltaic Procurement Plan (released in 2014 and approved in

2015):

The procurement of renewable energy resources using the RERF is subject to a set of

unique constraints. First, unlike with the utility renewable resources budgets, the RERF

may only be used to procure renewable energy credits. While the term “renewable

energy resources” is defined in the Illinois Power Agency Act as RECs or both renewable

energy and associated RECs,

the Public Utilities Act makes clear that “alternative

compliance payments . . . shall be deposited in the Illinois Power Agency Renewable

Energy Resources Fund and used to procure renewable energy credits.”

Second, Section 1-56(c) of the IPA Act calls on the IPA to use the RERF to “procure

renewable energy resources at least once each year in conjunction with a procurement

event for electric utilities required to comply with Section 1-75 of the Act.”

Given the

IPA’s strategy of advance purchases to hedge load requirements and the unexpectedly

high levels of migration to alternative retail electric suppliers, corresponding energy

procurement events for electric utilities had not occurred since 2012.

This has left the

Agency without a procurement event “in conjunction with” which it could procure RECs

using the RERF.

Third, Section 1-56(d) of the IPA Act requires that “the price paid to procure renewable

energy credits” using the RERF “shall not exceed the winning bid prices paid for like

resources procured for electric utilities required to comply with Section 1-75 of this

Act.”

The lack of a conjoining procurement event has also left the Agency without a

To the extent that a customer sought a more environmentally friendly product, the ARES could always offer a “green” product including

100% of megawatt-hours matched with renewable energy credits, disconnected from any RPS compliance obligation.

The characterizations of state law in this excerpt refer to the requirements of the Illinois Power Agency Act prior to Public Act 99-0906.

20 ILCS 3855/1-10.

220 ILCS 5/16-115D(d)(4).

20 ILCS 3855/1-56(c).

After not having procured energy in 2013, the Agency did conduct energy procurements in April 2014 and September 2014.

20 ILCS 3855/1-56(d).

Long-Term Renewable Resources Procurement Plan August 6, 2018

statutorily envisioned price ceiling for “like resources,” further constraining

procurement using the RERF.

Fourth, the IPA Act clearly articulates a preference for longer-term contracts using the

RERF, presumably to provide a stable stream of revenue necessary to incent the

development of new resources. Section 1-56(c) of the IPA Act calls for the Agency to,

“whenever possible, enter into long-term contracts on an annual basis for a portion of

the incremental requirement for the given procurement year.”

Similarly, Section 1-

56(b) of the Act requires that any contracts for resources from distributed generation

(“DG”) must run a minimum of 5 years.

But due to unsettled and dynamic load

migration between utility and alternative supplier service, the Agency must approach

long-term contracting with prudence and care, as the RERF’s future balance is subject

to the whims of future customer switching.

In addition to the above risks, as a special state fund, the RERF could always be—and indeed was—

subject to the risks of borrowing and transfers. In 2010, $6.7 million was transferred out of the RERF,

although ultimately repaid back into it. In 2015, $98 million was permanently transferred from the

RERF to the state’s General Revenue Fund (“GRF”) to make up for insufficient Fiscal Year 2015

general revenues. And in August 2017, $150 million was temporarily transferred from the RERF to

the GRF (after $12 million was permanently transferred from the RERF to the state’s Public Utilities

Fund in June 2017), leaving the RERF’s balance below the level needed to cover existing contractual

obligations.

Given these risks, and given recent periods in which the state failed to enact a budget

(and thus the IPA lacked appropriation authority to make payments under contracts regardless of

actual funds available ), the State of Illinois could be an unattractive counterparty for a REC delivery

contract.

With the majority of Illinois electric load being served by ARES, this stood as no small problem—

while the RPS covered the vast majority of electricity delivered in the state, little was produced

through it. Significant amounts were being paid into the RERF each year to support renewable

energy development, yet the money was unable to be effectively leveraged for that purpose. While

ARES were procuring, in aggregate, millions of RECs each year, the incentive structure facing those

suppliers made it highly unlikely that those RECs would be sourced from anything other than the

lowest-priced seller: generally, facilities already built and financed, and potentially from projects in

vertically integrated states with costs already being fully recovered through rates. Hence, parties

seeking changes to this system often characterized it as a “broken RPS,”

and one that would require

a comprehensive legislative overhaul to be properly fixed.

20 ILCS 3855/1-56(c).

20 ILCS 3855/1-56(b).

For further discussion of the challenges associated with entering into long-term contracts using funding streams subject to load

migration changes, see filings made in Commission dockets approving the IPA’s 2013 and 2014 annual procurement plans (Docket Nos.

12-0544 and 13-0546).

The transfer of $150 million was pursuant to newly enacted Section 5h.5 of the State Finance Act (30 ILCS 105/5h.5 contained in Public

Act 100-0023) that authorizes transfers from special funds to the General Revenue Fund. However, that Section also contains a provision

that funds will be repaid within 24 months, as well as a provision to transfer funds back to special funds as needed to “satisfy outstanding

expenditure obligations on a timely basis.”

One notable success story from the RERF was the Supplemental Photovoltaic Procurement process, which resulted in the development

of roughly 30 MW of new distributed generation photovoltaics in Illinois through five-year REC contracts using the RERF. But even this

process required legislative changes to be effectuated, with the Agency’s authority to develop its Supplemental Photovoltaic Procurement

Plan coming from Public Act 98-0672 (signed into law in 2014), which created new Section 1-56(i) of the IPA Act.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.2. Public Act 99-0906

The Agency’s obligation to develop a Long-Term Renewable Resources Procurement Plan stems from

new requirements included in Public Act 99-0906, known colloquially as the “Future Energy Jobs

Act” and referred to herein as P.A. 99-0906. P.A. 99-0906, then known as Senate Bill 2814, was passed

by both the Illinois House and Senate during the last days of the 99th General Assembly on December

1, 2016, and was signed into law by Illinois Governor Bruce Rauner on December 7, 2016 with an

effective date of June 1, 2017.

In addition to the requirement that the Agency develop this Long-Term Renewable Resources

Procurement Plan and implement the programs and procurement discussed herein, P.A. 99-0906

also contained a number of other significant reforms to Illinois energy law. Among those reforms

include the establishment of a zero emission standard requiring the Agency to develop a Zero

Emission Standard Procurement Plan for the procurement of zero emission credits from zero

emission (i.e., nuclear) generating facilities;

revisions to the state’s energy efficiency portfolio

standard found in Article VIII of the Public Utilities Act (220 ILCS 5) including the adoption of

cumulative savings targets for energy efficiency programs and measures, and the elimination of the

statutory pathway by which incremental energy efficiency programs were included in the IPA’s

annual procurement plans;

additional financial assistance for low-income ratepayers;

bill

crediting for the energy production associated with subscriptions to community renewable

generation;

and a smart inverter rebate for behind-the-meter generating facilities.

More pertinently for purposes of this Plan, P.A. 99-0906 constituted a comprehensive overhaul of the

state’s renewable energy portfolio standard, elements of which can be found in Sections 1-56 and 1-

75(c) of the IPA Act and Section 16-115D of the PUA. Under the prior Illinois RPS, compliance and

planning depended on how a customer’s supply requirements were met, with three separate

compliance mechanisms for load service by default utility supply service, hourly-pricing customers,

and load served by Alternative Retail Electric Suppliers. As discussed further below, changes to the

Illinois RPS through P.A. 99-0906 will transition the state’s RPS to a streamlined, centralized planning

and procurement process, with both RPS targets and available budgets determined on the basis of an

electric utility’s load for all retail customers

with funding collected through a delivery services

charge. Outside of the Initial Forward Procurements (discussed further below) and two remaining

years

of ARES compliance requirements, the state’s approach to meeting its RPS targets will be

addressed through the development and continued refinement of this Long-Term Renewable

Resources Procurement Plan, with the Plan proposing programs and procurements necessary to

The Agency’s Zero Emission Standard Procurement Plan, developed pursuant to new Section 1-75(d-5) of the Act, was filed with the

Commission on July 31, 2017 and was approved by the Commission on September 11, 2017. See ICC Docket No. 17-0333.

See 220 ILCS 5/16-111.5B.

See 220 ILCS 5/8-103B(c) (requiring ComEd and Ameren Illinois to allocate $25 million and $8.5 million, respectively, annually for low-

income energy efficiency programs); 305 ILCS 20/18(c)(5), (5.5), (7) (authorizing Percentage of Income Payment Plan (“PIPP”) qualified

customers to receive credits under a utility’s Arrearage Reduction Program, and creating a new Supplemental Arrearage Reduction

Program for utility customers who cannot join the PIPP due to timing or funding constraints); 220 ILCS 5/16-108.10 (creating new $10

million annual funding stream over five years for low-income assistance programs for ComEd customers).

See 220 ILCS 5/16-107.5(l).

See 220 ILCS 5/16-107.6.

For MidAmerican, consistent with the Commission’s Order in Docket No. 15-0541, the IPA understands that Section 1-75(c)’s renewable

energy procurement targets should “only relate to that portion of the ‘total supply’ procured for MidAmerican’s jurisdictional eligible retail

customers,” and not all retail sales in its service territory.

This includes the 2017-2018 delivery year.

Long-Term Renewable Resources Procurement Plan August 6, 2018

meet the new requirements of Illinois law and satisfying the law’s new emphasis on both using the

RPS as a tool to facilitate the development of new generating facilities and expanding access to the

benefits of renewable energy across a broader cross-section of the state’s economy.

2.2.1. Legislative Findings

This new emphasis is reflected in the legislative findings associated with Public Act 99-0906.

Specifically, in enacting P.A. 99-0906, the General Assembly found that “[t]o ensure that the State and

its citizens, including low-income citizens, are equipped to enjoy the opportunities and benefits of

the smart grid and evolving clean energy marketplace,” P.A. 99-0906 should serve to “maximize the

impact” of the state’s RPS.

This includes direction that the State should “encourage . . . the adoption

and deployment of cost-effective distributed energy resource technologies and devices, such as

photovoltaics, which can encourage private investment in renewable energy resources, stimulate

economic growth, enhance the continued diversification of Illinois' energy resource mix, and protect

the Illinois environment; investment in renewable energy resources, including, but not limited to,

photovoltaic distributed generation, which should benefit all citizens of the State, including low-

income households.”

These themes are also found in the new legislative findings and declarations of the IPA Act enacted

through P.A. 99-0906. The IPA Act now finds and declares that” [d]eveloping new renewable energy

resources in Illinois, including brownfield solar projects and community solar projects, will help to

diversify Illinois electricity supply, avoid and reduce pollution, reduce peak demand, and enhance

public health and well-being of Illinois residents.”

Other findings also reinforce the value of

community solar in expanding access to renewable energy,

and the value of developing brownfield

site solar projects to “help return blighted or contaminated land to productive use while enhancing

public health and the well-being of Illinois residents.”

This approach to the state’s RPS appears to constitute a meaningful shift in the logic governing the

state’s renewable energy requirements: in past years, the state’s approach to its RPS could have been

understood as governed by the logic that statutory compliance should be achieved at “the lowest total

cost over time, taking into account any benefits of price stability,”

as this criteria governed the

Agency’s annual procurement plan, in which renewable energy procurements were proposed.

Through changes effected by P.A. 99-0906, it is apparent that the General Assembly also seeks

outcomes of specific types—more equitable and diverse access to the benefits of renewable energy,

and an emphasis on facilitating the development of new generation and maximizing its

environmental benefits—in achieving compliance with the technical requirements of the law.

Guidance found in the RPS law itself also reflects that approach. Specifically, Section 1-75(c)(1)(I) of

the IPA Act requires that the IPA “shall design its long-term renewable energy procurement plan to

maximize the State's interest in the health, safety, and welfare of its residents, including but not

P.A. 99-0906, § 1(a).

P.A. 99-0906, § 1(a)(1). In the legislative findings of P.A. 99-0906, the General Assembly also specifically found that “low-income

customers should be included within the State's efforts to expand the use of distributed generation technologies and devices.” P.A. 99-

0906, § 1(b).

20 ILCS 3855/1-5(6).

20 ILCS 3855/1-5(7).

20 ILCS 3855/1-5(8).

See 220 ILCS 5/16-111.5(d)(4).

Long-Term Renewable Resources Procurement Plan August 6, 2018

limited to minimizing sulfur dioxide, nitrogen oxide, particulate matter and other pollution that

adversely affects public health in this State, increasing fuel and resource diversity in this State,

enhancing the reliability and resiliency of the electricity distribution system in this State, meeting

goals to limit carbon dioxide emissions under federal or State law, and contributing to a cleaner and

healthier environment for the citizens of this State.” The Agency believes its Long-Term Renewable

Resources Procurement Plan reflects these aspirations.

2.2.2. Changes to the RPS

To better meet these objectives, several changes were made to the RPS, including the introduction of

new concepts and terms, and new prescriptive requirements. Several of these new concepts are

discussed below, discussed further in the subsections later in this chapter, and in more detail in the

Chapters that follow.

2.2.3. New Concepts and Terms

First, as discussed further below, P.A. 99-0906 demonstrates a shift in compliance focus from

compliance through the procurement of “renewable energy resources”—which may be either 1) a

renewable energy credit associated with a megawatt-hour (“MWh”) of generation, or 2) that REC plus

the associated generation—to compliance through the purchase and retirement of “renewable

energy credits.”

This makes intuitive sense; the purchase of energy is not addressed through this

plan, and the Agency’s planning for any energy purchases can only be for utility default supply

customers (the “eligible retail customers”) and is handled through the development of a separate

procurement plan (which focuses on a shorter timeframe than many of the REC contracts envisioned

in the revised RPS).

Second, P.A. 99-0906 introduced the concept of a “community renewable generation project” to the

Illinois law. As defined by the IPA Act,

this is an electric generating facility that

(1) is powered by wind, solar thermal energy, photovoltaic cells or panels, biodiesel, crops

and untreated and unadulterated organic waste biomass, tree waste, and hydropower that

does not involve new construction or significant expansion of hydropower dams;

(2) is interconnected at the distribution system level of an electric utility as defined in this

Section, a municipal utility as defined in this Section that owns or operates electric

distribution facilities, a public utility as defined in Section 3-105 of the Public Utilities Act, or

an electric cooperative, as defined in Section 3-119 of the Public Utilities Act;

(3) credits the value of electricity generated by the facility to the subscribers of the facility;

and

(4) is limited in nameplate capacity to less than or equal to 2,000 kilowatts.

A subscriber’s subscription to such a facility is an “interest” in that facility, “expressed in kilowatts”

and sized primarily to offset part or all of the subscriber's electricity usage, and may not constitute

more than 40% of the facility’s nameplate capacity.

Photovoltaic powered community renewable

See, e.g., 20 ILCS 3855/1-75(c)(1)(B), (C). The law appears to recognize that “renewable energy resources” may be used to satisfy the

RPS, but appears to focus this plan only on the procurement of “renewable energy credits.”

See 20 ILCS 3855/1-10.

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

generating projects are frequently described herein as “community solar” projects, and feature

distinct procurement targets in the Illinois RPS.

Third, P.A. 99-0906 requires the development of an “adjustable block program.” Used to facilitate

the development of new community solar and distributed photovoltaic generation, the Adjustable

Block Program features a “transparent schedule of prices and quantities” for RECs “to enable the

photovoltaic market to scale up and for renewable energy credit prices to adjust at a predictable rate

over time.”

This represents a significant shift in the state’s approach to procuring renewable

energy; past efforts to procure renewable energy resources focused on competitive sealed bidding,

pay-as-bid procurement events. Most bidder and supplier information, including resulting contract

prices and quantities for winning bidders, was kept confidential. While these competitive

procurement elements are required for certain activities under the Illinois RPS (including initial and

subsequent forward procurements), other compliance pathways now feature open application to a

program featuring price and quantity transparency.

Fourth, for both the Illinois Solar for All Program and the Adjustable Block Program, P.A. 99-0906

contemplates “prepayment” for a stream of RECs to be delivered over the course of a 15-year

contract. This likewise constitutes a departure from prior activities under the Illinois RPS, all of

which featured payment for RECs only upon delivery and invoice. The specific prepayment schedules

applicable to project types under the Adjustable Block Program are discussed further in Section 2.5

below.

This, of course, is not a comprehensive list; many other new terms and concepts were introduced

through P.A. 99-0906, and the above list is not even a majority of the items. This non-exhaustive list

is instead intended only to provide background for the discussions that follow.

2.2.4. Long-Term Renewable Resources Procurement Plan

As referenced above, P.A. 99-0906 requires the IPA to develop a Long-Term Renewable Resources

Procurement Plan. This is a departure from past practice under the Illinois RPS; previously, Illinois

law required that renewable energy resource procurements used to meet the requirements of

Section 1-75(c) of the IPA Act be proposed through the Agency’s annual procurement plan. Those

plans were developed, published, filed with the ICC, and approved by the ICC on an annual basis (and

still are, with a more limited focus) with a planning horizon of the five upcoming delivery years. By

contrast, the Long-Term Renewable Resources Procurement Plan is initially prepared once, revised

at least every two years, and “shall include procurement programs and competitive procurement

events necessary to meet the goals”

set forth in Section 1-75(c) of the IPA Act—which contains

annual targets out until 2030. As explained in the Chapters that follow, as budget availability and

possible program successes or failures makes planning far into the future unwise or unworkable, in

some cases the Agency proposes that certain decisions be deferred until future years’ revisions of the

Long-Term Renewable Resources Procurement Plan.

2.2.5. Plan Requirements

While Illinois law lacks any single list of required elements for the Plan, both Section 16-111.5(b) of

the PUA and Sections 1-56(b) and 1-75(c) of the IPA Act do contain discrete requirements.

20 ILCS 3855/1-75(c)(1)(K).

20 ILCS 3855/1-75(c)(1)(A).

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.2.5.1. Section 16-111.5(b) Requirements

Section 16-111.5(b)(5) of the PUA provides that “[t]he Agency shall prepare a long-term renewable

resources procurement plan for the procurement of renewable energy credits under Sections 1-56

and 1-75 of the Illinois Power Agency Act for delivery beginning in the 2017 delivery year,”

with

“delivery year” defined as “the consecutive 12-month period beginning June 1 of a given year and

ending May 31 of the following year”

—i.e., the first delivery year for which the Plan is developed

would be 2017-2018. As a consequence, the IPA believed that although its Plan was to be approved

by the Commission in early April of 2018, this Plan should propose procurements necessary to meet

“2017 delivery year” goals, as well as targets for future delivery years. However, as discussed further

in Chapter 5, the Commission’s Order in Docket No. 17-0838 directed that no procurements be held

to meet Section 1-75(c)(1)(B) of the Act’s 2017 delivery year renewable energy credit procurement

goals.

The PUA contains three discrete requirements for what the Plan must contain:

First, the Plan must “[i]dentify the procurement programs and competitive procurement events

consistent with the applicable requirements of the Illinois Power Agency Act and shall be designed

to achieve the goals set forth in subsection (c) of Section 1-75 of that Act.”

While the term

“competitive procurement event” is not specifically defined in the IPA Act or the PUA, the IPA

understands the term “competitive procurement event” to be an element of, if not commensurate

with, a “competitive procurement process” or “competitive bid process,” which the PUA describes

subject to the requirements of Section 16-111.5(e)-(i) where applicable (i.e., conducted in a manner

consistent with the Agency’s prior competitive procurements).

The term “program” presumably

refers to the programs specifically referenced in Section 1-56(b) and Sections 1-75(c)(1)(K) and (N)

of the IPA Act.

In this Plan, the specific procurement programs and procurement events designed to meet the goals

of Section 1-75(c) can be found in Chapters 5 through 8.

Second, the Plan must “[i]nclude a schedule for procurements for renewable energy credits from

utility-scale wind projects, utility-scale solar projects, and brownfield site photovoltaic projects

consistent with subparagraph (G) of paragraph (1) of subsection (c) of Section 1-75 of the Illinois

Power Agency Act.”

As explained further below, this subparagraph concerns the quantitative

procurement targets for RECs from new solar and wind facilities found in Section 1-75(c), and the

schedule for those procurements can be found in Chapter 5.

Third, the Plan must “[i]dentify the process whereby the Agency will submit to the Commission for

review and approval the proposed contracts to implement the programs required by such plan.”

the past, under Section 16-111.5(e), the IPA’s procurement administrator developed standard

contract forms in consultation with other parties. A Commission decision was required only if parties

220 ILCS 5/16-111.5(b)(5).

20 ILCS 3855/1-10.

See Docket No. 17-0838, Final Order dated April 3, 2018 at 42.

220 ILCS 5/16-111.5(b)(5)(ii)(B)(aa).

220 ILCS 5/16-111.5(b)(5)(iii).

220 ILCS 5/16-111.5(b)(5)(ii)(B)(bb).

220 ILCS 5/16-111.5(b)(5)(ii)(B)(cc).

Long-Term Renewable Resources Procurement Plan August 6, 2018

could not agree on the contract form, and the standard form contract was required to be executed by

winning bidders after a competitive procurement result (the results of which were subject to

Commission approval). Under this revised model for use in implementing programs, it appears that

both REC delivery contracts and the IPA’s program administrator contracts

must first be approved

by the Commission prior to execution.

The IPA’s proposal for the process for submitting contracts

to the Commission for review and approval can be found in Chapters 6 and 8 of the Plan. As this

requirement concerns only “the programs required by such plan,” this requirement does not impact

the contract development process for the competitive procurements described in Chapter 5.

2.2.5.2. Section 1-75(c) Requirements

Section 1-75(c) of the IPA Act contains the most robust set of requirements for the long-term plan;

those include the following:

First, the Plan must “include the goals for procurement of renewable energy credits to meet at least

the following overall percentages: 13% by the 2017 delivery year; increasing by at least 1.5% each

delivery year thereafter to at least 25% by the 2025 delivery year; and continuing at no less than

25% for each delivery year thereafter.”

As explained further below, these percentages are

described as a portion of eligible retail sales, which currently includes some sales by alternative retail

electric suppliers while transitioning to all retail sales within two years. The law also contains a

requirement that “in the event of a conflict between these goals and the new wind and new

photovoltaic procurement requirements,” the long-term plan shall prioritize the new wind and

photovoltaic requirements.

The IPA does not anticipate any such conflict prior to its next revision

of this Plan, and has designed its Plan in a manner that reduces the likelihood of any such conflict

occurring.

Further discussion of these goals can be found in Chapter 3.

Second, the Plan “shall include the procurement of renewable energy credits in amounts equal to at

least” the new wind and new photovoltaics targets found in Section 1-75(c)(1)(C) of the IPA Act.

These targets are 2 million RECs from “new wind projects” by the 2020 delivery year, 3 million by

2025, and 4 million by 2030. “New photovoltaic projects” feature the same overall procurement

targets, while also containing requirements that at least 50% of new PV RECs be procured through

the Adjustable Block Program (and thus from distributed generation or community solar projects),

at least 40% from utility-scale (above 2 MW) photovoltaic projects, and at least 2% from brownfield

site photovoltaic projects that are not community renewable generation projects. Further discussion

of these quantitative new build targets can be found in Chapter 5.

For the Agency’s third-party program administrators, Section 16-111.5(b)(5)(iii) provides that “[t]hird parties shall not begin

implementing any programs or receive any payment under this Section until the Commission has approved the contract or contracts under

the process authorized by the Commission in item (D) of subparagraph (ii) of paragraph (5) of this subsection (b) and the third party and

the Agency or utility, as applicable, have executed the contract.”

In its Order approving the Plan, the Commission held that under Section 16-111.5(b)(5)(iii)’s requirements, “it must review the

individual [REC delivery] contracts between the utilities and Approved Vendors and “not just a master contract, although “a master

contract that is updated by a confirmation agreement providing the batch details regarding seller, buyer, price, term, project location, etc.

is a reasonable approach.” Docket No. 17-0838, Final Order dated April 3, 2018 at 116.

20 ILCS 3855/1-75(c)(1)(B).

Id.

Indeed, the Commission’s Order approving the Plan determined that any procurements originally proposed to meet annual percentage-

based renewable energy credit procurement goals should be cancelled to avoid any potential conflicts with meeting “statutory long-term

new build requirements,” and this Plan has been revised consistent with that determination. Docket No. 17-0838, Final Order dated April

3, 2018 at 42.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Third, the law requires that, to the extent that annual RPS spending budgets

for each utility become

a binding constraint, the Plan “shall prioritize compliance with the requirements of this subsection

features the following priority ranking:

(i) renewable energy credits under existing contractual obligations;

(i-5) funding for the Illinois Solar for All Program as described in Section 1-75(c)(1)(O);

(ii) renewable energy credits necessary to comply with the new wind and new photovoltaic

procurement requirements in Section 1-75(c)(1)(C); and

(iii) renewable energy credits necessary to meet the remaining requirements of Section 1-

75(c) (including the percentage-based delivery year goals in Section 1-75(c)(1)(B)).

The IPA is committed to ensuring that this priority ranking is reflected in this Plan and in any future

revisions to the Plan and has assembled its Plan cognizant of and sensitive to this prioritization.

Fourth, the law requires that renewable energy credits procured under the Initial Forward

Procurements shall be included in the Agency's long-term plan and shall apply to Section 1-75(c)’s

goals.

The results of the Initial Forward Procurements, conducted in three events from August 2017

through April 2018, are reflected in the Agency’s target procurement quantities found later in

Chapter 3 of this Plan.

Fifth, the Plan must set forth the process by which adjustments may be made when the cumulative

amount of renewable energy credits projected to be delivered from all new wind projects in a given

delivery year exceeds the cumulative amount of renewable energy credits projected to be delivered

from all new photovoltaic projects in that delivery year by 200,000 or more renewable energy

credits.

This provision is presumably intended to provide some balancing between wind and solar

quantities, and the Agency’s proposal for how it would seek to procure RECs from additional PV

projects to “rebalance” can be found in Chapter 5 of the Plan.

Sixth, the Plan must describe in detail how each “public interest factor” enumerated in Section 1-

75(c)(1)(I) “shall be considered and weighted for facilities located in states adjacent to Illinois” in

determining whether those facilities’ RECs may be considered “eligible” to satisfy the Illinois RPS.

This limitation of eligible RECs to Illinois and adjacent states constitutes a departure from past

practice under the RPS, under which competitive procurements first looked to RECs from Illinois and

adjoining states and then to “elsewhere” in attempting to satisfy targets, and may serve to

significantly limit the pool of renewable energy credits eligible to meet the RPS. The Agency’s

proposal for how to apply these criteria can be found in Chapter 4.

The statutory cost cap and resulting budgets for RPS spending, directed in Section 1-75(c)(1)(E) of the Act, are discussed in more detail

in Section 2.4.4 and Chapter 3 of this Plan.

This requirement is discussed further in the subsection below.

20 ILCS 3855/1-75(c)(1)(F).

20 ILCS 3855/1-75(c)(1)(G)(i).

20 ILCS 3855/1-75(c)(1)(G)(iv).

In its Order approving the Plan, the Commission clarified that this balancing requirement becomes effective as of June 1, 2021, as

originally proposed in the IPA’s filed Plan (and not earlier). See Docket No. 17-0838, Final Order dated April 3, 2018 at 47-48.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Seventh, the Plan shall provide that renewable energy credits previously allocated from generating

systems previously understood not to be rate-based for a state-regulated entity, but which end up

being so rate-based, shall be made up through a procurement conducted in the Agency’s next

procurement event. This connects back to a new requirement in the law that “renewable energy

credits shall not be eligible to be counted toward” RPS targets “if they are sourced from a generating

unit whose costs were being recovered through rates regulated by this State or any other state or

states on or after January 1, 2017.”

It appears that this could easily be accomplished through an

adjustment in procurement volumes for subsequent procurement events, and the IPA commits

through this Plan to make any such adjustments (not described herein, as they are as yet unknown

and unknowable).

Eighth, the Plan “shall include an Adjustable Block program for the procurement of renewable energy

credits from new photovoltaic projects that are distributed renewable energy generation devices or

new photovoltaic community renewable generation projects.”

A description of the Agency’s

proposed Adjustable Block Program can be found in Chapter 6, and it includes the Commission-

approved approach to the allocation of the remaining 25% of RECs to be procured through that

program not statutorily allocated to specific DG or community solar project types.

Ninth, and last among the requirements found in Section 1-75(c), the Plan “shall include a community

renewable generation program,” with a requirement that the Agency “establish the terms, conditions,

and program requirements for community renewable generation projects with a goal to expand

renewable energy generating facility access to a broader group of energy consumers, to ensure

robust participation opportunities for residential and small commercial customers and those who

cannot install renewable energy on their own properties” and that any subscriptions to such projects

“be portable and transferable.”

Presumably, although community solar photovoltaic is a subset of

“community renewable generation projects”—which can include generating technologies such as

wind, solar thermal, biodiesel, biomass, tree waste, and hydropower—this means that only

establishing an Adjustable Block Program featuring a community solar photovoltaic component

would not satisfy this statutory requirement, and a distinct non-PV community renewable generation

program must also be established.

The Agency’s proposed community renewable generation

program, modeled on but distinct from its Adjustable Block Program, can be found in Chapter 7.

2.2.5.3. Illinois Solar for All Requirements

As discussed further below, in recognition of a finding that “the State should encourage . . . investment

in renewable energy resources, including, but not limited to, photovoltaic distributed generation,

which should benefit all citizens of the State, including low-income households,” revisions to Section

1-56 of the IPA Act provide for the creation of “the Illinois Solar for All Program, which shall include

incentives for low-income distributed generation and community solar projects [. . .] to bring

20 ILCS 3855/1-75(c)(1)(J).

20 ILCS 3855/1-75(c)(1)(K).

20 ILCS 3855/1-75(c)(1)(N).

More specifically, Section 1-75(c)(1)(N) provides that “[t]he Agency shall purchase renewable energy credits from subscribed shares of

photovoltaic community renewable generation projects through the Adjustable Block program described in subparagraph (K) of this

paragraph (1) or through the Illinois Solar for All Program described in Section 1-56 of this Act” (emphasis added). (As the IPA cannot be

the counterparty to REC delivery contracts under Section 1-75(c), the Agency understands “purchase” effectively to mean “procure” in this

context.)

Long-Term Renewable Resources Procurement Plan August 6, 2018

photovoltaics to low-income communities in this State.”

In so doing, the Agency must “include a

description of its proposed approach to the design, administration, implementation and evaluation

of the Illinois Solar for All Program” in the Plan and “propose the Illinois Solar for All Program terms,

conditions, and requirements,”

including REC prices (which may be through a formula). The

description of the Agency’s proposed Illinois Solar for All Program can be found in Chapter 8.

In addition to describing what the Illinois Solar for All Program is and how it will be administered,

the law also requires that should the IPA hire a third-party program administrator (or

administrators) to assist with the administration of the Illinois Solar for All Program, the Plan shall

identify at what interval it must report to the Agency and the Commission (provided that interval is

at least quarterly). The Plan shall also provide for an independent evaluation of the program, and

must contain a definition of the term “environmental justice” community. These issues are likewise

addressed in Chapter 8.

The Plan must also ensure that the Illinois Solar for All program is funded. Specifically, Section 1-

75(c)(1)(O) of the Act provides that the Plan “shall allocate 5% of the funds available under the plan

for the applicable delivery year, or $10,000,000 per delivery year, whichever is greater, to fund the

programs.” This raises the question of what is meant by the phrase “funds available under the

plan”—only those utility-collected funds available through Section 1-75(c), or all funds inclusive of

any funds available from the Renewable Energy Resources Fund balance? In the former reading, the

Agency would retain discretion to allocate separately funds from the RERF, but in the latter reading,

the Agency could not do so. The IPA believes this latter model could not have been the drafters’

intent; for instance, in a year in which the RERF balance remained high but the utility-collected

budget under Section 1-75(c)(1)(E) was largely committed (i.e., unavailable), the Agency would be

constrained to using only $10 million to support Illinois Solar for All, despite having significantly

more money available and regardless of whatever success the Solar for All programs had been

experiencing. Thus, the IPA believes that the intention of this language in Section 1-75(c)(1)(O) is

that 5% of utility-collected funds, or $10 million, whichever is greater, would be made available

annually for Illinois Solar for All—in addition to whatever may be spent in a given year through the

RERF.

Notwithstanding the language discussed in the paragraph above, the law also requires that for each

of three particular delivery years—“the delivery years beginning June 1, 2017, June 1, 2021, and June

1, 2025”—the Plan “shall allocate 10% of the funds available under the plan for the applicable

delivery year, or $20,000,000 per delivery year, whichever is greater,” and $10,000,000 of such funds

shall be used by ComEd to implement its Commission-approved workforce development plan filed

under Section 16-108.12 of the PUA.

If additional funding for Illinois Solar for All programs is

available under Section 16-108(k)

of the PUA, then the Plan “shall provide for the Agency to procure

contracts in an amount that does not exceed the funding,” with the applicable utility or utilities as the

counterparty to such contracts.

20 ILCS 3855/1-56(b)(2).

20 ILCS 3855/1-56(b)(4).

20 ILCS 3855/1-75(c)(1)(O). See also Docket No. 17-0332, in which ComEd’s Workforce Development Implementation Plan was

approved.

As discussed in Sections 2.6.1 and 8.4.3, up to one-half of excess collections by utilities for RPS purposes in each of the 2017-2018, 2018-

2019, and 2019-2020 delivery years may be used for the Solar for All Program in the event of a “funding shortfall.” 220 ILCS 5/16-108(k).

220 ILCS 5/16-108(k).

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.2.6. Items Not Included in Long-Term Renewable Resource Procurement

Plan

While the Plan sets forth the IPA’s proposed approach to meeting the state’s renewable energy

resource procurement targets, it is not the sole mechanism for facilitating the development of

renewable energy in Illinois or providing value for the environmental attributes of electricity

generation. Thus, many items that may be of interest to readers of this Plan are not directly

addressed in this Plan, and below is a non-exhaustive list of those items not addressed in the Plan:

• Contracts or tariffs for the sale of energy from renewable energy generating facilities,

whether through bilateral contracts, wholesale market sales, community renewable

generation bill crediting, or net metering;

• Renewable energy resource procurement obligations of alternative retail electric suppliers

under Section 16-115D of the PUA;

• The procurement of zero emission credits from zero emission facilities (i.e., nuclear

generating facilities) under Section 1-75(d-5) of the IPA Act;

• Workforce development plans produced by a utility pursuant to Section 16-108.12 of the

PUA;

• Renewable energy generating device installer certification requirements developed pursuant

to Section 16-128A of the PUA;

• Renewable energy provider supplier diversity goals under Section 5-117(b) of the PUA;

• Tariff filings or modifications for the collection of funds used by utilities to pay for renewable

energy credit and zero emission credit delivery contracts;

• Specific renewable energy generating projects, proposals, or sites;

• “Green” or “clean energy” retail supply products marketed and sold by alternative retail

electric suppliers.

These issues may indeed be of significant interest to the Agency, and in some cases, their presence or

resolution informed decisions made in this Plan. However, as they do not fall within the scope and

jurisdiction of what the IPA may propose and the Commission may approve as part of this Plan,

specific proposals related to the above-listed topics are not made within this document.

2.2.7. Plan Development and Approval

The Plan development and approval largely mirrors the processes applicable to the Agency’s annual

procurement plan and zero emission standard procurement plan, only with longer timelines.

The process began with the Agency developing an initial draft of this Plan, while Section 1-

75(c)(1)(A) of the IPA Act provides that the “initial,” or draft, Plan “be released for comment no later

than 160 days after” the effective date of P.A. 99-0906 (i.e., June 1, 2017). Section 16-

111.5(b)(5)(ii)(B) of the PUA provides that the Agency “shall publish for comment the initial long-

term renewable resources procurement plan no later than 120 days after the effective date.” The

Agency chose to comply with the tighter of the two requirements, ensuring compliance under either

approach, and thus released its draft Plan on September 29. 2017. As with the IPA’s annual

procurement plan prepared pursuant to Section 16-111.5(d)(2) of the PUA, copies of the draft Plan

“and all subsequent revisions” were posted to the IPA and ICC websites and provided to each affected

electric utility.

Long-Term Renewable Resources Procurement Plan August 6, 2018

The law then provided parties with 45 days to provide comment on the draft plan. Comments were

made publicly available through being posted on the IPA’s and ICC’s websites, and such comments

were required to be “specific, supported by data or other detailed analyses, and, if objecting to all or

a portion of the procurement plan, accompanied by specific alternative wording or proposals.”

During the comment period, the Agency held public hearings for receiving public comment on the

Plan in the service territory of each affected utility. The Agency’s hearings occurred on October 26th

of 2017 in Springfield (Ameren Illinois), October 31st in Chicago (ComEd), and November 3rd in

Moline (MidAmerican).

With a draft Plan release date of September 29, 2017, comments were due on the draft Plan by

November 13, 2017. 49 comments were received from: 3Degrees, Ameren Illinois, APX, Carbon

Solutions Group, Center for Resource Solutions, City of Springfield, Clean Energy Design Group,

Coalition for Community Solar Access, ComEd, Direct Energy, Downstate Caucus, Elevate Energy,

Environmental Defense Fund/Citizens Utility Board, Environmental Law and Policy Center, Exelon

Generation, ForeFront Power, GRID Alternatives, GRID Alternatives/Elevate Energy, IGS Solar/SGC

Power, Illinois Attorney General, Illinois Commerce Commission Staff, Illinois Municipal Electric

Agency, Illinois National Association for the Advancement of Colored People, Illinois People's Action,

Illinois Solar Energy Association, Illinois Solar for All Working Group, Innovative Power Systems,

Interstate Renewable Energy Council, Joint Solar Parties, Kimberly Wasserman/Veronica Kyle/Keith

Harley, Landlease Energy Development, Little Village Environmental Justice Organization, Marseilles

Land & Water, Metropolitan Mayors Caucus, Natural Resources Defense Council, Northern Illinois

Hydropower, Renewables Suppliers, Sierra Club, SolAmerica Energy, Solar Energy Industries

Association, SRECTrade, Sunvest Solar, Syncarpha Capital, Tick Tock Energy, Trajectory Energy

Partners, Village of Oak Park, Vote Solar, Will County, and Wind on the Wires.

After the conclusion of the comment period, “the Agency may revise the long-term renewable

resources procurement plan based on the comments received” and, within 21 days after the

conclusion of that period, “shall file the plan with the Commission for review and approval.”

This

left the Agency with a filing deadline of December 4, 2017, on which date the Agency filed its Plan for

approval reflecting revisions made by the Agency in response to, and in consideration of, the

comments received.

The Illinois Commerce Commission’s Plan approval proceeding took the form of a contested,

docketed proceeding governed by the Commission’s Rules of Practice (Title 83, Part 200 of the Illinois

Administrative Code). Similar to the requirements applicable to the IPA’s annual procurement plans,

within 14 days after the filing of the Plan, “any person objecting to the plan” was required to “file an

objection with the Commission.”

With a December 4, 2017 filing date, “objections” were due by

December 18, 2017. Objections were filed by the Joint Solar Parties, Environmental Defense Fund,

ICC Staff, Renewables Suppliers, Wind on the Wires, Bosch Building Grid Technologies, Coalition for

Community Solar Access, Carbon Solutions Group, Natural Resources Defense Council, Ameren

Illinois Company, Commonwealth Edison Company, Elevate Energy and GRID Alternatives, Inc.

Id.

For additional discussion of the Agency’s review of comments received, and the resulting positions modified and explanation of why

certain positions were not modified, please refer to the Petition accompanying the initial filing of the Plan for Commission approval in

Docket No. 17-0838. A redline copy showing changes in the filed Plan against the Draft Plan published on September 29, 2017 can also be

found on the Agency’s website (www.illinois.gov/ipa

220 ILCS 5/16-111.5(b)(5)(ii)(C).

Long-Term Renewable Resources Procurement Plan August 6, 2018

(jointly), Environmental Law and Policy Center, and Little Village Environmental Justice

Organization.

Per the schedule set by the Administrative Law Judge, Responses to Objections were due by January

11, 2018, while Replies to Responses were due by January 25, 2018. The Administrative Law Judge

issued a Proposed Order on February 26, 2018. Briefs on Exception were due by March 7, 2018, and

Briefs in Reply to Exceptions were due by March 14, 2018.

The law requires that the Commission enter its order confirming or modifying the initial Long-Term

Renewable Resources Procurement Plan or any subsequent revisions within 120 days after the filing

of the plan by the Illinois Power Agency.

Again, with a December 4, 2017 filing date, this left the

Commission with an April 3, 2018 deadline for issuing an Order confirming or modifying the plan.

The Commission issued its Order approving the plan with certain specified modifications on April 3,

2018.

The Commission’s standard of review was to approve the Plan if it determined “that the plan

will reasonably and prudently accomplish the requirements of Section 1-56 and subsection (c) of

Section 1-75 of the Illinois Power Agency Act,”

and in paragraph (4) of the Order’s Findings and

Ordering Paragraphs, the Commission indeed determined that “the initial long-term renewable

resources procurement plan, as modified herein, will reasonably and prudently accomplish the

requirements of Section 1-56 and subsection (c) of Section 1-75 of the Illinois Power Agency Act.”

2.2.8. Plan Updates

While the Agency’s long-term renewable resources procurement plan features a “long-term” focus,

many elements informing future program and procurement decisions—technological progress,

marketplace changes, the success or failure of work undertaken under a prior-approved approach—

are simply unknowable at this time. As a result, updates to the Plan will be crucial in ensuring that

goals of the RPS are efficiently met.

The PUA provides that the Agency “shall review, and may revise, the plan at least every 2 years” after

the initial Plan, and “shall review and propose any revisions to the long-term renewable energy

resources procurement plan in conjunction with the Agency's other planning and approval

processes”

conducted under Section 16-111.5 of the PUA—specifically, the annual procurement

plan development and approval process referenced in Section 16-111.5(d).

The Agency develops

its annual plan in July and August of each year, publishes that plan for comment by August 15,

receives comments on that plan over 30 days, and then files that plan with the Commission 14 days

later. The Agency tentatively plans for its first revisions to its Long-Term Renewable Resources

Procurement Plan to be proposed in 2019, as part of the development and approval process of the

IPA’s 2020 annual procurement plan, which will take effect for calendar year 2020.

Id.

An Amendatory Order was also issued by the Commission on May 2, 2018, addressing only the narrow issue of REC pricing for

implementation of the Commission’s community solar project co-location determination.

220 ILCS 5/16-111.5(b)(5)(ii)(D).

Docket No. 17-0838, Final Order dated April 3, 2018 at 180.

220 ILCS 5/16-111.5(b)(5)(ii)(B).

Section 1-75(c)(1)(A) of the Act contains a similar provision, stating that “[t]he Agency shall review, and may revise on an expedited

basis, the long-term renewable resources procurement plan at least every 2 years, which shall be conducted in conjunction with the

procurement plan under Section 16-111.5 of the Public Utilities Act to the extent practicable to minimize administrative expense.”

Long-Term Renewable Resources Procurement Plan August 6, 2018

Lastly, “the Commission shall hold an informal hearing for the purpose of receiving comments on the

prior year's procurement process and any recommendations for change” on or before July 1 of each

year.

In satisfying a similar requirement applicable to the annual procurement plan, this has taken

the form of written recommendations, technical or substantive, being submitted to the Commission

and posted publicly on the Commission’s website.

2.3. The RPS and Percentage-Based Goals of the RPS

The Illinois RPS shares similarity with other state RPSs which require that a certain percentage of

electricity sales be met with a climbing percentage of renewable energy or renewable energy credit

procurement. For Illinois, this total is 25% by 2025: “13% by the 2017 delivery year; increasing by

at least 1.5% each delivery year thereafter to at least 25% by the 2025 delivery year; and continuing

at no less than 25% for each delivery year thereafter.”

2.3.1. Load Applicable to RPS Goals

At first blush, the Agency’s 25% by 2025 goal appears to mirror the Section 1-75(c)(1) targets found

in Illinois law prior to P.A. 99-0906. However, prior to P.A. 99-0906, only “eligible retail customer”

load—meaning load associated with utility default supply customers, and not customers taking

supply through alternative retail electric suppliers or through hourly pricing—was subject to this

requirement. In recent years, only 30-50% of potentially eligible retail customer load actually

received default supply service, while competitive class customers (including all medium to large

commercial and industrial customers—who represent approximately half of total load) had no

default supply option. Stated differently, while the RPS featured a “25% by 2025” requirement prior

to P.A. 99-0906, the vast majority of retail customer load in Illinois was not covered by Section 1-

75(c)(1)’s “25% by 2025” RPS goal.

Over two delivery years (beginning with the 2017 delivery year), P.A. 99-0906 transitions those goals

applicable only to “eligible retail customer” load to goals applicable to all “all load for retail

customers.” For the 2017 delivery year, those goals are “equal to at least 13% of each utility's load

for eligible retail customers and 13% of the applicable portion of each utility's load for retail

customers who are not eligible retail customers,” with the applicable portion at 50%. For the 2018

delivery year, the percentage goal increases to 14.5% while the applicable portion increases to 75%.

For the 2019 delivery year, the percentage goal increases to 16% and applies to all retail customer

load, including load associated with ARES customers.

One exception exists to this load calculation transition, however: under Section 1-75(c)(1)(H), if an

ARES owned one or more renewable generating facilities that were not wind or photovoltaic as of

December 31, 2015, then that ARES may elect “to supply its retail customers with renewable energy

credits from the facility or facilities” so long as those facilities continued to be owned by that ARES.

220 ILCS 5/16-111.5(b)(5)(vi). Information about the Commission’s informal hearing can be found here:

https://www.icc.illinois.gov/downloads/public/procurement/Public%20Notice%20of%20Informal%20Hearing%20Issued%20July%2

012%202018.pdf.

20 ILCS 3855/1-75(c)(1)(B).

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

This self-procurement from ARES-owned facilities by the ARES thus serves to reduce the statutory

renewable energy resource obligation by the amount of RECs self-procured.

Further discussion of how these percentage-based multipliers apply to retail customer load to create

actual REC procurement targets can be found in Chapter 3. As further discussed within that Chapter,

of the renewable energy credits procured under Section 1-75(c), “at least 75% shall come from wind

and photovoltaic projects.”

Notably, these requirements only apply to load served by Illinois’ major electric distribution utilities:

ComEd, Ameren Illinois, and that portion of MidAmerican load for which the IPA conducts

procurements. The Illinois RPS goals do not apply to load served by municipal electric utilities, rural

electric cooperatives, or Mt. Carmel Public Utility, and those entities do not have renewable energy

procurement obligations under Illinois law.

2.3.2. Eligible Projects for the Illinois RPS

Not all renewable energy generating facilities are eligible to sell RECs into the Illinois RPS. Changes

made through P.A. 99-0906 have significantly narrowed the universe of facilities capable of

generating RECs which qualify for the RPS, and specific criteria applicable to RECs or facilities

producing those RECs are discussed further below.

2.3.2.1. Eligible Generating Technologies

The Illinois Power Agency Act’s definition of “renewable energy resource” sets forth the generating

technologies capable of producing RECs eligible for the Illinois RPS. As set forth in Section 1-10 of

the IPA Act, the underlying energy must be generated “from wind, solar thermal energy, photovoltaic

cells and panels, biodiesel, anaerobic digestion, crops and untreated and unadulterated organic waste

biomass, tree waste, and hydropower that does not involve new construction or significant expansion

of hydropower dams,” as well as “landfill gas produced in the State.” While this language largely

mirrors the definition of “renewable energy resource” prior to P.A. 99-0906, that Act deleted the

inclusion of “other alternative sources of environmentally preferable energy” from the former

definition, thus clarifying that only those generating technologies delineated in the definition may

qualify.

The Act also sets forth certain generating technologies categorically incapable of producing RECs

eligible for the Illinois RPS, which include “the incineration or burning of tires, garbage, general

household, institutional, and commercial waste, industrial lunchroom or office waste, landscape

waste other than tree waste, railroad crossties, utility poles, or construction or demolition debris,

other than untreated and unadulterated waste wood.”

Please note that these requirements are merely threshold requirements for the Illinois RPS; specific

programs, such as the Adjustable Block Program, or procurement targets may carry additional

limitations.

For the 2018-2019 delivery year, see the following report on the RECs supplied under this provision:

https://www2.illinois.gov/sites/ipa/Documents/2018ProcurementPlan/ARES-REC-Report-2018-2019-delivery-year-20180516.pdf

The 2018-2019 RPS goals described in Chapter 3 account for these RECs.

20 ILCS 3855/1-75(c)(1)(C).

20 ILCS 3855/1-10.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.3.2.2. Eligible Projects—Locational

P.A. 99-0906 also introduced new locational and public interest benefit requirements for generating

facilities seeking to sell RECs into the Illinois RPS. From the introduction of the Illinois RPS in 2007

to June 1, 2011, Section 1-75(c) required the Agency to first look to renewable energy resources from

Illinois, then to resources from states adjoining Illinois, and then to elsewhere. After June 1, 2011,

the IPA first looked to resources from Illinois and adjoining states, and next to “elsewhere.”

Through the new Section 1-75(c)(1)(I), P.A. 99-0906 shifts the focus of the Illinois RPS’s approach to

project location in both focus and approach. A generating facility’s RECs are no longer prioritized

based on location; instead, the facility either qualifies for the Illinois RPS, or it does not.

Section 1-75(c)(1)(I) provides that the Plan must be designed “to maximize the State's interest in the

health, safety, and welfare of its residents, including but not limited to minimizing sulfur dioxide,

nitrogen oxide, particulate matter and other pollution that adversely affects public health in this

State, increasing fuel and resource diversity in this State, enhancing the reliability and resiliency of

the electricity distribution system in this State, meeting goals to limit carbon dioxide emissions under

federal or State law, and contributing to a cleaner and healthier environment for the citizens of this

State.” While the statute presumes that a facility located in-state provides those benefits at a

sufficient level, the Agency may also “may qualify renewable energy credits from facilities located in

states adjacent to Illinois if the generator demonstrates and the Agency determines that the

operation of such facility or facilities will help promote the State's interest in the health, safety, and

welfare of its residents” based on this public interest criteria. As the law provides no discussion of

potentially qualifying facilities located in states not “adjacent to Illinois,” the IPA believes facilities

located in those states cannot produce RECs for satisfying the Illinois RPS.

The Agency’s discussion of how to apply these criteria to adjacent state facilities, as well as a listing

of which states are considered “adjacent” to Illinois, can be found in Chapter 4.

2.3.2.3. Eligible Projects—Cost Recovery

Through Section 1-75(c)(1)(J), P.A. 99-0906 introduces an additional requirement on generating

facilities seeking to generate RECs eligible for the Illinois RPS: “a generating unit whose costs were

being recovered through rates regulated by this State or any other state or states on or after January

1, 2017” is ineligible. The statute’s rationale behind this change is to “promote the competitive

development of renewable energy resources in furtherance of the State's interest in the health, safety,

and welfare of its residents.” This raises multiple questions, among which are the following: first,

what criteria should be used for determining whether a facility’s costs are being recovered through

regulated rates? Second, what of municipal utilities or rural cooperatives that effectively serve as

vertically-integrated utilities (insofar as they can achieve full cost recovery for the development of

renewable energy generating facilities through rates), but may not be regulated by “this state or any

other state or states”? The Agency’s approach to these issues is discussed in Chapter 4.

The law also offers more punitive consequences if a non-regulated rate facility becomes a regulated

rate facility after the execution of an Illinois RPS contract; in such a situation, the contract must be

terminated and “the supplier of the credits must return 110% of all payments received under the

Long-Term Renewable Resources Procurement Plan August 6, 2018

contract”

(with those payments then being used for the procurement of additional RECs from new

wind or photovoltaic generation in the Agency’s next procurement event).

2.3.2.4. Installer Requirements

Certain facilities seeking to participate in the RPS are also subject to an installer qualification

requirement. Specifically, after June 1, 2017, “new photovoltaic projects or new distributed

renewable energy generation devices [. . .] must be procured from devices installed by a qualified

person in compliance with the requirements of Section 16-128A of the Public Utilities Act and any

rules or regulations adopted thereunder.”

In Docket No. 17-0268, the Illinois Commerce Commission adopted its Title 83, Part 461

administrative rules for the installation of new utility-scale photovoltaic generating projects under

Section 16-128A of the PUA. In that proceeding, the Commission adopted the following definition for

the term “qualified person” for new utility-scale solar installations:

"Qualified person" means a person who performs installations on behalf of the

certificate holder and who has completed at least one of the following programs

requiring lab or field work and received a certification of satisfactory completion: an

apprenticeship as a journeyman electrician from a USDOL-registered or an applicable

state-agency-registered electrical apprenticeship and training program; a North

American Board of Certified Energy Practitioners (NABCEP) distributed generation

technology certification program; an electrical training program for in-house

employees established and administered by an electric utility regulated by the

Commission; or an Associate in Applied Science degree from an Illinois Community

College Board-approved community college program in solar generation technology.

The Part 461 rules also provide a definition of the term “install”:

"Install" means to perform the electrical wiring and connections necessary to

interconnect the new solar project with the electric utility's transmission or distribution

system at the point of interconnection between the project and the utility. "Install" in

this Part specifically does not mean:

• Electrical wiring and connections to interconnect the new solar project

performed by utility workers;

• Electrical wiring and connections internal to the new solar project

performed by the manufacturer;

• The on-site construction and installation of a solar panel or a collector

substation; or

• Tasks relating to construction, planning and project management

performed by individuals such as an inspector, management planner,

consultant, project designer, or contractor for the project or their

employees.

20 ILCS 3855/1-75(c)(1)(J).

20 ILCS 3855/1-75(c)(7).

83 Ill. Adm. Code § 461.10.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Definitions of these terms were initially approved by the Commission in a Second Notice Order

entered on August 25, 2017, and approved with modification by the state’s Joint Committee on

Administrative Rules (“JCAR”) on October 24, 2017 with an effective date of October 26, 2017.

Any parties seeking to develop new photovoltaic projects or DG projects in Illinois should also be

aware of the Commission’s Part 461 and Part 468 rules (governing distributed generation installers)

and certification process more generally as well. The definition of “Qualified person” may preclude

the inclusion of self-installed new photovoltaic projects in the Adjustable Block Program (unless the

self-installer meets the “qualified person” definition).

2.3.3. Compliance Mechanism: RECs vs. “Renewable Energy Resources”

One other change to the Illinois RPS concerns what appears to be the exclusive use of RECs as the

compliance mechanism for meeting Illinois renewable energy procurement targets. Prior to P.A. 99-

0906, Section 1-75(c) required renewable energy procurement targets to be met through the

procurement of “renewable energy resources”—either a REC, or the REC and its underlying energy.

While the vast majority of the IPA’s procurement activities focused only on the procurement of RECs,

the 2010 long-term power purchase agreements are 20-year contracts for the delivery of a “bundled”

REC and energy product.

Rather than using the term “renewable energy resources,” Section 1-75(c)(1)(B) requires that the

Plan “shall include the goals for procurement of renewable energy credits”

to meet the statute’s

targets. While the description of the ARES load transition later in that same subparagraph (B) uses

the term “renewable energy resources,” subparagraph (C) and later subparagraphs also refer only to

the procurement of “renewable energy credits” (although subparagraph (E) references “renewable

energy resources”).

A shift in focus from “resources” to “RECs” makes intuitive sense; the IPA’s prior Section 1-75(c)

renewable energy planning and procurement processes were conducted in conjunction with the

development of its annual procurement plan for meeting the energy supply requirements of eligible

retail customers, and used to meet procurement requirements specific to that customer base. While

the IPA now conducts renewable energy planning and procurement processes to (eventually) meet

goals and targets applicable to all retail customer load,

its energy procurements still focus only on

eligible retail customer load—thus creating a disconnect between the universes of supply

requirements served by these two exercises.

While the IPA has not developed a final position on whether it could eventually procure a bundled

REC and energy product through the Plan or future revisions to it, or some combination of its

concurrent planning and procurement processes, the Agency proposed no such bundled product

procurements as part of this Plan and believes that no changes made to the law jeopardize prior-

executed bundled “renewable energy resource” contracts (such as the 2010 LTTPAs).

Emphasis added.

Specifically, the IPA’s long-term renewable resources procurement plan shall include renewable resource procurement for 100% of

retail customer load beginning with the delivery year beginning June 1, 2019, after procuring for an increasing portion of retail customer

load for the prior two delivery years. See 20 ILCS 3855/1-75(c)(1)(B).

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.3.4. RPS Funding and Rate Impact Cap

As before, the procurement of renewable energy credits continues to be constrained by an annual

procurement budget established through a rate impact cap. Specifically, “the total of renewable

energy resources procured under the procurement plan for any single year . . . shall be reduced for

all retail customers based on the amount necessary to limit the annual estimated average net increase

due to the costs of these resources included in the amounts paid by eligible retail customers in

connection with electric service to no more than the greater of 2.015% of the amount paid per

kilowatthour by those customers during the year ending May 31, 2007 or the incremental amount

per kilowatthour paid for these resources in 2011.”

The greater of these amounts—the 2007

amount per kilowatt-hour (“kWh”), as both amounts are known and, for each utility, it is greater

—

then “shall be applied to the actual amount of kilowatthours of electricity delivered, or applicable

portion of such amount [. . .] by the electric utility in the delivery year immediately prior to the

procurement to all retail customers in its service territory.” This produces an annual REC

procurement budget for the “costs of those resources” in a given year.

For a limited period, P.A. 99-0906’s changes to Section 16-108(k) of the PUA also allow for budget

amounts to be rolled over to future years. Those changes provide that rather than conducting annual

reconciliations of collections and costs, the Commission “shall instead conduct a single review,

reconciliation, and true-up associated with renewable energy resources' collections and costs for the

4-year period beginning June 1, 2017 and ending May 31, 2021, provided that the review,

reconciliation, and true-up shall not be initiated until after August 31, 2021.”

Over that four-year

period prior to the eventual reconciliation, “the utility shall be permitted to collect and retain funds

under this subsection (k) and to purchase renewable energy resources under an approved long-term

renewable resources procurement plan using those funds regardless of the delivery year in which

the funds were collected during the 4-year period.”

Through the budgets established under the rate impact cap and the associated tariffs for the

collection of funds, the applicable electric utility “shall be entitled to recover all of its costs associated

with the procurement of renewable energy credits” under the Plan, including “associated reasonable

expenses for implementing the procurement programs, including, but not limited to, the costs of

administering and evaluating the Adjustable Block program.”

As a result, annual procurement

budgets based only on REC costs would be inaccurate, and some estimate of associated

administrative expenses must be included and taken into account. Further discussion of the rate

impact cap, and the projected budgets produced under the rate impact cap, can be found in Chapter

20 ILCS 3855/1-75(c)(1)(E).

The specific cost cap rate for each of the three utilities is shown in Table 3-1 in Chapter 3 of this Plan.

The exception referenced above in Section 1-75(c)(1)(H) serves to reduce available budgets as well, as “the charges that would otherwise

be applicable to the retail customers of the alternative retail electric supplier . . . shall be reduced by the ratio of the quantity of renewable

energy credits supplied by the alternative retail electric supplier compared to that supplier's target renewable energy credit quantity.”

Changes under P.A. 99-0906 also provide that the utility shall not be required to “advance any payment or pay any amounts that exceed

the actual amount of revenues collected by the utility” under its Section 16-108(k) RPS rider, and “contracts executed under this Section

shall expressly incorporate this limitation.” 20 ILCS 3855/1-75(c)(1)(L)(vii); also see 220 ILCS 5/16-111.5(b)(5)(iv).

20 ILCS 3855/1-75(c)(6).

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.3.5. Employment Opportunities

The law also provides that “the renewable energy credit procurements, Adjustable Block solar

program, and community renewable generation program shall provide employment opportunities

for all segments of the population and workforce, including minority-owned and female-owned

business enterprises, and shall not, consistent with State and federal law, discriminate based on race

or socioeconomic status.”

The IPA believes strongly in the principles outlined in this statement in

the law, and believes that its Plan—including provisions to lower the barrier to entry in the

Adjustable Block Program for minority-owned and female owned businesses, its Illinois Solar for All

proposals, its approach to generation in adjacent states, and its approach to the geographic diversity

of projects within Illinois—properly takes those considerations into account and will result in those

opportunities being provided.

2.4. Quantitative New Build Targets of the RPS

Section 1-75(c)(1)(B) of the IPA Act establishes percentage-based umbrella goals for RECs required

to be procured based on a percentage of applicable retail customer load, but within those umbrella

requirements, other, more specific requirements must also be met. One such requirement is the

procurement of RECs from “new wind projects” and “new photovoltaic projects” found in Section 1-

75(c)(1)(C). Rather than expressed as a percentage of load, these requirements are expressed on a

quantitative basis (i.e., a fixed, statutorily-defined minimum number of RECs) while counting toward

the overall renewables procurement requirements.

2.4.1. Quantitative Procurement Requirements

The quantitative targets found in Section 1-75(c)(1)(C) are straightforward and symmetrical, and

operate as follows:

By the end of the 2020 delivery year (May 31, 2021):

• At least 2,000,000 renewable energy credits for each delivery year shall come from new wind

projects; and

• At least 2,000,000 renewable energy credits for each delivery year shall come from new

photovoltaic projects.

By the end of the 2025 delivery year (May 31, 2026):

• At least 3,000,000 renewable energy credits for each delivery year shall come from new wind

projects; and

• At least 3,000,000 renewable energy credits for each delivery year shall come from new

photovoltaic projects.

By the end of the 2030 delivery year (May 31, 2031):

• At least 4,000,000 renewable energy credits for each delivery year shall come from new wind

projects; and

• At least 4,000,000 renewable energy credits for each delivery year shall come from new

photovoltaic projects.

20 ILCS 3855/1-75(c)(7).

Long-Term Renewable Resources Procurement Plan August 6, 2018

For the “new photovoltaic project” requirement, at least 50% must come from solar photovoltaic

projects using the Adjustable Block Program (used to support distributed generation and community

solar, as discussed further below), at least 40% from utility-scale solar projects, and at least 2% from

non-community solar brownfield site photovoltaic projects.

The Agency understands this “at least

50%” concept to be first, in terms of RECs (as opposed to budget or installed capacity), and also, of

the quantitative target amounts listed in the law (as, in each of Sections 1-75(c)(1)(C)(i), (ii), and (iii)

“of that amount” references the REC amount expressly preceding it in the law), and not necessarily

50% of the overall number of RECs procured.

The Agency’s proposed procurements for meeting these targets can be found in Chapter 5.

2.4.2. “New wind project” and “new photovoltaic project” Definition

The definitions of a “new wind project” and a “new photovoltaic project” are also addressed through

the statute. What constitutes a “new photovoltaic project” is straightforward; it is a “photovoltaic

renewable energy facilit[y] that [is] energized after June 1, 2017.”

Projects developed under

Section 1-56 of the IPA Act (i.e., supplemental photovoltaic and Illinois Solar for All projects) are not

eligible to meet quantitative “new photovoltaic project” targets.

The definition of a “new wind project” is more awkward. The law defines “new wind projects” as

“wind renewable energy facilities that are energized after June 1, 2017 for the delivery year

commencing June 1, 2017 or within 3 years after the date the Commission approves contracts for

subsequent delivery years.”

This could be understood in one of two ways: perhaps most literally,

this means that for any delivery year after June 1, 2017 (“subsequent delivery years,” beginning with

the 2018 delivery year), a new wind project, once energized, is only “new” until the end of the 3 years

after the date on which the Commission approves its REC delivery contract. However, many wind

projects may take 3 years to develop, interconnect, and produce RECs, thus meaning that RECs

produced from the facility would no longer be “new” around the time that the facility begins

operation. As this interpretation would allow for wind projects to be “new” for only a brief, defined

The IPA Act, as modified by P.A. 99-0906, defines a “brownfield site photovoltaic project” as:

[P]hotovoltaics that are:

(1) interconnected to an electric utility as defined in this Section, a municipal utility as defined in this Section, a

public utility as defined in Section 3-105 of the Public Utilities Act, or an electric cooperative, as defined in Section 3-119

of the Public Utilities Act; and

(2) located at a site that is regulated by any of the following entities under the following programs:

(A) the United States Environmental Protection Agency under the federal Comprehensive Environmental

Response, Compensation, and Liability Act of 1980, as amended;

(B)the United States Environmental Protection Agency under the Corrective Action Program of the federal

Resource Conservation and Recovery Act, as amended;

(D) the Illinois Environmental Protection Agency under the Illinois Solid Waste Program.

20 ILCS 3855/1-10.

Thus, were the Adjustable Block Program to be extremely successful very quickly and exceed the targets of 1,000,000 RECs delivered

annually by the end of 2020-2021 and 1,500,000 RECs by the end of 2025-2026, the “at least 40%” requirement for utility-scale

photovoltaic projects remains at 40% of the new photovoltaic targets stated in the law, or 800,000 RECs by the end of the 2020 delivery

year and 1,200,000 RECS by the end of the 2025 delivery year. 20 ILCS 3855/1-75(c)(1)(C)(i), (ii).

20 ILCS 3855/1-10.

Id.

20 ILCS 3855/1-75(c)(1)(C).

Long-Term Renewable Resources Procurement Plan August 6, 2018

period before the facility may have begun operation, the IPA believes this could not have been the

drafters’ intent.

Instead, the IPA understands that “for subsequent delivery years”—projects for which contracts are

entered into on or after June 1, 2018—the “3 years after the date” of contract approval is effectively

a deadline by when the facility must be “energized” for it to retain its “new” status under the law

going forward. Stated differently, if the facility is able to be energized within 3 years after the date

on which the Commission approves its REC contract, then those RECs may be counted toward the

“new wind project” procurement targets in the law over the life of the contract. However, if the wind

project cannot energize within 3 years after Commission approval, its RECs may not be used to count

toward quantitative “new wind project” targets, and resultant REC delivery contracts should reflect

a consequence for that change in legal status (as the project’s RECs would then have less value in

meeting the requirements of the RPS; they would meet the percentage goals of Section 1-75(c)(1)(B)

of the Act, but not the quantitative REC targets of Section 1-75(c)(1)(C)).

Of course, both of these definitions raise the question of what constitutes a facility being “energized.”

Unlike interconnection, where official approval is required and associated forms are produced and

executed on a specific date, “energized” is more nebulous and, unfortunately, not defined through the

law. Faced with a similar quandary in developing its Supplemental Photovoltaic Procurement Plan,

the Agency settled on a definition of “energized” as being “the date by which the System has been

turned on for a period of 24 consecutive hours and is operational for purposes of generating

electricity regardless of whether the system has registered with a REC tracking system.” Parties could

then substantiate a system’s energization through a certification accompanied by the submission of

various forms establishing a system’s energization timeline. The Agency notes that unlike the

Supplemental Photovoltaic Procurement process, in which payment for RECs was made after REC

generation and only upon delivery and invoice to the Agency, the Adjustable Block Program and the

Illinois Solar for All Program feature prepayment for some, or all, of the RECs from a system upon

energization. Therefore, as discussed in Chapters 6 and 8, some consideration should be made of a

system being registered in a tracking system to generate RECs in addition to the date on which

interconnection to the utility was approved.

2.4.3. Initial Forward Procurements

Independent of (and potentially prior to) the development of this Plan, P.A. 99-0906 required the IPA

to conduct “initial forward procurements” of RECs from “from new utility-scale wind projects” and

“from new utility-scale solar projects and brownfield site photovoltaic projects.”

Conducted

through competitive procurement processes subject to applicable requirements of Section 16-111.5

of the PUA, the Initial Forward Procurement sought 15-year REC delivery contracts set to begin

delivery on June 1, 2019 at the earliest and June 1, 2021 at the latest. For both wind and solar, the

REC procurement quantities were 1,000,000 RECs delivered annually from each generating

technology, with a single wind procurement event required to take place within 160 days of June 1,

2017 and the solar procurement potentially conducted across multiple procurement events up to one

year from June 1, 2017.

20 ILCS 3855/1-75(c)(1)(G)(i), (ii).

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

The statute provides that RECs procured through the Initial Forward Procurement “shall be included

in the Agency's Long-Term Renewable Resources Procurement Plan and shall apply to all renewable

energy goals”

found in Section 1-75(c) of the IPA Act, including the quantitative “new wind” and

“new photovoltaic” targets discussed above. The Agency’s Initial Forward Procurement events for

new utility-scale wind and new photovoltaics have concluded;

the results of the Initial Forward

Procurement, as well as how those results inform remaining quantitative procurement targets, are

discussed further in Chapters 3 and 5.

2.4.4. Subsequent Forward Procurements

Section 1-75(c)(1)(G)(iii) also floats the concept of “subsequent forward procurements.” That

section sets forth conditions applicable to subsequent forward procurements: they must be “for

utility-scale wind projects,” they “shall solicit at least 1,000,000 renewable energy credits delivered

annually per procurement event,” and they shall be “planned, scheduled, and designed such that the

cumulative amount of [RECs] delivered from all new wind projects in each delivery year shall not

exceed the Agency's projection of the cumulative amount of [RECs] that will be delivered from all

new photovoltaic projects,” in that same delivery year.

However, the law does not contain statements either requiring that the Agency conduct a subsequent

forward procurement, or requiring that RECs from utility-scale wind projects may only be procured

using a subsequent forward procurement model. Nevertheless, consistent with the spirit of the law

and in recognition that the Agency will need to procure at least 1,000,000 additional new wind

project RECs beyond the Initial Forward Procurement quantities to meet its Section 1-75(c)(1)(C)(i)

2020 Delivery Year quantitative new wind target (as no more than 1,000,000 could be procured

through the initial forward procurement to meet a 2,000,000 REC target for 2020-2021), the Agency

has proposed a Subsequent Forward Procurement for RECs from new utility-scale wind projects as

part of the Plan.

Further discussion of the Agency’s proposed Subsequent Forward Procurement

can be found in Chapter 5.

2.4.5. Balancing Expected Wind RECs vs. Solar RECs

In addition to the condition placed on subsequent forward procurements mentioned above, the law

also contains a more general requirement that RECs under contract from new wind projects not

significantly exceed RECs under contract from new photovoltaic projects. Specifically, if the

projected amount of RECs from new wind projects to be delivered in a given delivery year exceeds

the projected amount of RECs from new photovoltaic projects by 200,000 or more RECs, then “the

Agency shall within 60 days adjust the procurement programs in the long-term renewable resources

procurement plan to ensure that the projected cumulative amount of renewable energy credits to be

delivered from all new wind projects does not exceed the projected cumulative amount of renewable

energy credits to be delivered from all new photovoltaic projects by 200,000 or more renewable

energy credits.”

Id.

More information about the Initial Forward Procurements can be found at on the IPA Procurement Administrator’s website at the

following address: https://www.ipa-energyrfp.com/2017-2018-initial-forward-procurements/

As discussed further in Chapter 5, the Commission’s Order approving the Plan increased the procurement volume for the IPA’s proposed

2018 Subsequent Forward Procurement to “at least” 2,000,000 RECs delivered annually. See Docket No. 17-0838, Final Order dated April

3, 2018 at 43.

20 ILCS 3855/1-75(c)(1)(G)(iv).

Long-Term Renewable Resources Procurement Plan August 6, 2018

This requirement is not intended to be applicable to results from the Initial Forward Procurements,

at least initially. Given that the Initial Forward Procurement calls for 1,000,000 RECs from “new wind

projects” to be procured “within 160 days after the effective date” of P.A. 99-0906, but the Initial

Forward Procurement from “new photovoltaic projects” is to be procured “within one year after the

effective date,” the law openly accommodates a longer time horizon for bringing solar RECs under

contract from the initial forward procurements. As the law expressly establishes this matching

requirement as only applicable “at any time after the time set for delivery of renewable energy credits

pursuant to the initial procurements,”

100

the IPA understands that this requirement becomes

applicable to its planning process after June 1, 2021, the latest date for first delivery of RECs from the

initial forward procurements.

101

The law also provides that the Agency shall provide “its projection of the renewable energy credits

to be delivered from all projects in each delivery year” on a “quarterly basis.”

102

2.5. Adjustable Block & Community Renewable Generation Programs

As referenced above, at least 50% of the quantitative new photovoltaic targets found in Section 1-

75(c)(1)(C) of the IPA Act shall be procured “from solar photovoltaic projects using the program

outlined in subparagraph (K) of this paragraph (1) from distributed renewable energy generation

devices or community renewable generation projects”—i.e., using the Adjustable Block Program.

2.5.1. Adjustable Block Program

At its core, the Adjustable Block Program is perhaps most notable for what it is not: it is not a

“competitive procurement event” using “pay as bid” pricing with selection of bids on the basis of

price. Nor is it a project selection process through which public interest criteria, such as those set

forth in Section 1-75(c)(1)(I) or those employed for the selection of winning bids under the Zero

Emission Standard found in Section 1-75(d-5) of the Act, determine the winning bidder.

Instead, the Adjustable Block Program provides “a transparent schedule of prices and quantities to

enable the photovoltaic market to scale up and for renewable energy credit prices to adjust at a

predictable rate over time.”

103

Stated differently, a party seeking a REC contract—such as a

photovoltaic distributed generation or community solar project developer—knows the REC price in

advance, and has visibility into when and how that price may change. The law sets forth other

requirements of the Adjustable Block Program: it must include “a schedule of standard block

purchase prices to be offered; a series of steps, with associated nameplate capacity and purchase

prices that adjust from step to step; and automatic opening of the next step as soon as the nameplate

capacity and available purchase prices for an open step are fully committed or reserved.”

104

Thus,

each block constitutes a quantity of nameplate capacity with a REC price

105

attached to that block,

and when a block is fully subscribed by qualifying projects, projects may then qualify for the next

100

Id.

101

In its Order approving the Plan, the Commission confirmed that “the IPA has accurately interpreted this provision in the Plan” and

clarified that this balancing requirement becomes effective as of June 1, 2021 (and not earlier). See Docket No. 17-0838, Final Order dated

April 3, 2018 at 47-48.

102

Id.

103

20 ILCS 3855/1-75(c)(1)(K).

104

Id.

105

Prices can be a set value, or established as the product of a formula.

Long-Term Renewable Resources Procurement Plan August 6, 2018

block (which features a different price). The Agency understands that “automatic opening” as used

in the law need not be “immediate” or “instantaneous,” and instead that “automatic” refers to the

ability for the block to open in a predictable manner not requiring additional administrative action.

2.5.1.1. Adjustable Block Program—Projects

The Adjustable Block Program is applicable to only two project types: photovoltaic distributed

renewable energy generation devices (i.e., solar DG), and photovoltaic community renewable

generation projects (i.e., community solar

106

Under Illinois law, a photovoltaic distributed renewable energy generation device must be:

(1) Powered by photovoltaics;

(2) interconnected at the distribution system level of either an electric utility as defined in this

Section, a municipal utility as defined in this Section that owns or operates electric

distribution facilities, or a rural electric cooperative as defined in Section 3-119 of the Public

Utilities Act (and thus, must be located in Illinois to be interconnected to such an entity);

(3) located on the customer side of the customer's electric meter and is primarily used to offset

that customer's electricity load; and

(4) limited in nameplate capacity to less than or equal to 2,000 kilowatts.

107

Under Illinois law, a photovoltaic community renewable generation project is a generation facility

that:

(1) is powered by photovoltaics;

(2) is interconnected at the distribution system level of an electric utility as defined in this

Section, a municipal utility as defined in this Section that owns or operates electric

distribution facilities, a public utility as defined in Section 3-105 of the Public Utilities Act, or

an electric cooperative, as defined in Section 3-119 of the Public Utilities Act (and thus, must

be located in Illinois to be interconnected to such an entity);

(3) credits the value of electricity generated by the facility to the subscribers of the facility; and

(4) is limited in nameplate capacity to less than or equal to 2,000 kilowatts.

108

Only new projects—those “energized on or after June 1, 2017”—are eligible for the Adjustable Block

Program.

In terms of what project types participate at what level within the Adjustable Block Program, the law

provides the following delineation:

(1) At least 25% from distributed renewable energy generation devices with a nameplate

capacity of no more than 10 kilowatts;

106

There are other forms of community solar recognized by Illinois law, including (A) properties owned or leased by multiple customers

that contribute to the operation of an eligible renewable electrical generating facility, and (B) individual units, apartments, or properties

located in a single building that are owned or leased by multiple customers and collectively served by a common eligible renewable

electrical generating facility. 220 ILCS 5/16-107.5(l)(1). These forms of community solar are not eligible for the Adjustable Block Program.

107

20 ILCS 3855/1-10.

108

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

(2) At least 25% from distributed renewable energy generation devices with a nameplate

capacity of more than 10 kilowatts and no more than 2,000 kilowatts.

109

(3) At least 25% from photovoltaic community renewable generation projects.

(4) The remaining 25% shall be allocated as specified by the Agency in the long-term renewable

resources procurement plan.

110

The Agency believes that this remaining allocation requirement does not necessarily require a strict

assignment of the remaining 25% to one of the prior three categories, and that the remainder can be

allocated to adjust for ongoing program performance of the other categories. This issue is discussed

further in Section 6.3 below.

The law also provides that the Adjustable Block Program shall ensure that RECs are procured from

“projects in diverse locations and are not concentrated in a few geographic areas.” At present, the

Agency believes that no special incentive or adder based only on geographic diversity is necessary to

ensure that this objective is met, but commits to monitor the locations of proposed and completed

projects, and to review and report on this issue in the next revision to the Plan.

2.5.1.2. Adjustable Block Program—Contracts

Section 1-75(c)(1)(L) sets forth certain requirements applicable to REC delivery contracts entered

into through the Adjustable Block Program. The first is that contracts must be “at least 15 years in

length,” which the Agency understands to require at least 15 years of REC deliveries under the

contract. Payment for RECs is made by (and RECs are delivered to) the applicable electric utility

(which is then required to retire the RECs), and payment is required by law to occur according to the

following schedule:

For DG systems of no more than 10 kW, “the renewable energy credit purchase price shall be paid in

full by the contracting utilities at the time that the facility producing the renewable energy credits is

interconnected at the distribution system level of the utility and energized.”

111

The Agency

understands “purchase price” to refer to the sum of payments for RECs required to be made under

the contract—i.e. full prepayment.

112

For larger DG systems and community solar projects, “20 percent of the renewable energy credit

purchase price shall be paid by the contracting utilities at the time that the facility producing the

renewable energy credits is interconnected at the distribution system level of the utility and

energized” with the remaining portion “paid ratably over the subsequent 4-year period.”

113

Prepayment poses unique challenges—while RECs are required to be delivered when generated to

meet annual utility compliance obligations, prepayment reduces the incentive to actually deliver

RECs. On this point, the law requires that each contract “shall include provisions to ensure the

delivery of the renewable energy credits for the full term of the contract,” and the Agency’s approach

109

The Agency may create sub-categories within this category to account for the differences between projects for small commercial

customers, large commercial customers, and public or non-profit customers.

110

20 ILCS 3855/1-75(c)(1)(K).

111

20 ILCS 3855/1-75(c)(1)(L)(ii). The Agency understands this provision to mean that a system 10 kW in size would be included in this

category.

112

All prepayment remains subject to the amounts actually collected by the utilities under its Section 16-108(k) tariffs, however. (See

Section 1-75(c)(1)(L)(vii)).

113

20 ILCS 3855/1-75(c)(1)(L)(iii).

Long-Term Renewable Resources Procurement Plan August 6, 2018

to clawback provisions, collateral requirements, and other contract elements intended to ensure REC

delivery can be found in Chapter 6.

2.5.1.3. Adjustable Block Program—Changes

Unlike a competitive procurement process, through which changes in market conditions may be

reflected in bidders’ bids, the Adjustable Block Program requires that the Agency project future

market conditions through establishing future block sizes and prices.

The law envisions these changes occurring in two ways: first, the Agency “may periodically review

its prior decisions establishing the number of blocks, the amount of generation capacity in each block,

and the purchase price for each block, and may propose, on an expedited basis, changes to these

previously set values” subject to the Section 16-111.5 plan revision process.

114

Second, “[p]rogram modifications to any price, capacity block, or other program element that do not

deviate from the Commission's approved value by more than 25% shall take effect immediately and

are not subject to Commission review and approval.”

115

This raises the question of what baseline the

25% deviation cap should be based on—would two 20% changes over the course of a year be

permissible, as neither was above 25% even though both were in aggregate? If not, how long must

the Agency wait until the next change is made? To prevent the requirement that the Agency seek

formal administrative approval for large modifications from being effectively ignored, the Agency

believes this threshold should be understood as a 25% change based on the last formally approved

(i.e., through establishment or revision of the Plan via Commission’s Section 16-111.5 approval

process) level.

In its Order approving the Plan, the Commission determined that “the final REC prices the IPA will

publish should be filed within 60 days as a compliance filing” in Docket No. 17-0838.

116

Accordingly,

the Agency published its REC prices for the Adjustable Block Program as a compliance filing in Docket

No. 17-0838 on June 4, 2018. Consistent with the Commission’s Order, these prices will serve as the

baseline for any subsequent modifications of up to 25%.

117

Section 1-75(c)(1)(M) of the Act requires that the Agency “consider stakeholder feedback when

making adjustments to the Adjustable Block design” and “notify stakeholders in advance of any

planned changes,” and the Agency commits to do so, as discussed further in Chapter 6. Likewise, the

law requires that “[t]he Agency and its consultant or consultants shall monitor block activity, share

program activity with stakeholders and conduct regularly scheduled meetings to discuss program

activity and market conditions.” As described further in Chapter 6, the Agency plans to monitor

program performance closely and shall seek to be proactive in communicating with stakeholders

about program performance and making any necessary changes to the structure of the Adjustable

Block Program.

114

20 ILCS 3855/1-75(c)(1)(K).

115

20 ILCS 3855/1-75(c)(1)(M).

116

Docket No. 17-0838, Final Order dated April 3, 2018 at 73-74.

117

See id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.5.2. Community Renewable Generation Program

P.A. 99-0906 also calls for the establishment of a “community renewable generation program.”

118

Unlike with the Adjustable Block Program, the law does not set forth procurement targets or a

proposed contract structure for this program; the Agency thus understands that, legally, it has

latitude to design its Community Renewable Generation Program in any manner otherwise

consistent with state law and done “with a goal to expand renewable energy generating facility access

to a broader group of energy consumers, to ensure robust participation opportunities for residential

and small commercial customers and those who cannot install renewable energy on their own

properties.”

119

From the law, the exact interaction and structure between the Agency’s Community Renewable

Generation Program, and the portion of the Agency’s Adjustable Block Program set-aside for

community solar, is unclear; the law simply references that “subscribed shares of photovoltaic

community renewable generation projects” shall be purchased through the Adjustable Block

Program.

120

Thus, the IPA understands the community solar portion of its Adjustable Block Program

to be something of a subset of its Community Renewable Generation Program, with a standalone

Community Renewable Generation Program still required to be established to provide support for

community renewable generation projects using technology other than photovoltaics.

Along these lines, Section 1-75(c)(1)(N) requires that “subscriptions” to community renewable

generation projects under the Community Renewable Generation Program must be portable (i.e.,

retained by the subscriber even if the subscriber relocates or changes its address within the same

utility service territory) and transferable (i.e., a subscriber may assign or sell subscriptions to

another person within the same utility service territory). The Agency believes that these

requirements apply to subscriptions for community solar projects participating in the Adjustable

Block Program as well.

Further discussion of the IPA’s Community Renewable Generation Program can be found in Chapter

2.6. Illinois Solar for All Program

Set forth in Section 1-56(b) of the IPA Act, the Illinois Solar for All Program shall “include incentives

for low-income distributed generation and community solar projects, and other associated approved

expenditures” in order “to bring photovoltaics to low-income communities in this State in a manner

that maximizes the development of new photovoltaic generating facilities, to create a long-term, low-

income solar marketplace throughout this State, to integrate, through interaction with stakeholders,

with existing energy efficiency initiatives, and to minimize administrative costs.” Further, the

program shall be “designed to grow the low-income solar market.”

121

An overview of the Illinois Solar for All Program, as well as the individual sub-programs under the

Illinois Solar for All banner, is below.

118

20 ILCS 3855/1-75(c)(1)(N).

119

Id.

120

Id.

121

20 ILCS 3855/1-56(b)(2).

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.6.1. Illinois Solar for All—Overview

At its core, the Illinois Solar for All Program is an incentive program—through more generous REC

contracts, the Illinois Solar for All Program incents low-income participation in solar photovoltaic

projects, whether as a system owner, community solar project subscriber, or system host. Those

RECs are retired to satisfy Section 1-75(c) compliance obligations just as with the other

procurements and programs described above, while the additional premium helps produce benefits

specific to growing the low-income solar marketplace and ensuring more equitable access to the

benefits of clean energy. Thus, structurally, the law envisions the Solar for All Program’s incentive

being offered through contracts for the delivery of RECs at a premium price above what would

otherwise be available, reflecting the additional incentive necessary to ensure low-income

participation, with the Agency also having the ability to offer full contract prepayment or otherwise

relax (or enhance) requirements in recognition of the unique challenges facing low-income project

development.

The program features no hard targets or goals for the quantity of RECs required to be procured, but

does feature defined funding sources. First, Illinois Solar for All is funded through using the

Renewable Energy Resources Fund. At the time of the filing of this Plan for Commission approval

(roughly three months after the unexpected transfer of $150 million out of the RERF), the existing

balance of the RERF was below the current balance of already-committed contractual obligations

(since that time, $37.5 million of those funds originally transferred out of the RERF have been repaid

back into the fund—leaving the RERF fund balance at just over $57 million— thus covering both

existing contractual obligations and some portion of future contracts), and the IPA considers any

existing contractual obligations from the RERF (specifically, Supplemental Photovoltaic Procurement

contracts) to be senior to any new obligations entered into through the Illinois Solar for All

Program.

122

State law

123

requires that the full $150 million be transferred back into the RERF within

24 months of its transfer in August 2017, but no additional alternative compliance payments are due

to be made into the RERF.

124

Second, Illinois Solar for All is funded through a portion of funds collected by the utilities under their

Section 16-108(k) RPS tariffs for purchases made under Section 1-75(c) of the IPA Act. Under Section

1-75(c)(1)(O), “5% of the funds available under the plan for the applicable delivery year, or

$10,000,000 per delivery year, whichever is greater” is available for Illinois Solar for All annually in

most years; while “for the delivery years beginning June 1, 2017, June 1, 2021, and June 1, 2025, the

long-term renewable resources procurement plan shall allocate 10% of the funds available under the

plan for the applicable delivery year, or $20,000,000 per delivery year, whichever is greater” with

$10 million in each of those three delivery years going toward funding ComEd’s workforce

development plan. This mechanism ensures a base level of Illinois Solar for All funding annually,

which is crucial given the uncertainty surrounding the RERF.

122

This appears to be the intent evident in Section 1-56(b) as well, as that section prefaces the percentage-based allocation of RERF funds

with the qualifier “monies available in the Illinois Power Agency Renewable Energy Resources Fund and not otherwise committed to

contracts executed under subsection (i) of this Section.” (emphasis added)

123

30 ILCS 105/5h.5(b).

124

Section 16-115D of the PUA provides that while “[t]hrough May 31, 2017, all alternative compliance payments by alternative retail

electric suppliers shall be deposited in the Illinois Power Agency Renewable Energy Resources Fund,” “beginning with the delivery year

commencing June 1, 2017, all alternative compliance payments by alternative retail electric suppliers shall be remitted to the applicable

electric utility” and not deposited into the RERF. (220 ILCS 5/16-115D(d)(4), (4.5).) See also 83 Ill. Adm. Code Part 455.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Third, Section 16-108(k) of the PUA contains the following provision:

If the amount of funds collected during the delivery year commencing June 1, 2017,

exceeds the costs incurred during that delivery year, then up to half of this excess

amount, as calculated on June 1, 2018, may be used to fund the programs under

subsection (b) of Section 1-56 of the Illinois Power Agency Act in the same proportion

the programs are funded under that subsection (b). However, any amount identified

under this subsection (k) to fund programs under subsection (b) of Section 1-56 of the

Illinois Power Agency Act shall be reduced if it exceeds the funding shortfall. For

purposes of this Section, "funding shortfall" means the difference between $200,000,000

and the amount appropriated by the General Assembly to the Illinois Power Agency

Renewable Energy Resources Fund during the period that commences on the effective

date of this amendatory act of the 99th General Assembly and ends on August 1, 2018.

Similar provisions exist in Section 16-108(k) for each of the delivery years commencing June 1, 2018

and June 1, 2019, and the meaning is unclear: there is no single “amount appropriated by the General

Assembly to the Illinois Power Agency Renewable Energy Resources Fund” for the 14 months

referenced in the paragraph above; instead, there are three separate fiscal year appropriations

125

covered by this period. The logic behind the provision is likewise unclear, as the Agency’s

appropriation is merely its legislatively-granted authority to spend and does not reflect actual

expenditures made—and thus, the “amount appropriated” is a slightly awkward measuring tool for

a “funding shortfall.”

Should funding for Illinois Solar for All be available

126

under this mechanism (while unstated in the

law, presumably for overcollections in the 2017-2018 delivery year, although the Agency would

reserve the right to develop a revised procurement plan should overcollections occur in 2018-2019

or 2019-2020), then “the Agency shall submit a procurement plan to the Commission no later than

September 1, 2018, that proposes how the Agency will procure programs on behalf of the applicable

utility.”

127

The Commission would have until November 1, 2018 to approve any such plan.

Under the Illinois Solar for All Program, payments “shall be in exchange for an assignment of all

renewable energy credits generated by the system during the first 15 years of operation and shall be

structured to overcome barriers to participation in the solar market by the low-income

community.”

128

The contract “may pay for such renewable energy credits through an upfront

payment per installed kilowatt of nameplate capacity paid once the device is interconnected at the

distribution system level of the utility and is energized,” giving the Agency flexibility in proposing

contract structures.

129

125

These are the appropriations for Fiscal Year 2017 (July 1, 2016 through June 30, 2017), Fiscal Year 2018 (July 1, 2017 through June 30,

2017), and Fiscal Year 2019 (July 1, 2018 through June 30, 2019).

126

Following each of the 2017-2018, 2018-2019, and 2019-2020 delivery years, the Agency will ask each of ComEd, Ameren Illinois, and

MidAmerican to provide an accounting of the utility’s RPS rider collections during the preceding delivery year and the costs it incurred for

Section 1-75(c) contracts during that delivery year.

127

20 ILCS 3855/1-56(b)(7). Perhaps notably, while the requirement that the IPA submit a Plan is prescriptive, Section 16-108(k)’s

funding allocation language is merely “permissive” (“up to half this excess amount . . . may be used to fund the programs”). The IPA thus

need not propose, and the Commission need not approve, a full (or any) statutorily authorized allocation. In preparing its Section 16-

108(k) procurement plan, the IPA plans to examine the availability and sufficiency of existing RERF funds and Solar for All program interest

and uptake before offering its recommendation for a funding allocation.

128

20 ILCS 3855/1-56(b)(3).

129

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

The counterparty to Illinois Solar for All contracts entered into using RERF funds is the Agency, while

the counterparty to contracts entered into using utility funds is the applicable utility.

In addition to payments for REC delivery contracts, the law provides that “[t]he Agency shall ensure

collaboration with community agencies, and allocate up to 5% of the funds available under the Illinois

Solar for All Program to community-based groups to assist in grassroots education efforts related to

the Illinois Solar for All Program.”

130

Notably, for grassroots education efforts, this amount is not

based only on the balance of the RERF; it is instead “up to 5% of the funds available under the Illinois

Solar for All Program,” and thus also inclusive of any Section 1-75(c) or 16-108(k) funds. In addition

to grassroots education, “costs associated with procuring experts, consultants, and the program

administrator . . . and related incremental costs, and costs related to the evaluation of the Illinois Solar

for All Program” may be paid out of the RERF.

2.6.2. Illinois Solar for All—Sub-programs

Illinois Solar for All is designed to incent specific defined project types, and to this end, Illinois Solar

for All features four sub-programs with percentage-based Fund balance allocations applicable to

each. Notably, the Agency understands these percentage-based allocations to be applicable only to

RERF funds, and not to funds collected by the utilities but available for Illinois Solar for All use (as

the law uses the phrasing “monies available in the Illinois Power Agency Renewable Energy

Resources Fund”

131

in making those percentage-based assignments). For the first three sub-

programs, these allocations may be changed if, after stakeholder input through a stakeholder process,

the Agency or its administrator determines that incentives for any those three sub-programs “have

not been adequately subscribed to fully utilize the Illinois Power Agency Renewable Energy

Resources Fund.”

132

The first three sub-programs also contain “a goal . . . that a minimum of 25% of the incentives for this

program be allocated to community photovoltaic projects in environmental justice communities.”

133

The Agency’s definition offered to the term “environmental justice community” is discussed further

in Chapter 8.

Discussion of the four sub-programs is below. In addition to these four sub-programs, “a party may

propose an additional low-income solar or solar incentive program, or modifications to the programs

proposed” and that additional program or modification will be approved “if the additional or

modified program more effectively maximizes the benefits to low-income customers after taking into

account all relevant factors, including, but not limited to, the extent to which a competitive market

for low-income solar has developed.”

134

130

Id.

131

20 ILCS 3855/1-56(b)(2).

132

Id.

133

20 ILCS 3855/1-56(b)(2)(A), (B), (C).

134

20 ILCS 3855/1-56(b)(4). While an additional program (focused on multi-family properties) was proposed by Elevate Energy and GRID

Alternatives in Docket No. 17-0838, that proposal was not adopted by the Commission; instead, the Commission suggested that the IPA

“monitor the treatment of multi-family buildings under the Low-Income Distributed Generation Incentive sub-program” and “include the

results of that monitoring for the Commission and explain its decision regarding whether to propose a program for this market segment”

as part of its 2019 Plan revision filing. Docket No. 17-0838, Final Order dated April 3, 2018 at 153.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.6.2.1. Low-Income Distributed Generation Incentive

The Low-Income Distributed Generation Incentive sub-program “provide[s] incentives to low-

income customers, either directly or through solar providers, to increase the participation of low-

income households in photovoltaic on-site distributed generation.”

135

Used for this sub-program and

others, the term “solar provider” is undefined and unclear; for purposes of allowing the market to

determine appropriate models, the Agency believes that “solar providers” can refer to any entity

which has a contractual relationship with the low-income customer in connection with the

underlying photovoltaic system (whether in the form of purchase, leasing, installation, aggregation,

or financing).

This program contains a firm, unequivocal commitment to using job trainees; the law provides that

“companies participating in this program that install solar panels shall commit to hiring job trainees

for a portion of their low-income installations,”

136

although the term “portion” is undefined in the

law. Nevertheless, the IPA believes that “portion” should not be understood as too small to be de

minimis, nor too large to be a “majority” (a term which likely would have been used had it been

intended).

For this sub-program, the law also requires that “an administrator shall facilitate partnering the

companies that install solar panels with entities that provide solar panel installation job training.”

137

The IPA understands this to mean its third-party Program Administrator engaging in such

facilitation, and commits to having its Program Administrator do the same.

The law also includes a provision that “[c]ontracts entered into under this paragraph may be entered

into with an entity that will develop and administer the program,”

138

although it is presently unclear

how the administrator could leverage state funds for this use.

This sub-program is allocated 22.5% of available RERF funds.

2.6.2.2. Low-Income Community Solar Project Initiative

Through the low-income community solar project initiative, “[i]ncentives shall be offered to low-

income customers, either directly or through developers, to increase the participation of low-income

subscribers of community solar projects.”

139

Again, the term “developer” is undefined; as community

solar project subscriptions may be actively marketed by entities other than the literal definition of

photovoltaic project “developers,” it is unclear whether this phrasing is intended to include all

entities marketing such subscriptions or only the project’s actual developer. The Agency will

interpret “developer” to be an Approved Vendor or their project partner.

A requirement of this program is that each participating project’s developer “shall identify its

partnership with community stakeholders regarding the location, development, and participation in

the project.”

140

Unclear from this phrasing is what constitutes a “community stakeholder,” or

135

20 ILCS 3855/1-56(b)(2)(A).

136

Id.

137

Id.

138

Id.

139

20 ILCS 3855/1-56(b)(2)(B).

140

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

whether the project itself must include “community stakeholders” from the community in which the

project is located (presumably so), the community of any subscribers (unclear), or both (also

unclear).

The law further provides that “[i]ncentives should also be offered to community solar projects that

are 100% low-income subscriber owned, which includes low-income households, not-for-profit

organizations, and affordable housing owners.”

141

This phrasing leaves program eligibility unclear—

must all subscribers be “low-income” for eligibility, or—as the law uses the term “also” in designating

100% low-income projects for eligibility—only a portion (and if so, what portion)? Not all

subscriptions are “ownership”; does ownership matter, and should it result in a heightened

incentive? These questions have no obvious answer, and the phrasing is too ambiguous to reveal any

clear intent.

The law also provides that “[c]ontracts entered into under this paragraph may be entered into with

developers,”

142

which the IPA understands to mean that a project developer, upon a sufficient

showing of low-income participation, may qualify for a contract award.

This sub-program is allocated 37.5% of available RERF funds.

2.6.2.3. Incentives for Non-profits and Public Facilities

The third sub-program provides that funding “shall be used to support on-site photovoltaic

distributed renewable energy generation devices to serve the load associated with not-for-profit

customers and to support photovoltaic distributed renewable energy generation that uses

photovoltaic technology to serve the load associated with public sector customers taking service at

public buildings.”

143

Stated differently, the program operates similarly to the first sub-program—an

incentive for on-site DG through a higher-priced REC contract—only with different eligibility

requirements (not-for-profit customers and public sector customers taking service at public

buildings).

This raises the question of whether all non-profits and all public sector entities may qualify for the

sub-program, or whether some nexus with the broader “low-income” intent of Illinois Solar for All is

required. As the law provides very specific thresholds (such as 25% from environmental justice

communities) when a specific threshold is intended, the IPA believes that the law may provide for

participation from all non-profit and public sector customers taking service at public buildings, but

believes that some level of community involvement may be required to maintain consistency with

the spirit of the law (as discussed further in Chapter 8).

This sub-program also combines referenced elements of each of the prior programs, stating that

“[c]ontracts may be entered into with an entity that will develop and administer the program or with

developers,”

144

which carries similar challenges and open questions to those referenced above.

This sub-program is allocated 15% of available RERF funds.

141

Id.

142

Id.

143

20 ILCS 3855/1-56(b)(2)(C).

144

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2.6.2.4. Low-Income Community Solar Pilot Projects

The fourth sub-program allows that “persons, including, but not limited to, electric utilities, shall

propose pilot community solar projects.”

145

Such projects are allowed by law to be larger than 2

megawatts (“MW”), but “the amount paid per project under this program may not exceed

$20,000,000.”

146

Such projects “must result in economic benefits for the members of the community

in which the project will be located” and “must include a partnership with at least one community-

based organization” (with that term again undefined).

147

Beyond the allowance that the project may be proposed by an electric utility and may be larger than

the law otherwise allows, it is not clear what other requirements make such facilities sufficiently

distinct so as to be considered a “pilot project.” While it may be tempting to require demonstration

of innovation through this program, the IPA does not believe that any additional limitations or

conditions on such projects should be inferred.

While the manner through which contracts are entered into in the other sub-programs is not

established in the statute, the low-income community solar pilot project sub-program must be

“competitively bid by the Agency,” which the Agency understands to be consistent with the

procurement requirements of Section 16-111.5 of the PUA where applicable.

The law further provides that funding under this sub-program “may not be distributed solely to a

utility,” and that some funds “must include a project partnership that includes community ownership

by the project subscribers.” The IPA thus understands that, for bid selection purposes, disbursement

to an entity other than a utility is a prerequisite for a utility bid to win, while satisfying the referenced

partnership through a winning bid is a prerequisite for any other bid to win.

The law provides that contracts under the Low-Income Community Solar Pilot Project program “may

be entered into with an entity that will develop and administer the program or with developers.”

148

This sub-program is allocated 25% of available RERF funds.

2.6.3. Illinois Solar for All—Additional Requirements

Section 1-56(b) also provides that under Illinois Solar for All, “[e]ach contract that provides for the

installation of solar facilities shall provide that the solar facilities will produce energy and economic

benefits, at a level determined by the Agency to be reasonable, for the participating low income

customer.”

149

The Agency believes that this requirement is in part met through the premium

attached to the REC price under Illinois Solar for All (and “energy benefits” for community solar and

distributed generation projects are already handled though bill crediting and net metering provisions

over which the Agency lacks jurisdiction), and provides support for consumer protections to ensure

that low income customers indeed receive benefits in entering into contractual arrangements with

installers, project developers, aggregators, or other intermediaries.

145

20 ILCS 3855/1-56(b)(2)(D).

146

Id.

147

Id.

148

20 ILCS 3855/1-56(b)(2)(D).

149

20 ILCS 3855/1-56(b)(2).

Long-Term Renewable Resources Procurement Plan August 6, 2018

Illinois Solar for All contracts must also “ensure the wholesale market value of the energy is credited

to participating low-income customers or organizations,”

150

which, again, is an issue handled through

net metering, but can be emphasized in resulting contracts. Contracts must also ensure that “tangible

economic benefits flow directly to program participants, except in the case of low-income multi-

family housing where the low-income customer does not directly pay for energy;”

151

while it is

unclear what constitutes a “tangible economic benefit” (or, for that matter, a “program participant,”

especially if the underlying contract is with a project developer or other such entity), the Agency will

require, consistent with the recent Commission order,

152

that ongoing annualized payments by the

customer (if any) must be less than 50% of the annual first year estimated production and/or utility

default service net metering value to be received by the customer. Additionally, this language

appears to provide further support for ensuring that marketing practices are standardized such that

low-income customers receive clear, standardized information about the benefits to be expected

from an Illinois Solar for All project.

The law also seeks for priority to be given to projects that “demonstrate meaningful involvement of

low-income community members in designing the initial proposal.”

153

Here again, the law provides

no definition of “meaningful involvement” nor does it define a “low-income community member,”

and it is unclear whether this would be distinct from an “environmental justice community” or what

constitutes a community “member.” The law further provides that “[a]cceptable proposals to

implement projects must demonstrate the applicant's ability to conduct initial community outreach,

education, and recruitment of low-income participants in the community;” again, the term

“participants in the community” is undefined and entirely unclear, but the Agency does understand

this language as providing that entities seeking to market installations or community solar

subscriptions using Illinois Solar for All contracts must, at a minimum, be certified by the Agency and

possess some baseline level of demonstrated competency. The Agency’s approach to vendor

certification is discussed further in Chapter 6.

As growing the low-income solar market involves more than just REC delivery contracts making

photovoltaics more economic, the law also requires that projects “must include job training

opportunities if available,” and seeks that such job training opportunities should be effected through

coordination with the job training programs proposed in ComEd’s Workforce Development Plan. The

Agency’s approach to encouraging that projects use job trainees to help build the low-income solar

marketplace is discussed further in Chapter 8.

2.6.4. Illinois Solar for All—Third-party Program Administrator

To assist the Agency in its administration of the Illinois Solar for All Program, the Agency may retain

a third-party program administrator (or administrators) through a Request For Qualifications and

competitive bid process. The selection criteria and requirements must include, but are not limited to,

“experience in administering low-income energy programs and overseeing statewide clean energy

or energy efficiency services.”

150

Id.

151

Id.

152

Docket No. 17-0838, Final Order dated April 3, 2018 at 150-151.

153

20 ILCS 3855/1-56(b)(2).

Long-Term Renewable Resources Procurement Plan August 6, 2018

As both its Illinois Solar for All third-party program administrator and the “expert consulting firms”

to assist with implementing and operating the Adjustable Block Program merely “may” be retained,

the Agency understands that it could, in theory, use the same entity to assist it with the

implementation of both programs (and is not prohibited from using either third-party administrator

to assist it with the implementation of the Community Renewable Generation Program).

154

In its Order approving the Plan, the Commission rejected a proposal requiring that the IPA use separate administrators for the

Adjustable Block Program and Illinois Solar for All Program and rejected a proposed requirement that the program administrator and its

subcontractors be limited to non-profit entities. See Docket No. 17-0838, Final Order dated April 3, 2018 at 161-164. On July 12, 2018,

the Commission approved the selection of InClime, Inc. as the Adjustable Block Program Administrator; at the time this Final Plan was filed

and published, a program administrator for the Illinois Solar for All Program had yet to be selected.

Long-Term Renewable Resources Procurement Plan August 6, 2018

3. RPS Goals, Targets, and Budgets

The original Illinois Renewable Portfolio Standard was established in 2007 through Public Act 95-

0481 and became effective on June 1, 2008. That RPS set annual percentage goals relative to eligible

retail loads in the state for the procurement of renewable resources, starting with at least 2% by the

beginning of the 2008-2009 delivery year and rising to 25% by the 2025-2026 delivery year.

155

These

goals initially applied only to the load associated with “eligible retail customers”—the residential and

small commercial customers who receive fixed-price bundled service from the utilities, rather than

switching to hourly priced service or to service from an Alternative Retail Electric Supplier. In 2009,

Public Act 96-0033 added Section 16-115D to the Public Utilities Act, which created RPS obligations

for ARES. The ARES RPS goals were based on the quantity of metered electricity delivered by the

ARES to retail customers in Illinois.

P.A. 99-0906 revised the RPS to apply the goals to all retail customers and to phase out the ARES

compliance obligations over a two-year period terminating on May 31, 2019 (see Section 3.2 for more

information). These revisions also consolidate the RPS into a single, centralized planning mechanism

for procurements and programs as described in this Plan. Significantly, the revisions to the RPS shift

the focus from the procurement of renewable energy resources to the procurement of renewable

energy credits or RECs.

156

The revisions to the RPS include a number of REC procurement goals and targets. The Agency

considers a “goal” to be an overall percentage of load to be procured in the form of RECs for a given

year based upon that year’s mandated RPS requirement.

157

A “target,” on the other hand, is the

number of RECs for a specific procurement event or program based upon the specific goal or

numerical mandate.

Under the changes to the RPS made via P.A. 99-0906, the annual RPS percentage goal remains the

same as in P.A. 95-0481—13% in the 2017 delivery year, rising incrementally by 1.5 percentage

points annually to 25% by 2025—but this goal will now be applied to all retail electricity sales rather

than sales limited to eligible retail customers. Meeting the RPS goals of the Act starts with the need

to procure an additional 7.5 million RECs for the 2017-2018 delivery year, increasing to the

forecasted procurement of 27.5 million RECs for the 2030-2031 delivery year.

In addition, while staying within the mandated goals, specific REC targets call for various quantities

of RECs to be procured in increasing steps starting with the 2017-2018 delivery year through the end

of the 2030-2031 delivery year, including:

• 1,000,000 RECs from new utility-scale wind projects and 1,000,000 RECs from new utility-

scale and brownfield site solar projects to be delivered annually (with delivery beginning no

earlier than June 1, 2019, and no later than June 1, 2021) procured through the Initial

Forward Procurement conducted separately from this Plan; and

• A total of at least 2,000,000 RECs delivered annually each from new wind and new

photovoltaic projects by the end of the 2020-2021 delivery year, ramping up to 3,000,000

RECs delivered annually each from new wind and new photovoltaic projects by the end of the

155

220 ILCS 5/16-111.5(a).

156

20 ILCS 3855/1-75(c)(1)(B).

157

For example, the RPS “goal” for the 2020-2021 delivery year is 17.5% of the retail load.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2025-2026 delivery year, and reaching 4,000,000 RECs delivered annually each from new

wind and new photovoltaic projects by the end of 2030-2031. (RECs from the Initial Forward

Procurement count toward these targets.)

This Chapter contains calculations of RPS targets, summaries of RPS portfolios, and summaries of

RPS budgets. Additional details are available in Appendix B.

3.1. Statewide Goals and Allocation of Cost and RECs from RPS Procurements to

Each Utility

Specific numerical targets included in the Act are statewide targets which do not specify

individualized REC targets for each utility. The Agency thus proposes to conduct the procurement of

RECs under this Plan based on statewide RPS goals and targets, rather than viewing those targets by

utility. The cost of the RECs associated with RPS procurements will be allocated to each utility,

through REC procurement contracts that are specific to the applicable utility and independent of

supplier performance under other utilities’ contracts, based on each utility’s Renewable Portfolio

Standard Budget (“RPS Budget”); Table 3-1 shows the proposed allocation.

158

Table 3-1: Utility REC Cost Allocations

Utility

Reference Year

Forecasted Delivered

Volume (MWh)

159

Cost Cap

Rate

160

($/MWh)

RPS Budget for 2020-

2021 Delivery Year

($)

161

Allocation Based on

RPS Budget for 2020-

2021 Delivery Year (%)

Ameren Illinois

38,017,110

1.8054

68,636,091

29.33%

ComEd

87,012,436

1.8917

164,601,426

70.34%

MidAmerican*

616,844

1.2415

765,812

0.33%

*Load covered by IPA procurements

This means that for every $1,000,000 of cost incurred to procure RECs, $293,300 and associated REC

contracts would be allocated to Ameren Illinois, $703,400 and associated RECs to ComEd, and $3,300

and associated RECs to MidAmerican. The IPA plans to review and update this allocation in its next

Plan in 2019.

158

This allocation method was initially developed to allocate the RECs from the August 31, 2017 Initial Forward Procurement and was

based on the RPS Budget for 2020-2021, which uses the prior year delivered volumes as reference. The 2019-2020 reference delivery year

was used because it will be the first year when all load, including that served by ARES, will be under the IPA’s REC procurements, thus

making the resulting RPS Budget a better representation of future RPS Budgets. As shown in Table 3-1, the allocation to each utility is based

on the utility’s share of the 2020-2021 delivery year RPS Budget. As noted in Chapter 6, the same allocation will be used for the Adjustable

Block Program procurements to each utility.

159

The 2019-2020 delivery year is the reference year for the 2020-2021 delivery year.

160

The Cost Cap Rate for each utility is defined in Section 1-75(c)(1)(F) of the Act as “the greater of 2.015% of the amount paid per

kilowatthour by [eligible retail] customers during the year ending May 31, 2007 or the incremental amount per kilowatthour paid for these

resources in 2011.” 2.015% of the bundled price paid per kWh by eligible retail customers in the 2006-2007 delivery year was 0.18054

cents for Ameren Illinois, 0.18917 cents for ComEd, and 0.12415 cents for MidAmerican. The incremental amount per kWh paid for

renewable resources in 2011 was 0.00584 cents for Ameren Illinois, and 0.0057 cents for ComEd. MidAmerican did not participate in IPA-

administered renewable energy procurements in 2011; therefore, it did not have an incremental amount for that year.

161

Beginning with the 2019-2020 delivery year, the RPS Budget for each utility is calculated by multiplying the values of the preceding two

columns of the table, as specified by Section 1-75(c)(1)(F) of the Act (“To arrive at a maximum dollar amount of renewable energy

resources to be procured for the particular delivery year, the resulting per kilowatthour amount shall be applied to the actual amount of

kilowatthours of electricity delivered […] by the electric utility in the delivery year immediately prior to the procurement to all retail

customers in its service territory.”).

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.2. Impact of the Phase out of Alternative Retail Electric Supplier RPS Obligations

P.A. 99-0906 resulted in changes to the requirements for ARES RPS compliance. Prior to the RPS

revisions contained in Section 16-115D of the Public Utilities Act, ARES could meet their compliance

requirements through Alternative Compliance Payments or through a combination of ACPs,

generation using eligible renewable resources, purchasing electricity generated using eligible

renewable resources, and purchasing RECs. A maximum of 50% of the ARES requirements could be

met with self-procurement or generation, while ACPs could account for a minimum of 50% up to a

maximum of 100% of the requirements. In general practice, the ARES tended toward the use of the

minimum 50% ACP requirement, relying on the procurement of eligible renewable energy resources

to meet the remaining compliance requirement. In order to be eligible for ARES compliance, the

renewable resources producing the RECs could be located in Illinois, states that adjoin Illinois, or

within the U.S. footprints of PJM or MISO.

162

Under the new RPS requirements, after a two-year transition period, the IPA will be responsible for

procuring RECs for virtually all retail load in Illinois, including load served by ARES. During the

transition period, the REC quantity associated with ARES load to be covered by the Agency’s

programs and procurements will be based on 50% of ARES load for the 2017-2018 delivery year,

75% for the 2018-2019 delivery year, and 100% for each delivery year thereafter.

163

Starting with the 2017-2018 delivery year, ARES will have to certify that the RECs used for

compliance were not produced by facilities whose costs were being recovered through rates

regulated by any state or states on or after January 1, 2017.

164

Starting with the 2019-2020 delivery

year and continuing for subsequent delivery years, ARES do not have an obligation to procure RECs

or make ACPs for RPS compliance.

165

The impact of the ARES RPS compliance obligations phase out is that the volume of RECs required to

be procured by the IPA to meet Section 1-75(c)(1)(B)’s percentage-based goals increases

significantly over the prior volumes required to meet those same percentages.

3.3. Section 1-75(c)(1)(H)(i) ARES Option to Supply RECs for their Retail Customers

Section 1-75(c)(1)(H) of the Act provides an exception to the phase out of ARES RPS obligations

described in Section 3.2. Under this exception, an ARES could use self-supplied RECs to meet a portion

(and possibly all) of its REC requirements. To do so, the ARES had to first make an informational filing

to the ICC within 45 days of the effective date of Public Act 99-0906, indicating that it owned a

generating facility or facilities as of December 31, 2015, that produced RECs eligible to meet the RPS,

provided that those facilities were not powered by wind or solar photovoltaics. The ARES must also

notify the Agency and the applicable utility by February 28 of each year of its election to supply RECs

to its retail customers and include the amount of RECs to be supplied.

One ARES informational filing covering an owned generation facility outside of Illinois was submitted

on a confidential basis to the ICC by the deadline of July 15, 2017.

162

MISO also includes the Canadian province of Manitoba, as well as parts or all of several U.S. states.

163

20 ILCS 3855/1-75(c)(1)(B); 220 ILCS 5/16-115D(a)(3.5).

164

220 ILCS 5/16-115D(a)(3.5); 83 Ill. Adm. Code § 455.120(b)(4).

165

220 ILCS 5/16-115D(i).

Long-Term Renewable Resources Procurement Plan August 6, 2018

Section 1-75(c)(1)(H) of the Act provides that the procurement of renewable energy resources for a

given year shall be reduced if the ARES uses RECs from an ARES-owned generation facility to supply

its retail customers. The amount of RECs that can be supplied by ARES-owned/ generation is subject

to several limitations. Specifically, the Act provides that:

“For the delivery year beginning June 1, 2018, the maximum amount of renewable

energy credits to be supplied by an alternative retail electric supplier under this

subparagraph (H) shall be 68% multiplied by 25% multiplied by 14.5% multiplied by

the amount of metered electricity (megawatt-hours) delivered by the alternative retail

electric supplier to Illinois retail customers during the delivery year ending May 31,

2016.”

166

“For delivery years beginning June 1, 2019 and each year thereafter, the maximum

amount of renewable energy credits to be supplied by an alternative retail electric

supplier under this subparagraph (H) shall be 68% multiplied by 50% multiplied by

16% multiplied by the amount of metered electricity (megawatt-hours) delivered by the

alternative retail electric supplier to Illinois retail customers during the delivery year

ending May 31, 2016, provided that the 16% value shall increase by 1.5% each delivery

year thereafter to 25% by the delivery year beginning June 1, 2025, and thereafter the

25% value shall apply to each delivery year.”

167

The Act limits the total amount of RECs that can be supplied by all ARES through owned generation:

“For each delivery year, the total amount of renewable energy credits supplied by all

alternative retail electric suppliers shall not exceed 9% of the Illinois target renewable

energy credit quantity. The Illinois target renewable energy credit quantity for the

delivery year beginning June 1, 2018 is 14.5% multiplied by the total amount of metered

electricity (megawatt-hours) delivered in the delivery year immediately preceding that

delivery year, provided that the 14.5% shall increase by 1.5% each delivery year

thereafter to 25% by the delivery year beginning June 1, 2025, and thereafter the 25%

value shall apply to each delivery year.”

168

In order to take into account the self-supply by the ARES, the Act requires that the charges which are

applicable to the retail customers of the ARES be reduced by the ratio of the RECs supplied by the

ARES to the ARES’s RPS target. Specifically, the Act states that:

“If the requirements set forth in items (i) through (iii) of this subparagraph (H) are met,

the charges that would otherwise be applicable to the retail customers of the alternative

retail electric supplier under paragraph (6) of this subsection (c) for the applicable

delivery year shall be reduced by the ratio of the quantity of renewable energy credits

supplied by the alternative retail electric supplier compared to that supplier's target

renewable energy credit quantity. The supplier's target renewable energy credit

quantity for the delivery year beginning June 1, 2018 is 14.5% multiplied by the total

amount of metered electricity (megawatt-hours) delivered by the alternative retail

supplier in that delivery year, provided that the 14.5% shall increase by 1.5% each

166

20 ILCS 3855/1-75(c)(1)(H)(iii).

167

Id.

168

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

delivery year thereafter to 25% by the delivery year beginning June 1, 2025, and

thereafter the 25% value shall apply to each delivery year.”

169

The Agency will post on its website by April 1 of each year a report on the aggregate number of RECs

being supplied by the ARES for the upcoming delivery year, starting June 1.

170

This quantity will be

accounted as RECs from “other technologies” (i.e., other than wind or solar) and will reduce the

overall RPS Target for that delivery year. Those targets are shown (unadjusted) in Table 3-10.

Technology-specific targets are shown in Table 3-11.

3.4. MidAmerican Volumes

MidAmerican’s status as a multi-jurisdictional utility which uses its own generating resources to

meet a portion of its Illinois load creates a unique situation for RPS compliance. Unlike Ameren

Illinois and ComEd, for which all retail load is subject to the RPS goals and targets, the MidAmerican

load for which the RPS goals and targets are applicable is only the load that is subject to the IPA

procurement process for conventional power. That amount is the load which is in excess of

MidAmerican’s Illinois-allocated generation in any given delivery year, which is approximately only

25-35% of its total jurisdictional load.

171

To account for the transition from the RPS previously applicable only to eligible retail customer load

to the RPS now being applicable to all retail sales (including those made by ARES), MidAmerican’s

targets and budgets will be calculated also to include the share of ARES load in MidAmerican’s service

area. The ARES load will be prorated by an amount equal to the share of MidAmerican’s supply load

covered by the IPA energy procurement process, the same discount applied to MidAmerican’s non

ARES-supplied load, and further adjusted by 50% for the 2017-2018 delivery year, and 75% for the

2018-2019 delivery year, to account for the ARES load transition period.

172

As a consequence, the number of RECs to be procured for MidAmerican is a very small portion of the

total number of RECs to be procured statewide. Based on the data presented in Table 3-1, for the

2017-2018 through 2020-2021 period, MidAmerican’s applicable retail load is approximately 0.55%

of the statewide applicable load.

3.5. Cost Cap and Cost Recovery

The IPA’s procurement of RECs is subject to monetary limitations in the form of a cost cap based on

limiting the annual average net increase to all eligible retail customers to “no more than the greater

of 2.015% of the amount paid per kilowatt-hour by those customers during the year ending May 31,

2007 or the incremental amount per kilowatt-hour paid for these resources in 2011.”

173

The cost cap

determined under these criteria is unchanged from the prior RPS cost cap; however, it is now applied

to the actual quantity of electricity delivered in the prior delivery year to all applicable retail

169

Id.

170

For the 2018-2019 delivery year, see: https://www2.illinois.gov/sites/ipa/Documents/2018ProcurementPlan/ARES-REC-Report-

2018-2019-delivery-year-20180516.pdf.

171

The Commission specified this approach for the procurement of renewable resources to meet the RPS compliance targets applicable to

MidAmerican in Docket No. 15-0541, determining that only the portion of MidAmerican’s load subject to the IPA’s planning and

procurement process is subject to Section 1-75(c) of the Act’s requirements.

172

Tables in this Plan do not yet reflect the ARES share of MidAmerican’s retail load. The Agency will update MidAmerican REC targets and

budgets based on updated load forecasts from MidAmerican which include ARES load.

173

20 ILCS 3855/1-75(c)(1)(E).

Long-Term Renewable Resources Procurement Plan August 6, 2018

customers in the utility’s service territory.

174

The cost cap rate, in cents per kilowatt-hour, is provided

in Table 3-2.

Table 3-2. REC Procurement Cost Cap Rate by Utility

175

Utility RPS Cost Cap Rate (¢/kWh)

Ameren Illinois

0.18054

ComEd

0.18917

MidAmerican

0.12415

Each utility is entitled to recover the costs of the RECs procured to meet the RPS compliance

requirements, subject to the cost cap limitations, along with “…the reasonable costs that the utility

incurs as part of the procurement process and to implement and comply with plans and processes

approved by the Commission…”

176

Beginning with the 2017-2018 delivery year, the utilities are able to recover all of their costs

associated with the RECs previously procured and procured through the implementation of the IPA’s

long-term renewable resource procurement plans through tariffs applicable to all of the utilities’

customers. These tariffs took effect as of the June 2017 billing period and allow collections by utilities

to recover the costs of RECs procured by the IPA. The Commission will conduct a single review,

reconciliation and true-up of the utility’s collections covering REC costs for the 2017-2018, 2018-

2019, 2019-2020, and 2020-2021 delivery years no earlier than August 31, 2021.

177

Subject to limits

(discussed in Chapters 2 and 8 of this Plan) based on any shortfall of funding to the IPA’s Renewable

Energy Resources Fund, a portion of any over-collection, up to half, will be used to fund the Illinois

Solar for All Program. This funding for the Illinois Solar for All Program will not reduce the overall

RPS Budget.

3.6. RPS Compliance Procurement Priorities

The Act provides guidelines for prioritizing the REC procurements in the event that the cost cap

limitations conflict with the RPS goals and targets such that the IPA cannot procure sufficient

additional quantities of RECs to meet goals or targets.

178

These priorities regarding the procurement

of RECs take the following order, arranged based on descending priority:

• RECs procured under existing contracts;

• RECs procured with funding for the Illinois Solar for All Program;

• RECs procured to comply with the new wind and solar photovoltaic procurement

requirements;

174

Id.

175

These figures are the same used in the IPA’s 2017 Electricity Procurement Plan approved by the Commission. See:

https://www.illinois.gov/sites/ipa/Documents/2017ProcurementPlan/2017-IPA-Procurement-Plan.pdf

at 12.

176

220 ILCS 5/16-108(k).

177

See id.

178

20 ILCS 3855/1-75(c)(1)(F).

Long-Term Renewable Resources Procurement Plan August 6, 2018

• RECs procured to meet the remaining RPS targets (REC Gap).

Based on the list above, the procurement of RECs under existing contractual obligations will have the

highest priority, with the procurement of RECs to meet remaining RPS requirements having the

lowest priority. The RPS Budget for each year will therefore be allocated in the order of these

priorities, until goals are met, or there are no remaining funds available for that year (as well as

allocation of expected expenditures for future years).

3.7. Wind/Solar Matching Requirement and Solar Split

The Act defines the annual REC targets for wind and solar resources in terms of the timing of the

annual quantities to be procured and the technology preferences for the renewable resources

generating the RECs.

179

The overall quantity of RECs procured to meet the RPS goals must include at

least a combined 75% from wind and photovoltaic projects. This is a change from the prior RPS

construct, under which there was a goal that 75% of the renewable energy resources come from

wind, 6% from photovoltaics, and 1% from distributed generation.

180

In addition to the wind and photovoltaic requirements that apply to the overall RPS goals, there are

also specific numerical targets that apply to RECs from new wind and new photovoltaic projects. New

projects are those projects energized after June 1, 2017.

181

The REC target deliveries from new

projects from each technology are 2,000,000 RECs by the end of the 2020-2021 delivery year,

3,000,000 RECs by the end of the 2025-2026 delivery year, and 4,000,000 RECs by the end of the

2030-2031 delivery year. The new photovoltaic project REC procurement targets are further broken

down to reflect the procurement of 50% from distributed photovoltaic renewable generation

projects or photovoltaic community renewable generation projects using the Adjustable Block

Program, 40% from utility-scale photovoltaic projects, 2% from brownfield site photovoltaic projects

that are not community solar projects, and the remaining 8% not specified but determined through

this Plan. Furthermore, the total amount of RECs targeted for delivery from all new wind sources is

intended not to exceed the total amount of RECs to be delivered from all new photovoltaic projects.

In the event that the projected cumulative quantity of new wind project RECs to be delivered exceeds

the quantity of new solar project RECs projected to be delivered by 200,000 RECs or more, the

procurement targets for the programs contained in the Plan will be adjusted as needed.

182

Per the

definition of “new photovoltaic projects” in the Act, RECs procured as part of the Illinois Solar for All

Program (see Chapter 8) cannot be counted as new photovoltaic RECs and therefore are not

accounted as such in this Plan, although these RECs would count toward the overall 75% of RECs

coming from wind or photovoltaic resources.

183

179

20 ILCS 3855/1-75(c)(1)(C).

180

220 ILCS 5/16-111.5(a).

181

The IPA, in accounting for RECs from new projects towards the Section 1-75(c)(1)(C) REC targets, excludes RECs procured from DG

projects in 2017 because of their relative small quantity and uncertainty around their energized date. They are, however, included in

compliance calculations to ensure that at least a combined 75% of RECs be from wind and photovoltaic projects.

182

In its Order approving the Plan, the Commission confirmed that this balancing or “matching” requirement becomes effective as of June

1, 2021 (the last point at which projects from the Initial Forward Procurements can begin delivery of RECs). See Docket No. 17-0838, Final

Order dated April 3, 2018 at 47-48.

183

20 ILCS 3855/1-75(c)(1)(B), (C).

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.8. REC Portfolio

For the planning and development of the various procurements and programs under this Plan, it is

necessary to aggregate the utility level portfolios of existing RECs under contract and RECs from the

Initial Forward Procurement mandated in the Act into a single, statewide portfolio of RECs. That

resulting statewide portfolio can then be examined against REC goals and targets mandated in the

Act to estimate gaps that need to be closed through the procurement of RECs. The following sections

examine existing REC portfolios and the resulting statewide REC Portfolio after accounting for

expected deliveries of RECs resulting from the Initial Forward Procurement.

3.9. Existing REC Portfolios - RECs Already Under Contract

Each of the three utilities has an existing portfolio of RECs from IPA procurements approved prior to

the enactment of P.A. 99-0906. The tables that follow show the REC portfolio of each utility and the

aggregated statewide portfolio.

184

In these tables, “LTPPA” means the Long-Term Power Purchase

Agreements entered into in 2010; “Rate Stability” means the Rate Stability Block Procurement

conducted in 2012;

185

and “DG” means the Distributed Generation procurements conducted by the

IPA in 2015, 2016, and 2017.

186

Table 3-3. Ameren Illinois Existing REC Portfolio

Delivery

Year

LTPPA

Wind

LTPPA

Solar

Rate

Stability

Wind

Rate

Stability

Solar

Wind

Solar

Total

Wind

Total

Solar

Total All

RECs

2017-

2018

596,571

3,429

251,767

2,629

6,797

848,356

12,855

861,211

2018-

2019

596,571

3,429

8,411

596,589

11,840

608,429

2019-

2020

596,571

3,429

8,411

596,589

11,840

608,429

2020-

2021

596,571

3,429

7,475

596,571

10,904

607,475

184

RECs from the Initial Forward Procurement events conducted in August 2017 through April 2018 are not included in these tables;

instead they are shown in the Section that follows.

185

Procurement conducted pursuant to 220 ILCS/16-111.5(k-5) (Repealed, effective June 1, 2017).

186

For procurement and budget planning purposes, the IPA assumes that RECs from the Spring 2017 DG Procurement will be delivered

starting in the 2017-2018 delivery year, and RECs from the Fall 2017 DG Procurement will be delivered starting in the 2018-2019 delivery

year.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Table 3-4. ComEd Existing REC Portfolio

Delivery

Year

LTPPA

Wind

LTPPA

Solar

Rate

Stability

Other

Wind

Solar

Total

Wind

Total

Solar

Total All

RECs

2017-

2018

1,233,838

27,887

271,473

16,556

1,233,860

44,443

1,549,776

2018-

2019

1,233,838

27,887

23,095

1,233,860

50,982

1,284,842

2019-

2020

1,233,838

27,887

23,095

1,233,860

50,982

1,284,842

2020-

2021

1,233,838

27,887

21,181

1,233,838

49,068

1,282,906

Table 3-5. MidAmerican Existing REC Portfolio

Delivery Year

DG Solar

Total All RECs

2017-2018

655

2018-2019

655

2019-2020

655

2020-2021

655

3.10. Initial Forward Procurement

The Act requires the IPA to conduct an Initial Forward Procurement for RECs generated by new

utility-scale wind projects, new utility-scale solar projects, and new brownfield site photovoltaic

projects through 15-year contracts with the goal of procuring 1,000,000 new wind project RECs and

1,000,000 new solar project RECs delivered annually.

187

The utility-scale projects are specified as

those with a generating capacity that is greater than 2,000 kW,

188

while there is no minimum size

requirement for the capacity of the brownfield site solar projects. The Initial Forward Procurement

was held as a single procurement event for wind RECs and across multiple procurement events for

solar RECs.

The first Initial Forward Procurement event was held on August 31, 2017 with procurement targets

of 1 million annually-delivered wind RECs and 200,000 annually-delivered solar RECs to be

generated by utility-scale and brownfield site photovoltaic projects.

189

Two additional procurement

187

20 ILCS 3855/1-75(c)(1)(G)(i), (ii).

188

20 ILCS 3855/1-10.

189

Results of the August 31, 2017 procurement are available at:

https://www.icc.illinois.gov/downloads/public/Public%20Notice%20of%202017%20Wind%20and%20Solar%20REC%20Procuremen

t%20Results%202017-09-07.docx. Note that after the Commission’s approval of the results, one winning wind bidder declined to accept

its portion of the procurement volume (which represented a prorated amount of that bidder’s bid, given the Initial Forward Procurement’s

statutory limitation of a 1,000,000 REC procurement volume). The quantities listed in

Table 3-1 reflect that decision.

Long-Term Renewable Resources Procurement Plan August 6, 2018

events were then held on March 19 and April 26, 2018 to procure the remaining 800,000 annually-

delivered solar RECs.

190

For procurement and budget planning purposes, the IPA assumes that RECs

from the Initial Forward Procurement will be delivered starting in the 2019-2020 delivery year as

shown in Table 3-6. This assumption allows the Agency to be conservative in terms of estimating

future expenditures; the Agency will monitor when actual deliveries commence and will in the future

update actual goals and budgets accordingly.

Table 3-6. Initial Forward Procurement RECs

191

Delivery Year

Wind

Solar

Total All RECs

2017-2018

2018-2019

2019-2020

965,000

1,000,000

1,965,000

2020-2021

965,000

1,000,000

1,965,000

3.11. Statewide REC Portfolio

The utilities’ existing REC portfolios and the resulting RECs from the Initial Forward Procurements

shown above, in the aggregate, produce the Statewide REC Portfolio presented in Table 3-7. This table

indicates the volume of RECs available to meet the various RPS goals and targets mandated in the

Act.

Table 3-7. Statewide REC Portfolio

Del.

Year

Existing

Wind

Existing

Solar

Existing

Other

192

Initial

Forward

Wind

Initial

Forward

Solar

Total

Wind

Total

Solar

Total

Other

Total All

RECs

2017-

2018

2,082,216

57,953

271,473

2,082,216

57,953

271,473

2,411,642

2018-

2019

1,830,449

63,477

1,830,449

63,477

1,893,926

2019-

2020

1,830,449

63,477

965,000

1,000,000

2,795,449

1,063,477

3,858,926

2020-

2021

1,830,409

60,627

965,000

1,000,000

2,795,409

1,060,627

3,856,036

190

Results of the March 19, 2018 procurement are available at:

https://www.icc.illinois.gov/downloads/public/Public%20Notice%20of%20March%202018%20Solar%20REC%20Procurement%20R

esults%202018-03-21.pdf. Results of the April 26, 2018 procurement are available at:

https://www.icc.illinois.gov/downloads/public/Public%20Notice%20of%20April%202018%20Solar%20REC%20Procurement%20Res

ults%202018-05-02.pdf.

191

Section 1-75(c)(1)(G) of the Act contemplates that deliveries from the Initial Forward Procurement will begin delivery “on June 1, 2019,

if available, but not later than June 1, 2021.” Therefore, no RECs are indicated for delivery years 2017-2018 and 2018-2019.

192

“Other” refers to RECs from other technologies, other than wind or solar.

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.12. Loads, RPS Goals and Targets, and REC Gaps

The various procurements and programs under this Plan are designed to meet RPS goals and targets

mandated by the Act. To start the procurement planning process, it is necessary first to calculate the

annual REC targets and the gaps that to be filled. In the prior Section, a statewide REC portfolio was

presented. The RECs in that portfolio will be used in conjunction with the REC targets developed in

this Section to estimate the gaps.

3.13. Applicable Retail Customer Load

The table below shows the forecasted retail customer load subject to RPS compliance through the

2020-2021 delivery year.

193

The Act mandates the transition to a single RPS procurement mechanism

in which statewide RPS goals are applied to all retail customer load by the 2019-2020 delivery year

and beyond. This table takes into account the transition provisions as explained in Section 3.2.

Table 3-8. Retail Customer Load Applicable to the Compliance Year

Compliance

Delivery Year

Reference

Delivery Year

Ameren Illinois

[MWh]

ComEd

[MWh]

MidAmerican

[MWh]

194

Statewide

[MWh]

2017-2018

2016-2017

21,152,970

54,420,529

539,165

76,112,664

2018-2019

2017-2018

29,995,820

71,460,380

503,181

101,959,381

2019-2020

2018-2019

37,993,441

87,121,731

704,364

125,819,536

2020-2021

2019-2020

38,017,110

87,012,436

616,844

125,646,391

3.14. RPS Goals and Targets

RPS annual goals are derived from Section 1-75(c)(1)(B) of the Act. To determine the number of RECs

required to meet the goals (the “Overall RPS Target”), the delivery year RPS goal is applied to the

reference year applicable retail customer load (“Applicable Load”) as shown in equation (1).

(1) Delivery Year Overall RPS Target = Delivery Year RPS Goal * Reference Year

Applicable Load

193

As customary, in support of the IPA procurement processes, in the summer of 2017 the utilities developed and provided the actual and

forecast loads used in this Plan.

194

As noted in Section 3.4, unlike Ameren Illinois and ComEd for which all retail load is subject to the RPS goals and targets, the

MidAmerican applicable load subject to the RPS goals and targets is only the percentage of load that is subject to the IPA procurement

process.

Long-Term Renewable Resources Procurement Plan August 6, 2018

The statewide RPS Goals and Targets for 2017-2018 through 2020-2021 are shown in the table

below.

Table 3-9. Statewide RPS Goals and Targets

Delivery Year RPS Goal Reference Year

Reference Year

Applicable Load

[MWh]

Overall RPS

Target [RECs]

2017-2018

13.0%

2016-2017

76,112,664

9,894,646

2018-2019

14.5%

2017-2018

101,959,381

14,784,110

2019-2020

16.0%

2018-2019

125,819,536

20,131,126

2020-2021

17.5%

2019-2020

125,646,391

21,988,118

3.15. Overall REC Procurement Targets (REC Gaps)

The overall number of RECs targeted for procurement for each year to meet annual goals (“REC Gap”)

is simply the difference between the RPS Target RECs and the total number of RECs in the Statewide

REC Portfolio as shown below.

Table 3-10. Statewide Overall REC Gap

Delivery Year

Overall RPS

Target RECs

Statewide Portfolio

Total All RECs

Overall REC

Procurement Target

(REC Gap)

2017-2018

9,894,646

2,411,642

7,483,004

2018-2019

14,784,110

1,893,926

12,890,184

2019-2020

20,131,126

3,858,926

16,272,200

2020-2021

21,988,118

3,856,036

18,132,082

Long-Term Renewable Resources Procurement Plan August 6, 2018

Figure 3-1 below provides a visual representation of the Applicable Loads, REC Portfolio, and Overall

REC Gaps discussed in this Section.

Figure 3-1. Statewide Applicable Retail Load, REC Portfolio and Overall REC Gap

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.16. Procurement Targets to Meet Specific Wind-Solar Requirement and

Overall RPS Targets

Section 1-75(c)(1)(C) of the Act, as explained in Section 3.1 above, requires that the overall quantity

of RECs procured to meet the RPS goals must include at least a combined 75% from wind and

photovoltaic projects. Analysis of the Statewide REC Portfolio against the overall RPS Target

produces minimum REC Procurement Targets for wind and photovoltaics. Table 3-11 below shows

the minimum REC Procurement Targets for wind and solar (i.e., photovoltaic) projects and RECs of

any technology to meet the overall RPS Targets.

Table 3-11. Statewide REC Portfolio and Minimum REC Procurement Targets

Del.

Year

Overall

RPS

Target

[RECs]

Combined

75%

Wind/Solar

REC

Requirement

Sum of

Wind

and

Solar in

REC

Portfolio

Minimum

REC

Procurement

Target for

Wind and

Solar

Existing

Plus ARES

Supplied

Other

Tech.

RECs

Targeted

Residual REC

Procurement of

any Technology

to Meet Overall

RPS Goal

Overall REC

Procurement

Target

(REC Gap)

(a)

(b)

= (a) * 0.75

(c)

(d)

= (b) - (c)

(e)

(f)

= (a) - (c) - (d) - (e)

(g)

= (a) - (c) - (e)

2017

2018

9,894,646

7,420,985

2,140,169

5,280,816

271,473

2,202,189

7,483,004

2018

2019

14,784,110

11,088,083

1,893,926

9,194,157

650,419

3,045,609

12,239,765

2019

2020

20,131,126

15,098,344

3,858,926

11,239,418

5,032,781

16,272,200

2020

2021

21,988,118

16,491,089

3,856,036

12,635,053

5,497,030

18,132,082

3.17. RPS Budget

As described in Section 3.5, the Act imposes monetary limitations on the RPS in the form of a cost cap

that limits the annual average net increase in rates to all eligible retail customers. The cost cap rate,

in cents per kilowatt-hour, is unique to each utility and is provided in Table 3-2. The cents per

kilowatt-hour rate is applied to the actual electricity (expressed in kilowatt-hours) delivered in the

delivery year immediately prior to determine a maximum dollar amount which constitutes the RPS

Budget for the delivery year. Specifically, the Act states that:

“Notwithstanding the requirements of this subsection (c), the total of renewable energy

resources procured under the procurement plan for any single year shall be subject to

the limitations of this subparagraph (E). Such procurement shall be reduced for all retail

customers based on the amount necessary to limit the annual estimated average net

Long-Term Renewable Resources Procurement Plan August 6, 2018

increase due to the costs of these resources included in the amounts paid by eligible

retail customers in connection with electric service to no more than the greater of

2.015% of the amount paid per kilowatthour by those customers during the year ending

May 31, 2007 or the incremental amount per kilowatthour paid for these resources in

2011. To arrive at a maximum dollar amount of renewable energy resources to be

procured for the particular delivery year, the resulting per kilowatthour amount shall

be applied to the actual amount of kilowatthours of electricity delivered, or applicable

portion of such amount as specified in paragraph (1) of this subsection (c), as applicable,

by the electric utility in the delivery year immediately prior to the procurement to all

retail customers in its service territory. The calculations required by this subparagraph

(E) shall be made only once for each delivery year at the time that the renewable energy

resources are procured. Once the determination as to the amount of renewable energy

resources to procure is made based on the calculations set forth in this subparagraph

(E) and the contracts procuring those amounts are executed, no subsequent rate impact

determinations shall be made and no adjustments to those contract amounts shall be

allowed. All costs incurred under such contracts shall be fully recoverable by the electric

utility as provided in this Section.”

195

A utility’s annual RPS Budget is calculated as shown in equation (2).

(2) Annual RPS Budget ($/Year) = Prior Year Delivered Electricity (MWh) * Cost Cap Rate

($/MWh)

A utility’s delivery year remaining available gross RPS Budget (“Available Gross RPS Budget”) is

determined by subtracting from the utility’s total RPS Budget the direct financial obligations

associated with existing REC contracts (“Contracted REC Spend”) and the estimated direct financial

obligations associated with the Initial Forward Procurement (“Estimated REC Spend”), as shown in

equation (3).

196

(3) Delivery Year Available RPS Budget = Annual RPS Budget (equation 2) – Contracted

REC Spend – Estimated REC Spend

For the purpose of establishing funds available for REC purchases, as explained in the following

Section, the Available Gross Budget amount will be adjusted prior to any procurement to account for

indirect costs: (i) allocation to fund the Illinois Solar for All Program, (ii) allocation to fund job

training programs, and (iii) set aside for administrative expenses.

3.17.1. Utilities Budgets

Table 3-12 through Table 3-14 show, for each utility, the corresponding Cost Cap Rate, the RPS

Budget, the Prior Year Delivered Electricity, Contracted REC Spend, Estimated REC Spend associated

with the Initial Forward Procurement, and the Available Gross RPS Budget for delivery years 2017-

195

20 ILCS 3855/1-75(c)(1)(E).

196

In the event that the cost cap limitations conflict with the RPS goals and targets such that the IPA cannot procure sufficient additional

quantities of RECs to meet the RPS goals or targets, priority for procurement shall first be given to RECs under existing contractual

obligations, followed by RECs for the Illinois Solar for All Program, followed by RECs necessary to comply with the new wind and solar

procurement requirements, and finally RECs necessary to meet the remaining RPS requirements. 20 ILCS 3855/1-75(c)(1)(F). In its Order

approving the Plan, the Commission determined that “such a conflict is possible” if the Agency were to conduct procurements to meet the

remaining RPS requirements (i.e., the annual goals found in Section 1-75(c)(1)(B) of the Act), and thus granted various parties’ requests

to cancel those procurements. Docket No. 17-0838, Final Order dated April 3, 2018 at 41-42.

Long-Term Renewable Resources Procurement Plan August 6, 2018

2018 through 2020-2021. The Available Gross RPS budget is an estimate that will be updated prior

to conducting competitive REC procurements and prior to the implementation of Programs under

this Plan that depend on the RPS Budget.

In addition to direct expenditures on RECs, RPS budgets will also feature allocations for several

additional purposes. First, pursuant to Section 1-75(c)(1)(O) of the Act, the greater of 5% or

$10,000,000 (of the combined RPS budgets of the utilities) each year will be allocated to the Illinois

Solar for All Program. See Section 8.4 for details on that allocation. Second, also pursuant to Section

1-75(c)(1)(O), in each of the delivery years 2017-2018, 2021-2022, and 2025-2026, $10,000,000 of

ComEd’s RPS budget will be allocated to fund job training programs pursuant to Section 16-108.12

of the PUA. Third, a reasonable amount of each budget will be set aside for administrative expenses

(including, but not limited to, expenses related to development of this Plan and future updates, the

management of procurements and programs, Adjustable Block Program Administrator expenses not

covered by fees charged to participants, and fees charged by tracking systems for the retirement of

RECs). The IPA proposes initially to set aside 3% of the budget for these administrative expenses, and

will refine this set aside as more information becomes available.

Unspent funds for delivery years 2017-2018 through 2020-2021 will roll over and be available for

the subsequent delivery year, provided that the roll over funds must be applied on or before May 31,

2021. Up to half of any roll over funds, moreover, may be allocated to cover any “funding shortfall”

for the Illinois Solar for All Program (see Sections 2.6.1 and 8.4.3 for more details).

197

The Agency will

update RPS budgets on an annual basis to reflect these various adjustments.

Table 3-12. Ameren Illinois RPS Budget

198

Delivery Year

Prior Year

Delivered

Electricity

(MWh)

Cost Cap

Rate

($/MWh)

RPS Budget

Contracted

REC Spend

Estimated

REC Spend

Initial

Forward

Procurement

Available Gross

RPS Budget

(est.)

2017-2018

21,152,970

1.8054

$38,189,571

$9,412,155

$28,777,416

2018-2019

29,995,820

1.8054

$54,154,453

$8,000,000

$46,154,453

2019-2020

37,993,441

1.8054

$68,593,358

$7,999,000

$2,742,210

$57,852,148

2020-2021

38,017,110

1.8054

$68,636,091

$7,753,000

$2,742,210

$58,140,881

197

See 220 ILCS 5/16-108(k).

198

Does not include indirect allocations, administrative set aside, ARES ACP funds collected by the utility, or uncommitted Hourly ACP

funds.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Table 3-13. ComEd RPS Budget

199

Delivery Year

Prior Year

Delivered

Electricity

(MWh)

Cost Cap

Rate

($/MWh)

RPS Budget

Contracted

REC Spend

Estimated

REC Spend

Initial

Forward

Procurement

Available

Gross RPS

Budget (est.)

2017-2018

54,420,529

1.8917

$102,947,315

$23,718,264

$79,229,051

2018-2019

71,460,380

1.8917

$135,181,601

$23,357,415

$111,824,186

2019-2020

87,121,731

1.8917

$164,808,179

$23,484,084

$6,576,451

$134,747,644

2020-2021

87,012,436

1.8917

$164,601,426

$23,095,360

$6,576,451

$134,929,615

Table 3-14. MidAmerican RPS Budget

200

Delivery Year

Prior Year

Delivered

Electricity

(MWh)

Cost Cap

Rate

($/MWh)

RPS Budget

Contracted

REC Spend

Estimated

REC Spend

Initial

Forward

Procurement

Available

Gross RPS

Budget (est.)

2017-2018

539,165

1.2415

$669,373

$111,829

$557,544

2018-2019

503,181

1.2415

$624,699

$111,829

$512,870

2019-2020

704,364

1.2415

$874,468

$111,829

$30,851

$731,787

2020-2021

616,844

1.2415

$765,812

$111,829

$30,851

$623,131

Table 3-15. Statewide RPS Budget

201

Delivery Year RPS Budget

Contracted

REC Spend

Estimated

REC Spend

Initial

Forward

Procurement

REC Spend

Available

Gross RPS

Budget (est.)

2017-2018

$141,806,259

$33,242,248

$108,564,011

2018-2019

$189,960,753

$31,469,244

$158,491,509

2019-2020

$234,276,005

$31,594,913

$9,349,512

$193,331,580

2020-2021

$234,003,329

$30,960,189

$9,349,512

$193,693,627

199

Does not include indirect allocations, administrative set aside, ARES ACP funds collected by the utility, or uncommitted Hourly ACP

funds.

200

Does not include indirect allocation, administrative set aside, or ARES ACP funds collected by the utility.

201

Does not include indirect allocation, administrative set asides, ARES ACP funds collected by the utilities, or uncommitted Hourly ACP

funds.

Long-Term Renewable Resources Procurement Plan August 6, 2018

3.18. Summary of REC Procurement Targets and RPS Budgets

The aggregation of REC Targets and RPS Budgets at a statewide level provides an important tool for

planning and implementing the various procurements and programs under this Plan. The table below

presents a snapshot summary of the REC Gap to be procured and Available Gross RPS Budget, which

together are essential factors to achieve the RPS Goals set forth by the Act.

Table 3-16. Statewide REC Gap and Available RPS Budget

202

Delivery Year

Overall REC

Procurement Target

(REC Gap)

Available

Gross RPS

Budget (est.)

2017-2018

7,483,004

$108,564,011

2018-2019

12,239,765

$158,491,509

2019-2020

16,272,200

$193,331,580

2020-2021

18,132,082

$193,693,627

3.19. Alternative Compliance Payment Funds Held by the Utilities

As of June 30, 2018, Ameren Illinois had $15.8 million and ComEd $31.8 million of alternative

compliance payments collected from retail customers that take service under electric utilities' hourly

pricing tariff or tariffs. These funds are being used to fund the REC purchases from the 2015 through

2017 distributed generation procurements the Agency conducted for the utilities, which featured

five-year REC delivery contracts with payment upon delivery (and not prepayment).

203

The final

distributed generation procurement occurred on October 13, 2017. With the completion of that

procurement, and as of June 30, 2018, the remaining balance of unallocated hourly alternative

compliance payments is $11.2 million for Ameren Illinois, and $22 million for ComEd. Also, as of June

30, 2018, Ameren Illinois had $23.4 million, ComEd $41 million, and MidAmerican $0.01 million of

alternative compliance payment funds collected from ARES since June 1, 2017.

204

The utilities will

continue to collect alternative compliance payments from ARES in 2018 and 2019 as ARES RPS

compliance obligations phase out.

In its filed Plan, the IPA proposed to set aside the uncommitted balance of the Hourly ACP funds, as

well as the ARES ACP funds collected by the utilities (a total of $97.6 million as of June 30, 2018

205

)

for use at a later date in the event of a shortfall in the Available RPS Budgets, contemplating that the

uncommitted funds could also be a source of the available funds used to help support the Illinois

Solar for All Program. In its Order approving the Plan, while the Commission agreed with the IPA

202

Does not include indirect allocation, administrative set asides, ARES ACP funds collected by the utilities, uncommitted Hourly ACP funds.

203

2016 and 2017 Distributed Generation procurements for MidAmerican were funded out of MidAmerican’s Renewable Energy Resources

budget, as MidAmerican does not have any Hourly Alternative Compliance Payments.

204

Section 16-115D of the PUA provides that while “[t]hrough May 31, 2017, all alternative compliance payments by alternative retail

electric suppliers shall be deposited in the Illinois Power Agency Renewable Energy Resources Fund,” “beginning with the delivery year

commencing June 1, 2017, all alternative compliance payments by alternative retail electric suppliers shall be remitted to the applicable

electric utility” and not deposited into the RERF. (220 ILCS 5/16-115D(d)(4), (4.5).) See also 83 Ill Adm. Code Part 455. ComEd’s balance

reflects interest earned on the ARES ACP funds held by ComEd, while Ameren Illinois’ and MidAmerican’s do not.

205

Additional ARES ACP funds will be collected by the utilities in the late Summer or early Fall of 2018 and 2019.

Long-Term Renewable Resources Procurement Plan August 6, 2018

that “spending ACP funds on RECs in the first four delivery years, while funds collected pursuant to

Section 16-108(k) are unspent and refunded, would be contrary to the statutory intent of increasing

the amount of renewable energy resources procured,” the Commission ultimately found that “the

best use of these funds is to provide funding for new wind and new solar” and thus ACP funds should

be used to fund “an additional forward procurement,” with funding for that procurement “prioritized

such that any funds collected pursuant to Section 16-108(k) should be used prior to the ACP

funds.”

206

3.20. Impact of RPS Budget on Procurement Volumes

As explained in prior sections of this Chapter, the available RPS Budgets may limit the quantity of

RECs that can be procured to meet the RPS goals. For example, as presented in the tables above, for

the 2020-2021 delivery year, an estimate of the available Gross RPS Budget statewide is $192 million;

for a delivery year featuring a gap of approximately 18 million RECs; this indicates that a budget of

roughly $11 per REC is available to meet the RPS Goal for that delivery year. However, the REC Gap

is expected to be addressed through RECs procured from a various procurements and programs:

forward procurements, the Adjustable Block Program, and the Illinois Solar for All Program. The REC

prices for these will likely vary greatly, and the Adjustable Block Program and Illinois Solar for All

Program both feature payment for RECs that is heavily front-loaded.

While the Agency in Chapter 6 has proposed REC prices for the Adjustable Block Program, the timing

between when a project reserves its REC price from an applicable Block and when it is energized and

thus begins receiving payments (which are front-loaded to varying degrees) is not yet known because

that program is designed to allocate RECs to projects before they are built, and the lag between

reserving funds and the start of payment after development is complete and the project energized

could be as much as two years.

207

Furthermore, the Agency has proposed measures to potentially cap

the number of projects in specific Block groups under the Adjustable Block Program to help prevent

creating contractual obligations greater than the available funding available. In addition, the Agency

has a long-standing policy not to publicly speculate on, or suggest, future REC prices related to

competitive procurements. This creates a slight challenge in terms of discussing when the RPS

Budgets will become limited. One mitigating factor is that through the 2020-2021 delivery year,

unspent funds can be rolled over from one year to the next. Given that the proposals contained in this

Plan will not launch until the 2018-2019 delivery year, the Agency expects that the amount of

accumulated roll-over in the initial years could be substantial. That roll-over will be further

supplemented by the hourly ACP funds that have been collected and not allocated to the prior utility

DG procurements, as well as the ARES ACP funds that have been collected and will be collected in

2017-2018 and 2018-2019 (although under the Commission’s Order in Docket No. 17-0838, ACP

funds are dedicated specifically for the purpose of funding additional forward procurements, as

discussed above).

208

In light of those observations, the Agency does not expect that the procurements and programs

proposed in this Plan will be limited by available RPS budget funds through at least the 2020-2021

206

Docket No. 17-0838, Final Order dated April 3, 2018 at 8.

207

See Sections 6.15.1 and 6.15.2.

208

See Docket No. 17-0838, Final Order dated April 3, 2018 at 8.

Long-Term Renewable Resources Procurement Plan August 6, 2018

delivery year.

209

The Agency will refine and update this estimate when it updates this Plan in 2019

for implementation in calendar year 2020, and if it appears there will be limitations created in the

available RPS Budget, the Agency will propose procurement and program approaches to address

those limitations proactively including potentially setting specific budgets for individual programs

and procurements.

210

Nonetheless, through 2019, the Agency will carefully monitor the results of its

procurements and programs and will adjust procurement and program volumes accordingly if it

finds it necessary to do so.

209

While the Commission’s Order in Docket No. 17-0838 significantly increased REC procurement volumes for additional forward

procurements of RECs from new wind projects and new photovoltaic projects, those contracts do not feature prepayment and the Agency

believes that those projects are unlikely to begin REC deliveries until well after contract execution—and thus are unlikely to significantly

impact RPS budgets prior to the 2020-2021 delivery year.

210

Any such allocations would be made consistent with the priorities outlined in Section 1-75(c)(1)(F) of the Act and consistent with any

other immutable obligations in the governing law.

Long-Term Renewable Resources Procurement Plan August 6, 2018

4. Renewable Energy Credit Eligibility

To be eligible for use in compliance with the Illinois RPS, RECs are required to meet a variety of

eligibility requirements. First, the RECs are to be sourced from generating technologies permitted in

the definition of “renewable energy resources” contained in Section 1-10 of the Act. The revised

definition contained in the Act removes the category “other alternative sources of environmentally

preferable energy” from the definition.

211

Second, Public Act 99-0906 added two new eligibility

requirements in Subsections (I) and (J) of Section 1-75(c)(1). Subsection (I) creates locational

eligibility criteria, while subsection (J) creates criteria related to how a facility that generates RECs

recovers its costs. This Chapter discusses how the Agency interprets and will implement these two

new requirements.

4.1. Adjacent State Requirement

Section 1-75(c)(1)(I) of the IPA Act, a new provision contained in Public Act 99-0906, created a new

locational eligibility requirement for the Illinois RPS. This requirement replaces the prior standard,

which was that renewable energy resources could come from Illinois and adjoining states, and if not

available, then they could come from elsewhere.

212

The new locational requirement specifies that

qualifying renewable energy credits can be generated by facilities located in Illinois, and may be

sourced from facilities in adjacent

213

states—but only if these facilities can meet a set of public

interest criteria. While not explicitly stated in the statute, the Agency understands that the

consideration of the public interest criteria for adjacent states means that renewable energy credits

from states that are not adjacent to Illinois (or for that matter, from other countries) would not be

eligible for the Illinois RPS.

The public interest criteria that the Agency is instructed to consider include:

1. Minimizing sulfur dioxide, nitrogen oxide, particulate matter and other pollution that

adversely affects public health in this State

2. Increasing fuel and resource diversity in this State

3. Enhancing the reliability and resiliency of the electricity distribution system in this State

4. Meeting goals to limit carbon dioxide emissions under federal or state law

5. Contributing to a cleaner and healthier environment for the citizens of this State

The Act specifies that the Agency “may qualify renewable energy credits from facilities located in

states adjacent to Illinois if the generator demonstrates and the Agency determines that the

211

This leaves the definition as, "‘[r]enewable energy resources’ includes energy and its associated renewable energy credit or renewable

energy credits from wind, solar thermal energy, photovoltaic cells and panels, biodiesel, anaerobic digestion, crops and untreated and

unadulterated organic waste biomass, tree waste, and hydropower that does not involve new construction or significant expansion of

hydropower dams. For purposes of this Act, landfill gas produced in the State is considered a renewable energy resource. `Renewable

energy resources’ does not include the incineration or burning of tires, garbage, general household, institutional, and commercial waste,

industrial lunchroom or office waste, landscape waste other than tree waste, railroad crossties, utility poles, or construction or demolition

debris, other than untreated and unadulterated waste wood.”

212

Former 20 ILCS 3855/1-75(c)(3), repealed June 1, 2017.

213

For the purpose of assessing eligibility for compliance with the Illinois RPS, the Agency defines only states that have a common border

as states adjacent to Illinois: Wisconsin, Iowa, Missouri, Kentucky, Indiana, and Michigan. Michigan is considered adjacent due to the border

between Illinois and Michigan that exists in Lake Michigan. This is consistent with how other State Agencies interpret the federal Coastal

Zone Management Act. See for example, https://www.dnr.illinois.gov/cmp/documents/3_boundary.pdf

Long-Term Renewable Resources Procurement Plan August 6, 2018

operation of such facility or facilities will help promote the State's interest in the health, safety, and

welfare of its residents based on the public interest criteria described above.”

214

To do so, and to “ensure that the public interest criteria are applied to the procurement and given full

effect”, the Plan “shall describe in detail how each public interest factor shall be considered and

weighted for facilities located in states adjacent to Illinois.” This Chapter provides that description.

Developing a methodology for considering and weighting these public interest criteria creates

certain challenges. The complex nature of an interconnected electric power grid and associated

system operations (i.e., generation dispatch for economics and reliability), and how pollution flows

across states, all prevent the Agency from simply quantifying and scoring facility eligibility requests

using easily obtainable data. While predictions can be simulated, there is not one clear, unassailable

way to determine how a renewable energy facility in an adjacent state will meet the public interest

criteria.

Instead, the Agency has developed what it believes are reasonable proxies for each criterion. The

Agency notes that it developed a similar set of criteria for use in its Zero Emission Standard

Procurement Plan (“ZES Plan”) developed pursuant to Section 1-75(d-5) of the Act, which was

approved by the Commission on September 11, 2017 in Docket No. 17-0333. That ZES Plan includes

consideration of how to minimize sulfur dioxide, nitrogen oxide, and particulate matter emissions

that would result from the potential closure of zero emission facilities (i.e., nuclear plants located in

PJM or MISO).

The circumstances under consideration in that plan were different; for the ZES Plan, the challenge

was in determining what generation would replace a zero emission (nuclear) facility should it close

(and its associated environmental effects), rather than assessing the value that a renewable

generating facility would add to the grid and the environment. For example, while based conceptually

on the same approach used for the ZES Plan, the basis for determining compliance with one of the

public interest criteria in this Plan is focused on the displacement of potential new non-renewable

gas-fired generation by renewable generation that could be eligible to supply RECs to meet the

Illinois RPS requirements. Among the differences from the ZES Plan scoring approach are that

renewable generating facilities are likely to be intermittent rather than baseload (a defining

characteristic of zero emission facilities), typically impact generation on the margin of the dispatch

order, and are generally smaller in size relative to the ZES replacement generation.

To assess whether a renewable generating facility located in an adjacent state is eligible to participate

in the IPA’s REC procurements to meet the Illinois RPS, the Agency will assign a maximum of 20

points to each of the five public interest criteria, as described below, for a total of 100 possible points.

For a renewable energy generating facility in an adjacent state to have its RECs considered eligible

for the Illinois RPS, the IPA proposes that an adjacent state facility would need to demonstrate that it

can achieve a total score of at least 60 points for the Agency to approve that request. The IPA believes

that this score threshold – one which requires a better than average score demonstrating benefits to

the health, safety, and welfare of Illinois residents, but yet not too onerous to prohibit any adjacent

state participation – provides a balanced approach to ensuring that adjacent state facilities indeed

214

20 ILCS 3855/1-75(c)(1)(I).

Long-Term Renewable Resources Procurement Plan August 6, 2018

provide sufficient benefits consistent with the law’s directive.

215

The Agency commits to review and

analyze not only this scoring threshold, but also the Agency’s proposed methodology for the

consideration of adjacent state facilities, for its 2019 update of this Plan.

The Agency also notes that there are two wind facilities in adjacent states that were the recipients of

contracts from the 2010 Long-Term Renewable Resources Procurement. One in Iowa has a contract

with Ameren, while one in Indiana has a contract with ComEd. As these facilities were granted

contracts at a time that Illinois law viewed them as providing sufficient benefits to Illinois residents

for their renewable energy resources to be used to meet the Illinois RPS, the Agency proposes that

these two facilities be grandfathered into this requirement.

4.1.1. Public Interest Criteria

1. Minimizing sulfur dioxide, nitrogen oxide, particulate matter and other pollution that

adversely affects public health in this State

In the Zero Emission Standard Procurement Plan, the Agency developed a scoring methodology for

sulfur dioxide, nitrogen oxide, and particulate matter that considered the likely location of

replacement generation compared to a bidding zero emission facility that could be at risk of ceasing

operation. That methodology calculated, for any given zero emission facility, the percentage of the

replacement generation that would occur in various states, an emissions factor related to each of

those states based on its existing coal and gas generation, and an adjustment factor that recognized

the frequency of prevailing winds and the distance from Illinois that could predict the amount of

pollution that would impact the residents (and thus public health) of Illinois.

For the purposes of this Plan and the consideration of this criterion, the Agency refines and simplifies

the methodological approach utilized in the ZES Plan. Under the ZES Plan, emissions are associated

with replacement of generation located anywhere in PJM or MISO; for the purposes of this Plan, the

Agency will consider that a renewable energy facility would displace the emissions of a typical new

natural gas-fired generation facility.

In the ZES Plan, the Agency weighted replacement generation across multiple states, in recognition

that replacement generation for a large Zero Emission Facility would likely come from multiple

sources (replacement generation would be a combination of changed dispatch of existing generation

units as well as the potential development of new generating units).

216

For this Plan, the Agency

simplifies that weighting to focus on comparing emissions from renewable generation to the

emissions from a new natural gas-fired generating facility. This assumption reflects the fact that

recent and anticipated additions to the resource mix in PJM and MISO will be predominantly natural

gas, wind or solar

217

and natural gas is increasingly the fuel on the margin for both PJM and MISO,

215

In its Order approving the Plan, the Commission approved of this 60 point scoring threshold, finding that “the IPA’s general methodology

is a reasonable implementation of PA 99-0906 and a basic passing score of 60 points is an appropriate threshold.” Docket No. 17-0838,

Final Order dated April 3, 2018 at 20.

216

Specifically, 33% of the replacement generation was assumed to be in the bidding zero emission facility’s own state, and the remaining

67% of replacement generation was assumed to occur across the relevant RTO, allocated by states based on each state’s share of RTO-wide

generation. ZES Plan, July 31, 2017, https://www.icc.illinois.gov/downloads/public/edocket/451223.pdf

, at 37.

217

The North American Electric Reliability Corporation 2016 Long-Term Reliability Assessment (December 2016) notes that capacity

additions in the Eastern Interconnection (which includes PJM and MISO) for the period 2015 through 2016 are forecasted to be more than

95 percent natural gas, wind, or solar. In the March 2017 report, “PJM’s Evolving Resource Mix and System Reliability”

(

http://www.pjm.com/~/media/library/reports-notices/special-reports/20170330-pjms-evolving-resource-mix-and-system-

reliability.ashx), PJM states that from 2010 to 2016, natural gas and renewable made up 87 percent of new megawatts placed in service.

Long-Term Renewable Resources Procurement Plan August 6, 2018

and thus more appropriate for comparison than, say, a baseload coal facility.

218

As discussed below,

this comparison is a relevant factor in the evaluation criteria for renewable technologies that involve

combustion (thus not including wind, solar, or hydro).

To simplify the calculation, the emissions comparison includes SO

and NO

as proxies for all

emissions because higher emissions of SO

and NO

are generally correlated with higher emissions

of PM, especially with regard to facilities that involve the combustion of solid fuels. The SO

and NO

are primary sources of PM

2.5

in ambient air away from the immediate emissions source, as coarse PM

(PM

) is deposited nearer the source, while secondary PM

2.5

increases based on the formation of

sulfates and nitrates from the SO

and NO

in the atmosphere as the pollutants move away from the

primary source.

219

The following table shows SO

, NO

, and CO

emissions rates of new natural gas-

fired generation based upon 2016 data from the U.S. Energy Information Agency (“EIA”).

220

Table 4-1: Natural Gas-Fired Generation Emissions Rates

Pollutant

Pounds/MWh

0.007

0.05

772

The calculation of the score will multiply an emissions factor for the renewable resource facility

(scaled from 0 to 1) by a wind duration/direction factor (scaled from 0 to 1) and then by 20 points

to determine the number of points awarded for this criterion.

The emissions factor is calculated by taking one minus: the sum of the eligible renewable resource’s

and NO

emissions in pounds/MWh divided by the sum of the SO

and NO

emissions from a new

natural gas-fired generation facility in pounds/MWh.

The emissions factor for renewable energy generating facilities such as wind, solar, or hydro, which

do not emit SO

, NO

, or Particulate Matter, would be 1.0 because those facilities would have zero in

the numerator of the part of the equation that is subtracted from one.

For other renewable generating technologies, the Agency notes that those technologies eligible for

the Illinois RPS include a combination of technologies that rely on combustion of a fuel source

including biodiesel, anaerobic digestion (which presumably would create a biogas that is then

burned), biomass, and tree waste; and other technologies that do not involve combustion (e.g., wind,

solar thermal, photovoltaic, and hydro power).

221

Renewable generation technologies that involve

combustion to generate electricity generate sulfur dioxide, nitrogen oxide, particulate matter, and

218

See: Potomac Economics, “2016 State of the Market Report for the MISO Electricity Markets,” June 2017,

https://www.potomaceconomics.com/wp-content/uploads/2017/06/2016-SOM_Report_Final_Rev.pdf

; Monitoring Analytics, LLC, “Q2

2017 State of the Market Report for PJM January through June,” August 10, 2017,

http://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2017.shtml.

219

U.S. EPA, “Particulate Matter Emissions,” Report on the Environment, http://www.epa.gov/roe/.

220

Emissions rates for a natural gas turbine operating in combined cycle with a heat rate of 6,600 Btu/kWh are shown in Table 2-5 of the

November 2016 U.S. EIA Report “Capital Cost Estimates for Utility Scale Electricity Generating Plants.” The CO

emissions in pounds per

MMBtu are 117 for CO2, 0.001 for SO

, and for NOx 0.0075; which at the heat rate of 6,600 Btu/kWh, are 772 pounds per MWh of CO

0.007 pounds per MWh of SO

, and 0.05 pounds per MWh of NOx. See:

https://www.eia.gov/analysis/studies/powerplants/capitalcost/pdf/capcost_assumption.pdf

221

While landfill gas produced in Illinois is eligible, it is not relevant to this discussion of facilities located in adjacent states.

Long-Term Renewable Resources Procurement Plan August 6, 2018

, among other things. In order to assess the emissions impact of renewable resource technologies

that involve combustion, the emissions from these facilities are compared to the emissions from a

new natural gas-fired facility. To the extent that the technologies that involve combustion generate

and NO

emissions, and the emissions in pounds/MWh are lower than the emissions from a new

gas-fired facility, then the calculation for the renewable energy facility would result in the facility

receiving points for this criterion. On the other hand, if the emissions are equal to or greater on a

pounds/MWh basis than from a new natural gas-fired facility, then the calculation would result in

the facility receiving zero points for this criterion. This reflects that an emissions rate that is greater

than that for a natural gas-fired facility does not have a positive impact on the environment and public

health.

The Zero Emission Standard Plan included consideration of wind direction and duration as well as

the distance from Illinois to modify the emissions criteria scoring. In scoring the emissions related

public interest criterion for this Plan, the Agency simplifies the wind duration/direction approach.

Since the renewable generating facilities supplying RECs from outside of Illinois must be located in

the states adjacent to Illinois (as opposed to anywhere within PJM and MISO under the Zero Emission

Standard), the consideration of distance is less important and will not be considered in the approach

adopted for this Plan.

The following table provides the wind duration/direction factors for each adjacent state.

Table 4-2: Wind Duration/Direction Factors

Adjacent State

Wind Direction Sectors

Wind Direction and

Duration Factor

222

Indiana

SSE, SE, ESE, E, NNE, NE, ENE

0.256

Kentucky

S, SSE, SE

0.201

Missouri

W, WSW, SW, SSW, S

0.439

Iowa

W, WNW, NW, NNW

0.269

Wisconsin

N, NNW

0.096

Michigan

NE, NNE

0.088

The wind duration factor is based on the percentage of the time the wind blows into Illinois from 16

directional sectors that form all of the directions in 360 degrees around Illinois. For example, the

wind blowing from Indiana would encompass seven directional sectors from which the wind blows

on average 25.6 percent of the time. Thus, for example, a solar facility located in Indiana would

receive 1 x 0.256 x 20 or 5.1 points. The following equation shows how this score is obtained (with

the caveat that the minimum possible score is zero and cannot be a negative score)

223

222

Total factors exceed 1.0 because there may be more than one state represented in a given wind direction sector.

223

See Docket No. 17-0838, Final Order dated April 3, 2018 at 21.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Figure 4-1: Pollution Score Calculation

20 /

××





































−=

∑

FactorDirectionDuration

Wind

MWh

lbs

NOandSO

MWh

lbs

and

Score

resourcegas

resourcerenewable

2. Increasing fuel and resource diversity in this State

Fuel and resource diversity generally refers to the use of a balanced group of generating facilities and

technologies which results in reducing the risk that a specific technology could adversely impact

overall system reliability. For example, PJM defines fuel diversity as: utilizing multiple resource types

to meet demand such that a sufficiently diversified system is expected to provide the flexibility and

adaptability to: “1) mitigate risk associated with equipment design issues or common modes of

failure in similar resource types, 2) address fuel price volatility and fuel supply disruptions, and 3)

reliably mitigate instabilities caused by weather and other unforeseen system shocks.”

224

In effect,

fuel and resource diversity can act as a hedge to help ensure a stable and reliable supply of electricity.

Any generation source that promotes more reliance on generation sources other than coal and

nuclear, which presently have generation shares of 38% and 50.2% of Illinois’ total generation

respectively, would contribute to increasing fuel and resource diversity in Illinois. By this measure,

any of the eligible renewable energy resource generating technologies would contribute to diversity

in Illinois. However, since these facilities would be located outside of Illinois, in the adjacent states,

the full impact on the State’s fuel and resource diversity depends on whether the electricity generated

by these facilities could actually be available to Illinois end-users.

Given that renewable generation is currently only a small fraction of the resource mix for Illinois, the

increase of renewable generation in the region could increase the fuel and resource diversity of

Illinois. However, the Agency notes that Illinois is a net exporter of electricity, so the impact on fuel

and resource diversity in Illinois may be limited for facilities located in adjacent states. But while

Illinois is a net exporter of electricity, that does not mean that there is no impact on Illinois from

electricity generated in adjacent states, because on an hour-to-hour basis electricity may flow into,

or out of, Illinois. In order to address this issue for facilities located in the adjacent states, the Agency

will use the location of the renewable resource facility relative to Illinois as the basis for modifying

the fuel and resource diversity score. A distance factor will be calculated for each facility.

225

The

distance factor will be based on the distance from the facility to Morris, Illinois (which is the town

closest to the population weighted geographic center of Illinois,

226

and thus can serve as a reasonable

proxy for the load-weighted center of the state). The factor will be calculated as 1 minus the ratio of

(i) the distance from the facility to Morris and (ii) 470 miles, which is roughly the furthest point in an

adjacent state from Morris. Consistent with the Commission’s Order in Docket No. 17-0838, the

224

PJM, “PJM’s Evolving Resource Mix and System Reliability,” March 2017, available at: http://www.pjm.com/~/media/library/reports-

notices/special-reports/20170330-pjms-evolving-resource-mix-and-system-reliability.ashx.

225

Because wind farms cover a large geographic area, a wind farm’s distance would be based on the border of the closest county containing

turbines that are part of that wind farm.

226

Based on the 2010 Census. See: https://www2.census.gov/geo/docs/reference/cenpop2010/CenPop2010_Mean_ST.txt.

Long-Term Renewable Resources Procurement Plan August 6, 2018

center point of the City of Morris will be used for this calculation.

227

That factor will be multiplied by

the maximum possible 20 points.

Additionally, consistent with the Commission’s Order in Docket No. 17-0838 and the approach taken

with respect to the third criteria below, a facility “that is not connected to either PJM or MISO” will

receive a Fuel and Resource Diversity Score of zero.

228

Adjacent state generation facilities “within a

transmission control area that have a transmission usage agreement with PJM or MISO” may still

receive non-zero scores under Criteria 2 and 3, however.

229

Figure 4-2: Fuel and Resource Diversity Score

 =

(

1   /,  0

)

1 

    , 

(



)

 

 20

3. Enhancing the reliability and resiliency of the electricity distribution system in this

State.

While this criterion references the “electricity distribution system” and that term is generally

understood to mean the local distribution system that serves homes and businesses and not the

transmission grid that transports power over longer distances (and across state lines), the Agency is

concerned that, read literally, there would be no direct way for a facility in an adjacent state to meet

this criterion because a facility in an adjacent state would have (at best) only an incidental impact on

the distribution system (or more accurately systems, each operated by a different utility) within

Illinois. With that in mind, the Agency proposes to interpret this criterion more liberally and consider

the impact on the grid more generally, as distribution service is ultimately supported by the

reliability of transmission service. The scoring for this public interest criterion involves a threshold

and, based on the assumption that generating facilities located closer to Illinois would have a more

beneficial impact on the State’s distribution system reliability and resiliency, a distance factor. The

criterion can be understood to refer to the transmission systems operated by PJM and MISO. To the

extent that a facility in an adjacent state is not interconnected to the PJM or MISO grid (for example,

in the portions of Iowa and Missouri that are part of the Southwest Power Pool(“SPP”)), those

facilities would not score any points for this criterion. Otherwise, a facility in an adjacent state that is

in either of the PJM or MISO control areas (or “within a transmission control area that have a

transmission usage agreement with PJM or MISO”) would be eligible to receive points. To obtain the

distance factor, the Agency will use an approach that considers proximity to Illinois and thus an

increased likelihood that electricity produced will provide increased system reliability and resilience.

The scoring for this public interest criterion will utilize the same distance factor as is applied to the

fuel and resource diversity scoring.

227

See Docket No. 17-0838, Final Order dated April 3, 2018 at 21.

228

Id. The Commission also offered that “if a facility is not connected to PJM or MISO, it should not be allowed to participate in Illinois’ RPS

procurement;” the Agency believes that because such a facility would score 0 out of 20 points on Criteria 2 and 3 and given the 60 point

threshold, an adjacent state facility not connected to PJM or MISO would effectively be eliminated from consideration and no further scoring

adjustments must be taken to give effect to the Commission’s intent.

229

Id.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Figure 4-3: Reliability and Resiliency Score

( )

miles 470

(miles) IL Morris, ofacility t from Distance

1 0 else PJM/MISO;in if 1 ×













−×=Score

4. Meeting goals to limit carbon dioxide emissions under federal or State law

Due to the stay of the United States Environmental Protection Agency’s (“US EPA”) Clean Power Plan

imposed by the U.S. Supreme Court in February 2016, there are not currently any enforceable federal

laws or regulations that limit carbon dioxide emissions from existing power generation facilities.

230

Illinois does not have any specific law that limits carbon dioxide; however, there are multiple

provisions of Illinois law, such as the Zero Emission Standard and the Renewable Energy Portfolio

Standard, that recognize the value of minimizing carbon dioxide emissions even if those provisions

do not create explicit limits. To recognize the value in reducing carbon dioxide emissions, the Agency

will determine the score for each renewable resource facility by adjusting the 20 points available for

this criterion by a factor which reflects the ratio of the CO

emissions from the renewable resource

to the CO

emissions from a new natural gas fired generating facility, 772 pounds of CO

per MWh, as

shown in Table 4-1 above. This will be done by using the formula applied to the first emissions

criterion except that the inputs will be pounds of CO

emitted per MWh. The factor applied to the 20

points available for this public interest criterion will be calculated as follows:

Figure 4-4: CO

Score Calculation

MWh

lbs

MWh

lbs

resource

gas

resource

renewable





































−=

Score

Renewable generating facilities that do not emit any CO

will receive the full 20 points, while

renewable generating facilities that emit CO

will receive points based on the factor multiplied by the

20 points. Since CO

emissions are generally considered to be a global problem, in that CO

emissions

anywhere on the planet contribute to global warming, which affects the health and welfare of the

citizens of Illinois, wind direction, duration, and distance from Illinois’s load-weighted center are not

relevant for the scoring of this criterion and are not included in the calculation.

231

230

See, e.g., http://www.nytimes.com/2016/02/10/us/politics/supreme-court-blocks-obama-epa-coal-emissions-regulations.html;

http://www.scotusblog.com/wp-content/uploads/2016/02/15A773-Clean-Power-Plan-stay-order.pdf.

See also https://www.regulations.gov/document?D=EPA-HQ-OAR-2017-0355-0002 (Proposed Rule, Repeal of Carbon Pollution Emission

Guidelines for Existing Stationary Sources: Electric Generating Units, October 16, 2017); https://www.regulations.gov/document?D=EPA-

HQ-OAR-2017-0545-0001 (Advanced Notice of Proposed Rulemaking, State Guidelines for Greenhouse Gas Emissions from Existing

Electric Utility Generating Units, December 28, 2017).

231

The Agency notes that the Zero Emission Standard Plan contains a different scoring methodology for CO

emissions, but that

methodology is based upon the impacts of replacement generation and the consideration related to “minimizing carbon dioxide emissions

that result from electricity consumed in Illinois” (20 ILCS 3855/1-75(d-5)(1)(C)), which is not the same standard as under consideration

in qualifying adjacent-state facilities for the RPS.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5. Contributing to a cleaner and healthier environment for the citizens of this State

This criterion is arguably the most subjective in nature, and presents unique challenges given that

the Agency strives to use objective approaches to the greatest extent possible when considering the

public interest criteria. Generally speaking, the Agency believes that renewable resources inherently

contribute to a cleaner and healthier environment generally (with the caveat related to emissions

from renewable resources that involve combustion, discussed above) because they reduce the

reliance on fossil fuels and have no safety issues generally associated with the containment and

disposal of radioactive materials of nuclear generation. Under this Plan, the points awarded for this

public interest criterion will be the average of the points awarded under the first and fourth public

interest criteria described above. This approach will take into account the emissions from renewable

resource facilities that involve combustion and, subsequently, emissions, which would not contribute

to a cleaner and healthier environment for the citizens of Illinois.

4.1.2. Application Process

The eligibility of renewable energy credits from renewable energy generating facilities located in

states adjacent to Illinois is not automatically granted, because the Act requires that approval comes

only after “the generator demonstrates and the Agency determines” that the facility’s operation

meets the public interest criteria discussed above.

232

That determination requires an active request

(demonstration) by an interested generator. Therefore, after this Plan was approved, the Agency

asked M-RETS to remove all out-of-state facilities from eligibility for the Utility RPS (this removal will

not impact eligibility for the ARES RPS under Section 16-115D of the PUA). As GATS does not

distinguish in its facility or REC eligibility between the Utility RPS and the ARES RPS, and with no

spot procurements scheduled to be conducted for the Utility RPS, GATS eligibility for out-of-state

facilities will be similarly updated after the end of the ARES RPS obligations. Renewable generating

facilities in adjacent states may apply to the Agency for consideration for eligibility for the Utility

RPS.

233

The Agency has developed an application form (i.e., a spreadsheet) for use by owners of adjacent-

state facilities that wish to have renewable energy credits considered to be eligible for the Illinois

RPS.

234

The information to be entered into the application form includes the generating technology

(including information on emissions rates if the technology involves combustion), state where the

generator is located, distance from the geographical center of Morris, IL, the Regional Transmission

Organization (“RTO”) where the facility is or planned to be interconnected (e.g., PJM, MISO, SPP), and

the tracking system ID (for existing facilities). The application form will automatically calculate the

score for the facility. In addition, the generator will also have to include information related to the

provision limiting the recovery of costs in rates described in the next Section. The Agency will update

the data used in the eligibility calculations on an annual basis to use the most recent available inputs,

but a facility’s determination of eligibility will be based on the data available at the time of the request

for determination (in other words, a facility would not risk having its eligibility revoked at a later

date if the inputs changed after the initial eligibility determination is made by the Agency).

232

20 ILCS 3855/1-75(c)(1)(I).

233

An exception will be made for the out-of-state facilities that have LTPPA contracts with the utilities. As discussed in Section 4.1, those

facilities will be grandfathered into this consideration and will remain eligible to provide RECs for compliance with the Illinois RPS.

234

Available at: https://www2.illinois.gov/sites/ipa/Documents/2018ProcurementPlan/IL-RPS-Adjacent-State-Facility-Determination-

of-Eligibility-20180404.xls.

Long-Term Renewable Resources Procurement Plan August 6, 2018

The Agency will review applications to verify the information submitted (e.g., confirming the distance

inputs), and if the facility has a score equal to or greater than 60 points (and meets the cost recovery

requirement found in Section 1-75(c)(1)(J) of the Act, discussed further below), the Agency will

approve the facility as eligible to produce renewable energy credits for compliance with the Illinois

RPS. The Agency will inform the applicable tracking system (GATS or M-RETS) that the facility should

be coded as Illinois RPS eligible.

In the case of a new adjacent-state facility that is not yet operational (and thus also not registered in

GATS or M-RETS), an owner may submit a request for determination of eligibility based upon the

planned design of the facility. Such a submittal must also include documentation from the applicable

RTO (or utility for distributed resources) that the facility has entered the interconnection queue and

is actively pursuing an interconnection agreement. If the Agency determines that the planned facility

does meet the public interest criteria, then it will grant a pre-approval of the eligibility. It will be the

responsibility of the facility owner to notify the IPA and the tracking system once the facility is

operational to request being coded as eligible for the Illinois RPS in the applicable tracking system.

The Agency will review final system information to verify consistency with the information

submitted for the pre-approval.

4.2. Cost Recovery Requirement

Section 1-75(c)(1)(J) of the Act contains the provision that,

In order to promote the competitive development of renewable energy resources in

furtherance of the State's interest in the health, safety, and welfare of its residents,

renewable energy credits shall not be eligible to be counted toward the renewable

energy requirements of this subsection (c) if they are sourced from a generating unit

whose costs were being recovered through rates regulated by this State or any other

state or states on or after January 1, 2017.

Similar language also applies to RECs procured by ARES for their RPS obligations (“…shall not include

any resources from a facility whose costs were being recovered through rates regulated by any state

or states on or after January 1, 2017”

235

). The ICC recently updated rules

236

for ARES RPS compliance

to comply with this new statutory provision (among others).

237

As part of the process of

implementing those rules, the Agency will work with ICC staff to review facility eligibility in GATS

and M-RETS to make reasonable determinations of what existing facilities would meet these criteria

and would have RECs eligible for use by ARES for their RPS compliance.

Generally speaking, the Agency understands that facilities owned by a rural electric cooperative or a

municipal utility would not be impacted by this criterion (as in Illinois, those entities’ rates are not

regulated by this state or any other), although the Agency notes that there are certain adjacent states

which regulate some rural electric cooperative and municipal utility rates. Therefore, there will not

be a blanket approval of facilities owned by rural electric cooperatives or municipal utilities service

235

220 ILCS 5/16-115D(a)(3.5).

236

83 Ill. Adm. Code Part 455.

237

The Commission’s Second Notice Order was issued August 25, 2017, and the Rules were approved by JCAR on October 24, 2017 with an

effective date of October 26, 2017.

Long-Term Renewable Resources Procurement Plan August 6, 2018

territories in adjacent states; rather, as those facilities request eligibility, their rate recovery status

will be reviewed.

The Agency also understands that this provision was generally intended to ensure that facilities

owned by a vertically integrated utility, for which REC revenues may be incidental to building and

financing the facility (as that facility’s costs could be recovered from ratepayers in that other state,

potentially resulting in a credit or discount to those ratepayers for any REC revenues—effectively

causing Illinois ratepayers to cross-subsidize those in vertically integrated states) would not be

eligible. On the other hand, the mere presence of a Power Purchase Agreement between a facility and

a separate utility whose costs are recovered in regulated rates would not trigger these criteria (nor

would participation in the IPA’s energy procurement events, for which regulated utilities serve as

contractual counterparties, or participation in a net metering or similar energy crediting program,

which would serve to disqualify the very facilities that other portions of the Illinois RPS work to

support). Likewise, the Agency believes that being a Qualifying Facility under the Public Utility

Regulatory Policies Act (“PURPA”)

238

(and also meeting the other aspects of the requirements of the

Illinois RPS), would not be disqualifying because the Qualifying Facility does not directly recover its

costs through rates; rather, it is compensated for its energy at the purchasing utility’s avoided cost

rate.

Additionally, the Agency endeavors to provide consistent application of this rate regulated language

in making facility determinations for both the RPS under Section 1-75(c) and also ARES RPS eligibility

under Section 16-115D of the PUA, and proposes to work with Illinois Commerce Commission Staff

(with whom the Agency has traditionally made and is likely to be making joint determinations on

ARES RPS facility eligibility) to this end.

After the approval of this Plan by the Commission, the Agency asked M-RETS to have all facilities

outside of Illinois have their REC eligibility removed for Illinois utility RPS purposes, while for GATS

because that system does not distinguish between the Utility RPS and the ARES RPS, that change will

be made after the end of the ARES RPS obligations. (Therefore, this change will not impact ARES RPS

eligibility designations.) As described in Section 4.1.2, facilities located in adjacent states will

proactively have to request eligibility for the utility RPS pursuant to the public interest criteria

standard explained above. Those requests to meet the public interest criteria will also be required to

include a notarized certification, and documentation, that the facility does not have its costs

recovered through regulated rates. For a distributed generation facility, simple documentation of

ownership would suffice. For larger facilities, the Agency is not proposing a firm standard of

documentation but suggests that there are multiple approaches that could be used by a requesting

facility. These include, but are not limited to:

• For facilities tracked in M-RETS, documentation to support the status listed in the “Facility

Ownership Type” field

• A Market Based Rate authorization letter from the Federal Energy Regulatory Commission

that demonstrates that the facility owner is not a utility with costs recovered through

regulated rates

• Certification as a Qualifying Facility

238

16 U.S.C. §§ 796(17), 824a-3, 824i.

Long-Term Renewable Resources Procurement Plan August 6, 2018

• Use of information from other sources such as the S&P Global Intelligence Briefing Book, or

the Platts UDI Directory of Electric Power Producers and Distributors

The Agency will review (in consultation with the ICC) information provided for a facility, and may, as

needed, request additional information in order to verify a facility’s status.

The Agency is not aware of any renewable facilities in Illinois that have their costs recovered through

regulated rates.

In addition to the screening process described above, all contracts from future IPA-administered

procurements or programs will contain provisions to reflect this additional requirement of Section

1-75(c)(1)(J),

Each contract executed to purchase renewable energy credits under this subsection (c)

shall provide for the contract's termination if the costs of the generating unit supplying

the renewable energy credits subsequently begin to be recovered through rates

regulated by this State or any other state or states; and each contract shall further

provide that, in that event, the supplier of the credits must return 110% of all payments

received under the contract. Amounts returned under the requirements of this

subparagraph (J) shall be retained by the utility and all of these amounts shall be used

for the procurement of additional renewable energy credits from new wind or new

photovoltaic resources as defined in this subsection (c). The long-term plan shall provide

that these renewable energy credits shall be procured in the next procurement event.

The Agency notes that Section 1-75(c)(1)(J) also provides a limited exception to this provision for

facilities that participate in the Illinois Solar for All Program outlined in Section 1-56 of the Act,

Notwithstanding the limitations of this subparagraph (J), renewable energy credits

sourced from generating units that are constructed, purchased, owned, or leased by an

electric utility as part of an approved project, program, or pilot under Section 1-56 of

this Act shall be eligible to be counted toward the renewable energy requirements of this

subsection (c), regardless of how the costs of these units are recovered.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5. Competitive Procurement Schedule

As described throughout this Chapter, to help meet RPS goals outlined in Section 1-75(c) of the IPA

Act, the IPA proposes to conduct a variety of competitive procurements for RECs in calendar years

2018 and 2019. In combination with the programs described in Chapters 6, 7, and 8, subject to any

limitations created by the RPS budget caps, these competitive procurements are intended to make

progress toward the RPS REC goals outlined in Sections 1-75(c)(1)(B) and (C), and identified in

Chapter 3, through the 2019-2020 delivery years, and also procure additional RECs under long-term

contracts to prepare for meeting the goals for future delivery years.

This Chapter discusses two types of competitive procurements: Forward Procurements and Spot

Procurements. Pursuant to the Commission’s Final Order in Docket No. 17-0838, this Plan no longer

contains proposals for Spot Procurements in the 2017-2018 through 2019-2020 delivery years,

239

while Forward Procurement volumes were significantly increased through the Order. For purposes

of this Chapter, the Agency will use the following definitions of these procurements:

• A Forward Procurement is a competitive procurement for RECs where the beginning

delivery date is in a future delivery year and the delivery term is multiple years. Further, a

Forward Procurement is for unit-specific RECs. Forward Procurements include those

specifically outlined in the Act (e.g., a Subsequent Forward Procurement) and additional

Forward Procurements proposed by the IPA as part of this Plan. Unless specified otherwise

in this Chapter (i.e., Community Generation Program Forward Procurement in Section 5.8.4),

Forward Procurements will, to the extent practicable, follow the model used for the Initial

Forward Procurement including:

o 15-year REC-only contracts

o Price per REC fixed over the term of the contract, no price escalation

o Ability to bank RECs

o Credit requirements and instruments

• A Spot Procurement is a competitive procurement for RECs for either the prior, current, or

the prompt delivery year goals. The delivery term of a Spot Procurement is one delivery year.

While the IPA does not believe the PUA or IPA Act requires that spot procurement proposals

track exactly on the requirements of Section 16-111.5, the Agency proposes that its spot

procurements will, to the extent practicable, follow the model the IPA has used for past

similar REC procurements including:

o Fixed price per REC

o RECs must be from applicable delivery year

o Credit requirements and instruments

As discussed in Chapter 2, the Agency will review and update this Plan in 2019 in conjunction with

the development of the Agency’s 2020 Annual Procurement Plan, with those updates and revisions

to take effect in calendar year 2020. The schedule of competitive procurements occurring after 2019

will be addressed in that Plan update. A discussion of the general principles for future competitive

procurements is discussed in Section 5.10.

239

See Docket No. 17-0838, Final Order dated April 3, 2018 at 40-44.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5.1. Statutory Requirements

Section 16-111.5(b)(5)(ii)(B)(aa) of the PUA requires that this Plan:

“Identify the procurement programs and competitive procurement events consistent

with the applicable requirements of the Illinois Power Agency Act and shall be designed

to achieve the goals set forth in subsection (c) of Section 1-75 of that Act.”

The “competitive procurement events” contemplated by the IPA are discussed in this Chapter, while

the “procurement programs” are discussed in Chapters 6, 7 and 8. Also specifically addressed in this

chapter is the following additional provision (bb) of that subsection of the Act regarding REC

procurements subsequent to the Initial Forward Procurement:

240

“Include a schedule for procurements for renewable energy credits from utility-scale

wind projects, utility-scale solar projects, and brownfield site photovoltaic projects

consistent with subparagraph (G) of paragraph (1) of subsection (c) of Section 1-75 of

the Illinois Power Agency Act.”

Section 16-111.5(b)(5)(iii) further states that,

“For those renewable energy credits subject to procurement through a competitive bid

process under the plan or under the initial forward procurements for wind and solar

resources described in subparagraph (G) of paragraph (1) of subsection (c) of Section

1-75 of the Illinois Power Agency Act, the Agency shall follow the procurement process

specified in the provisions relating to electricity procurement in subsections (e) through

(i) of this Section.”

While it is unclear whether procurements such as those proposed in this Chapter are required to be

conducted as “a competitive bid process,” the Agency has achieved positive results in past experience

with its competitive bid process and, outside of the programs it proposes in later Chapters, sees no

need to deviate from this approach. Section 5.3 discusses in more detail the procurement process

specified in Section 16-111.5(e) through (i) conducted by the Agency for prior electricity

procurements, as well as prior renewable energy procurements, and how this process will be applied

to the competitive procurements proposed in this Plan.

241

240

The Agency notes that subparagraph 1-75(c)(1)(G) also includes the Initial Forward Procurements that were mandated to be developed

and implemented prior to the release of this Final Plan. The Agency therefore understands this provision to apply only to subparagraph

(G)(iii) regarding the “Subsequent Forward Procurements” and other additional forward procurements.

241

The provisions related to this Plan contained in Section 16-111.5 of the PUA and Section 1-75(c)(1) of the Act generally refer to

“competitive procurement processes” or “competitive procurement events” while in this one instance there is reference to “a competitive

bid process” that shall follow the procurement process contained in Section 16-111.5. However, that provision only applies to the Initial

Forward Procurement. Nonetheless, while the Agency may have the discretion to conduct other competitive procurement processes

through procedures other than those envisioned by Section 16-111.5 (e.g., rather than a sealed bidding with pay-as-bid settlement, offering

a standard offer price, or perhaps a single clearing price), at this time the Agency believes that all the competitive procurements it

administers should follow the framework set up by Section 16-111.5.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5.2. Background on past REC Procurements conducted by the IPA

In the years 2009 through 2016, with the exceptions of 2013 and 2014,

242

the IPA held procurements

for renewable energy resources to meet the RPS requirements of the utilities’ eligible retail

customers. These procurements were conducted through a competitive procurement process.

While changes to Section 1-75(c) of the IPA Act significantly increase the volume of RECs to be

procured by the Agency, the Agency has a long track record of procuring renewable energy resources,

predominantly RECs.

243

The Agency’s past competitive procurements for renewable energy

resources resulted in the procurement of the following quantities of RECs:

244

• Spot Procurements for one-year delivery of RECs

o 2009 REC procurements for Ameren Illinois and ComEd (720,000 RECs for Ameren

Illinois, 1,564,360 RECs for ComEd)

o 2010 REC procurements for Ameren Illinois and ComEd (860,860 RECs and

1,887,014 RECs for Ameren Illinois and ComEd, respectively)

o 2011 REC procurements for Ameren Illinois and ComEd (952,145 and 2,117,054

RECs)

o 2012 REC procurements for Ameren Illinois and ComEd (523,376 RECs and

1,335,673 RECs)

o 2015 SREC procurements for Ameren Illinois and ComEd (30,212 SRECs and 49,770

SRECs)

o 2016 SREC procurements for Ameren Illinois and ComEd (33,271 SRECs and 67,952

SRECs)

o 2016 REC procurement for MidAmerican

• Procurements for multiple delivery years of RECs

o 2010 Long-term procurements for Ameren Illinois and ComEd (20 year contracts,

bundled RECs and energy, 600,000 RECs per year and 1,261,725 RECs per year,

respectively)

o 2012 “Rate Stability” procurement for Ameren Illinois and ComEd (contracts for four

years and seven months) (2,053,837 RECs over the delivery term, and 2,737,110

RECs over the delivery term, respectively)

o 2015 Supplemental Photovoltaic procurements using the RERF (5 year contracts,

with provision to allow time for identification of under 25 kW systems) (21,436

SRECs per year)

o 2015 Distributed Generation procurement for Ameren Illinois and ComEd (5 year

contracts)

o 2016 Supplemental Photovoltaic procurement using the RERF (5 year contracts, with

provision to allow time for identification of under 25 kW systems) (18,354 SRECs per

year)

242

In the Agency’s 2013 Procurement Plan, due to a decline of eligible retail customers’ load served by the utilities, mainly attributable to

municipal aggregation, the Agency determined, and the Commission agreed, that no new procurements of renewable energy resources (or

for that matter energy) were required. See Order, Docket No. 12-0544, December 19, 2012, at 109-110.

243

Section 1-75(c) of the Act prior to the changes enacted through Public Act 99-0906 focused on the procurement of “renewable energy

resources.” The revisions to the Section contained in Public Act 99-0906 focus the Long-Term Renewable Resources Procurement Plan on

specifically acquiring “renewable energy credits” from programs and competitive procurements.

244

Announcements of these procurements that contain additional information can be found at:

https://www.illinois.gov/sites/ipa/Pages/Prior_Approved_Plans.aspx

. Certain REC volume information has been redacted to maintain

required confidentiality in accordance with 220 ILCS 5/16-111.5(h).

Long-Term Renewable Resources Procurement Plan August 6, 2018

o 2016 Distributed Generation procurement for Ameren Illinois and ComEd and

MidAmerican (5 year contracts)

o 2017 Distributed Generation procurements (5 year contracts, also include provision

to allow time for identification of under 25 kW systems) (19,549 SRECs per year

procured in Spring 2017, 8,153 SRECs per year procured in Fall 2017)

o 2017 Initial Forward Procurement (15 year contracts, 1.965 million RECs per year

procured

5.3. Updates to the Agency’s Competitive Procurement Approach

Based on this previous REC procurement experience, the Agency has a solid foundation to build upon

for conducting the competitive procurements proposed in this Plan. While the specific products and

delivery terms may vary from past procurements, the Agency believes that no significant

modifications to the procurement approach itself are needed. Nonetheless, there are some specific

items that can be updated as discussed below.

The procurement approach the Agency has used for prior REC procurements stems from the

approach laid out in Section 16-111.5 of the Public Utilities Act for “standard wholesale product” (i.e.,

block energy, capacity, etc.) procurements. It includes the following key provisions:

• Standard contracts and credit provisions

• Sealed bids with pay-as-bid settlement

• Use of confidential benchmarks to eliminate bids not consistent with the market

• Bid selection based on price

• No post-bid negotiations

• Procurement Administrator evaluates bids and provides confidential recommendation to the

Commission for approval

• Procurement Administrator provide bidder interface including training

• Uniform/standardized bid forms

• Uniform/standardized/harmonized credit requirements

• Procurement Monitor involvement

These provisions define a procurement process that has multiple stages.

• The Procurement Administrator develops draft contracts in consultation with the utilities,

the Agency, the Procurement Monitor,

245

and ICC Staff.

246

• Draft contracts are released for public comment.

• The Procurement Administrator, the Agency, the utilities, ICC Staff and the Procurement

Monitor review all comments received on the draft contract and revise the contract as

needed.

247

• Typically, the Procurement Administrator holds an informational webcast upon release of

the final contracts and RFP rules.

• Submission of Proposals is in two parts:

245

The Procurement Monitor is an independent consultant that works on behalf of the Commission to oversee all aspects of the

procurement process. 220 ILCS 5/16-111.5(c)(2).

246

The Agency expects that the contract will be based on a modified ABA-EMA-ACORE REC Purchase & Sale Agreement.

247

If agreement between the Procurement Administrator and the utilities is not reached on the terms and provisions of the contracts, any

disputes are resolved by the Commission. (See 220 ILCS 5/16-111.5(e)(2)).

Long-Term Renewable Resources Procurement Plan August 6, 2018

o Part 1 for pre-qualification – allows bidders to provide basic information, and agree

to the terms of the contract and the RFP rules.

o Part 2 for registration of bidders – allows bidders to update information, make

additional certifications including regarding confidentiality of bidding information,

and post bid assurance collateral.

• Bids – on the bid date, bidders submit bids using a standardized bid form.

• Evaluation of Bids – the Procurement Administrator evaluates bids based on price,

procurement objectives and priorities; identifies the winning bids; prepares a

recommendation for the Commission. The Procurement Monitor observes the bidding and

evaluation process and makes its own recommendation.

248

• Commission decision – After review of the Procurement Administrator’s and Procurement

Monitor’s reports and recommendations, the Commission renders a decision on the results

of the procurement event.

249

• Release of procurement results – The Procurement Administrator releases the results of the

procurement event; confidential information is protected.

250

• Contract execution with the utilities – Within three business days of Commission approval of

the procurement results, utilities and winning bidders sign binding contractual arrangements

using the standard form contracts.

251

Unless specifically noted in the following sections, the IPA proposes that the competitive

procurements for RECs proposed in this Plan follow these past practices that have been refined over

the past eight years.

5.4. Revised REC Eligibility

Changes in the RPS will require several changes to the IPA’s approach to conducting competitive

procurements. The most significant change is that the universe of eligible facilities, and thus eligible

RECs, has changed significantly. Prior to 2011, the standard was:

“Resources procured pursuant to this Section shall be procured from facilities located in

Illinois, provided the resources are available from those facilities. If resources are not

available in Illinois, then they shall be procured in states that adjoin Illinois. If resources

are not available in Illinois or in states that adjoin Illinois, then they may be purchased

elsewhere.”

After 2011, the standard changed to:

“Resources procured pursuant to this Section shall be procured from facilities located in

Illinois or states that adjoin Illinois. If resources are not available in Illinois or in states

that adjoin Illinois, then they may be procured elsewhere.”

252

This allowed the IPA to run procurements that featured a bid selection process where bids were

selected on the basis of price in a series of preferential categories that reflected locational priorities.

248

See 220 ILCS 5/16-111.5(f).

249

See id.

250

See 220 ILCS 5/16-111.5(h).

251

See 220 ILCS 5/16-111.5(g).

252

Both provisions were contained in the prior provisions of 20 ILCS 3855/1-75(c)(3), repealed and replaced effective June 1, 2017 through

Public Act 99-0906.

Long-Term Renewable Resources Procurement Plan August 6, 2018

As can be seen in the public notices of winning bidders from past procurement results,

253

RECs were

procured in the categories “Illinois and adjoining states” and “other states.”

Starting June 1, 2017, under the revised RPS enacted through Public Act 99-0906, this paradigm

changed again and the pool of potentially eligible RECs has shrunk significantly. As discussed in

Chapter 4, two new conditions have been placed on RECs that are eligible to be used for RPS

compliance. First is a locational standard that allows RECs from facilities located in Illinois, and from

facilities located in adjacent states only if they meet the public interest criteria set out in Section 1-

75(c)(1)(I) (as explained in Chapter 4 above). By implication, RECs from states further afield than

the states adjacent to Illinois do not qualify for the Illinois RPS. Second, a standard related to how

generating units recover their costs not only limits RECs to those from generating units that do not

recover their costs through state-regulated rates, but also assesses penalties for RECs from systems

later found to be non-compliant.

254

These new eligibility requirements will require competitive procurements conducted by the IPA to

feature additional steps to verify that RECs being procured are eligible for the Illinois RPS. How this

manifests itself will depend on the type of procurement being conducted. For Forward Procurements,

additional review may be required during the bidder registration process to allow the Procurement

Administrator and the Agency to verify information about proposed facilities and if facilities located

in the states adjacent to Illinois meet the public interest criteria (for example, see Chapter 4 for more

information on how facilities would request this determination). As Spot Procurements were

cancelled through the Commission’s Order in Docket No. 17-0838, a distinct approach to facility

eligibility screening for Spot Procurements is no longer necessary.

5.5. Credit Requirements

To ensure that RECs under contract to satisfy a compliance requirement are indeed delivered, the

Agency proposes to continue requiring collateral with contracts, with the collateral amount

established as a function of contract value. While specific collateral levels are not proposed as part of

this Plan (and are generally determined through the contract development process), the Agency

believes that the level of collateral must be low enough to encourage participation and high enough

to discourage suppliers from voluntarily defaulting on contracts for economic reasons. Further, the

IPA proposes a strict requirement that suppliers and associated facilities who voluntarily default on

contracts for economic reasons or misrepresent their eligibility to participate in a procurement event

will be barred from participation in future IPA procurements.

5.6. Benchmarks

Prior to the revisions to the RPS contained in Public Act 99-0906, benchmarks used for renewable

energy resources procurements (i.e., confidential price levels above which no bids would be

accepted) were developed pursuant to a statutory provision requiring that the price paid for

renewable energy resources being procured “not exceed benchmarks based on market prices for

renewable energy resources in the region,” and required that such benchmarks “be developed by the

253

See: https://www.illinois.gov/sites/ipa/Pages/Prior_Approved_Plans.aspx for past IPA procurement results.

254

See 20 ILCS 3855/1-75(c)(1)(J). Note that Section 1-75(c)(1)(I) references “facility” and “facilities” for the geographic standard, while

Section 1-75(c)(1)(J) references “generating unit” for the cost recovery standard. Section 1-10 of the IPA Act does not specifically define

“generating unit” but does define a facility as, “an electric generating unit or a co-generating unit that produces electricity along with related

equipment necessary to connect the facility to an electric transmission or distribution system.” The Agency understands these terms to be

generally interchangeable.

Long-Term Renewable Resources Procurement Plan August 6, 2018

procurement administrator, in consultation with the Commission staff, Agency staff, and the

procurement monitor” and “subject to Commission review and approval.”

255

For the procurements to be conducted under the revised Section 1-75(c) as described in this Plan,

the concept of being “cost-effective” for the competitive procurement of RECs has been revised.

Specifically, through changes by P.A. 99-0906, “cost-effective” now means that the prices for RECs

do not exceed benchmarks based on market prices for like products in the region. For

purposes of this subsection (c), "like products" means contracts for renewable energy

credits from the same or substantially similar technology, same or substantially similar

vintage (new or existing), the same or substantially similar quantity, and the same or

substantially similar contract length and structure. Benchmarks shall be developed by

the procurement administrator, in consultation with the Commission staff, Agency staff,

and the procurement monitor and shall be subject to Commission review and approval.

If price benchmarks for like products in the region are not available, the procurement

administrator shall establish price benchmarks based on publicly available data on

regional technology costs and expected current and future regional energy prices.

256

Due to the sensitive nature of the benchmark development process and how the release of

information related to the level of the benchmark could impact bidder behavior in competitive

procurements, this Plan will not provide additional information on the process for developing the

benchmark or any range of potential benchmark prices.

These benchmarks are not to be used to curtail or otherwise reduce contractual obligations entered

into by or through the Agency prior to June 1, 2017.

257

5.7. Procurements for RECs from New Projects vs. RECs to Meet Annual Goals

Section 1-75(c)(1)(F) creates a prioritization order for REC procurements, to the extent that the

“budget” of utility-collected funds, pursuant to Sections 1-75(c)(1)(E) and 1-75(c)(6) of the Act and

Section 16-108(k) of the Public Utilities Act, becomes a binding constraint:

1. RECs under existing contractual obligations;

2. RECs procured through funding for the Illinois Solar for All Program;

3. RECs necessary to comply with the new wind and new photovoltaic procurement

requirements described in items (i) through (iii) of subparagraph (C) of this paragraph (1)

[of Section 1-75 of the IPA Act];

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4. RECs necessary to meet the remaining requirements of this subsection (c).

Chapter 3 describes a substantial gap between the quantity of RECs needed to meet annual

percentage RPS goals and the RECs from prior procurements that are already under contract or will

be brought under contract through the Initial Forward Procurement. Taking into consideration the

REC procurement priorities discussed above, to meet the annual RPS percentage goals, the Agency

255

20 ILCS 3855/1-75(c)(1) repealed effective June 1, 2017.

256

20 ILCS 3855/1-75(c)(1)(D).

257

Id.

258

The provisions are for 2,000,000 RECs by the end of the 2020-2021 delivery year, 3,000,000 RECs by the end of the 2025-2026 delivery

year, and 4,000,000 RECs by the end of the 2030-2031 delivery year.

Long-Term Renewable Resources Procurement Plan August 6, 2018

proposes to first satisfy the new wind and photovoltaic requirements. Then the Agency will seek to

meet the remaining requirements of Section 1-75(c) (which the IPA understands to refer primarily,

if not exclusively, to the percentage-based goals found in Section 1-75(c)(1)(B)) through Forward

Procurements. In its Plan originally filed with the Commission, the Agency also proposed “spot

procurements” to meet the annual RPS percentage goals found in Section 1-75(c)(1)(B) of the Act.

However, in its Order approving the Plan, citing “the serious risk Spot Procurements can pose to the

budget which may prevent the IPA from meeting its statutory long-term new build requirements,”

the Commission granted “various parties’ requests to cancel the Spot Procurements.”

259

Thus, under

this Plan, there will be no Spot Procurements in the 2017-2018 through 2019-2020 delivery years.

Consistent with the Commission’s Order in Docket No. 17-0838, the IPA proposes to implement the

competitive procurements summarized in Table 5-1 below. A description of each of these

procurements follows in Sections 5.7.1 through 5.9. The Procurement Dates listed are tentative dates

and may be adjusted by the Agency if needed. While the Agency will strive to keep to this

procurement schedule, unforeseen circumstances could delay procurements. Likewise, if it is feasible

to hold a procurement earlier than planned (but not more than one calendar quarter), the Agency

may accelerate the schedule for certain procurements. The Agency will announce any changes to

procurement dates at least three months prior to the earlier of the scheduled or revised date.

260

259

Docket No. 17-0838, Final Order dated April 3, 2018 at 42.

260

For the purposes of this schedule, the procurement date refers to the commencement of the process for the specific procurement, and

not the bid date.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Table 5-1: 2018 and 2019 Forward Procurements Summary

Section

Procurement

Technology

Type

261

Procurement

Date

Term

Delivery

Start

Annual REC

Target

262

5.7.1

First

Subsequent

Forward

Wind (utility-

scale)

New

Summer 2018

Years

2020-2021

2 million

5.7.2

Brownfield Site

Forward

Photovoltaic

(brownfield

site)

New

Fall 2018

Years

2020-2021

0.08 million

5.8.1

Photovoltaic

Forward

Photovoltaic

(utility-scale)

New

Fall 2018

263

Years

2020-2021

2 million

minimum

5.8.2

Second

Subsequent

Forward

264

Wind (utility-

scale)

New

Fall 2019

Years

2021-2022

1 million

minimum

265

5.8.3

Other

Renewables

Forward

266

Any other

than wind/

photovoltaic

New

To be

determined

Years

To be

determined

To be

determined

5.8.4

Community

Renewable

Generation

Program

Forward

Any non-

photovoltaic

(with

subscribers)

New

Fall 2019

Years

2020-2021

or later

To be

determined

267

8.6.4

Low-Income

Community

Solar Pilot

Project

Photovoltaic

(with

community

participation/

subscribers)

New

To be

determined

(tentatively

late 2018 or

early 2019)

Years

To be

determined

Based on

available

budget

261

Type refers to whether the generating facility that produces the RECs is new or existing. “Any” means that either type is acceptable.

262

All REC Targets are subject to available RPS budget limitations.

263

While originally scheduled for the “Summer” or “Summer or Fall” of 2018, the Brownfield Site Forward Procurement and Photovoltaic

Forward Procurement are now both currently scheduled to feature a contract comment taking place in the Summer of 2018 (having already

been preceded by a workshop and written comment process taking place in the Spring and Summer of 2018) with bidder registration, bid

submission, bid evaluation, bid selection, and contract execution occurring in the Fall of 2018.

264

Contingent upon whether sufficient photovoltaics are projected to be procured.

265

The final target REC volume for this procurement will be set in early 2019.

266

To be held based on Request for Information responses.

267

The final target REC volume for this procurement will be set in early 2019 based on the performance of other procurements and

programs and analysis of expected available budget.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5.7.1. First Subsequent Forward Procurement

Procurement

Technology

Type

268

Procurement

Date

Term

Delivery

Start

Annual

REC

Target

269

First Subsequent Forward

Wind

(utility-

scale)

New

Summer 2018

15 Years

2020-2021

2 million

The first round of the Initial Forward Procurement, conducted by the Agency in August 2017, selected

(but did not precisely procure) 1,000,000 annual RECs from new utility-scale wind projects (“annual

RECs” meaning the quantity of RECs to be delivered annually under the resulting REC delivery

contracts).

270

It also procured 200,000 annual RECs from new utility-scale photovoltaic projects. The

Agency subsequently conducted two additional rounds of Initial Forward Procurement for RECs from

new photovoltaic projects in March and April 2018. These procured an additional 800,000 of annual

RECs. As required by Section 1-75(c)(1)(G)(ii) of the Act, these projects must start the delivery of

RECs by June 1, 2021.

Section 1-75(c)(1)(C)(ii) specifies that by the end of the 2020-2021 delivery year (May 31, 2021), at

least 2,000,000 RECs used to meet the requirements of the Illinois RPS are to be delivered annually

from new wind projects, and likewise that at least 2,000,000 RECs are to be delivered annually from

new photovoltaic projects.

271

It further specifies that at least 50% of those photovoltaic RECs (i.e., at

least 1,000,000 RECs) are to come from projects developed through the Adjustable Block Program

described in Chapter 6, that 40% of the photovoltaic RECs (at least 800,000 RECs) are to come from

utility-scale projects, and that the Agency determine through this Plan how the remainder (200,000

RECs) are to be procured. Section 1-75(c)(1)(C)(ii) also specifies that 2% of the photovoltaic RECs

(at least 40,000 RECs) be procured from brownfield site photovoltaic projects that are not

community solar.

For present planning purposes, the Agency will assume that the additional rounds of the photovoltaic

Initial Forward Procurement meet their targets, and that the projects from the Initial Forward

Procurement are successfully developed, energized, and begin delivering their annual quantities of

RECs by their statutory deadline. Under this approach, the initial forward procurements will meet

965,000 out of the 2,000,000 annual REC goal for new utility-scale wind projects by the 2020-2021

delivery year. For new photovoltaic projects, the 1,000,000 RECs from utility-scale solar projects

through the Initial Forward Procurement will exceed the 40% of RECs from new utility-scale solar

projects requirement (800,000 RECs), and the Agency views the additional 200,000 RECs from

utility-scale solar projects as contributing to the 8% portion of the 2,000,000 new photovoltaic RECs

by the 2020-2021 delivery year for which the Agency has discretion on how to procure.

268

Type refers to whether the generating facility is new or existing.

269

REC Target is subject to available RPS budget limitations.

270

965,000 RECs were ultimately procured due to one bidder’s rejection of a partial award after approval by the Commission.

271

For the purposes of this Chapter, references to REC quantities should be understood to mean an annual delivery quantity separate from

the length of the contract under which RECs are delivered.

Long-Term Renewable Resources Procurement Plan August 6, 2018

Therefore, the Agency will need to conduct an additional procurement of RECs from new wind

projects to meet the 2,000,000 annual REC goal. To do so, the Agency proposes to conduct its First

Subsequent Forward Procurement for RECs from new utility-scale wind projects to be held pursuant

to Section 1-75(c)(1)(G)(iii). That section outlines several requirements for a Subsequent Forward

Procurement:

• The procurement must be for “at least 1,000,000 renewable energy credits delivered

annually per procurement event.”

• The procurement “shall be planned, scheduled, and designed such that the cumulative

amount of renewable energy credits delivered from all new wind projects in each delivery

year shall not exceed the Agency's projection of the cumulative amount of renewable energy

credits that will be delivered from all new photovoltaic projects, including utility-scale and

distributed photovoltaic devices, in the same delivery year at the time scheduled for wind

contract delivery.”

In the Plan filed for ICC approval, the Agency projected that at least 1,035,000 additional annual RECs

from new wind projects through the First Subsequent Forward Procurement would be required. In

approving this Plan, the Commission required that the Agency instead “increase the size of the

targeted annual REC minimums for the long-term utility-scale PV forward procurement in Spring

2019 or as soon as possible (Plan at Section 5.8.1) and the long-term utility-scale wind `first

subsequent forward’ procurement in Summer 2018 (Plan at Section 5.7.1) to at least 2 million RECs

per year.”

272

Therefore, the target annual volume for the First Subsequent Forward Procurement will

be 2 million RECs.

The First Subsequent Forward Procurement for RECs from new utility-scale wind projects will, to the

extent practicable, follow the approaches used by the IPA in previous procurements including the

Initial Forward Procurement. The Agency understands that to be considered a “new wind project,” a

facility must be energized within three years of the Commission’s approval of the procurement

results. See Section 2.4.2 for additional discussion of this issue.

273

In order to maximize federal tax incentives (reducing potential REC prices) and to maximize the

likelihood that projects will be completed by the end of the 2020-2021 delivery year, the First

Subsequent Forward Procurement will be held in the summer of 2018.

272

Docket No. 17-0838, Final Order dated April 3, 2018 at 43.

273

In addition, the Agency notes that it would generally not consider a repowered wind farm a “new wind project” for purposes of Section

1-75(c)(1)(C) of the IPA Act. Providing an incentive for existing generation to simply repower for increased efficiency would be

inconsistent with statutory directives encouraging the development of “new” projects to “to diversify Illinois electricity supply, avoid and

reduce pollution, reduce peak demand, and enhance public health and well-being of Illinois residents” (20 ILCS 3855/1-75(1-5)(6)), as the

incremental benefits offered to Illinois residents by a repowered project would be significantly less than those offered by an entirely new

facility.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5.7.2. Brownfield Site Forward Procurement

Procurement

Technology

Type

274

Procurement

Date

Term

Delivery

Start

Annual REC

Target

275

Brownfield Site

Forward

Photovoltaic

(brownfield

site)

New

Fall 2018

15 Years

2020-2021

0.08 million

The Initial Forward Procurements, conducted in August 2017, March 2018, and April 2018, did not

procure any RECs from new brownfield site photovoltaic projects, and the Agency has not otherwise

procured any RECs that would satisfy the brownfield site photovoltaic project requirement. Given

the emphasis that P.A. 99-0906 gave to encouraging brownfield site photovoltaics (for example,

adding to the “Legislative declarations and findings” section of the IPA Act a new provision stating

that “[d]eveloping brownfield solar projects in Illinois will help return blighted or contaminated land

to productive use while enhancing public health and the well-being of Illinois residents”

276

), the IPA

believes that procuring an amount greater than the 2020 quantitative target of RECs from brownfield

site photovoltaic projects is consistent with the law’s intent. This procurement would seek to

accelerate the development of brownfield site photovoltaic projects with the goal to meet the 2025

brownfield site target (80,000 RECs annually versus the 2020 target of 40,000 RECs). Therefore, the

Agency plans to conduct a Brownfield Site Forward Procurement in calendar year 2018 for RECs

from new brownfield site photovoltaic projects to meet the 2025 delivery year goal.

In terms of what sites may be eligible to participate in the Brownfield Site Forward Procurement,

Section 1-10 of the Act provides the following definition for a “brownfield site photovoltaic project”:

"Brownfield site photovoltaic project" means photovoltaics that are:

(1) interconnected to an electric utility as defined in this Section, a municipal utility as

defined in this Section, a public utility as defined in Section 3-105 of the Public Utilities

Act, or an electric cooperative, as defined in Section 3-119 of the Public Utilities Act; and

(2) located at a site that is regulated by any of the following entities under the following

programs:

(A) the United States Environmental Protection Agency under the federal

Comprehensive Environmental Response, Compensation, and Liability Act of

1980, as amended;

(B) the United States Environmental Protection Agency under the Corrective

Action Program of the federal Resource Conservation and Recovery Act, as

amended;

Remediation Program; or

274

Type refers to whether the generating facility is new or existing.

275

REC Target is subject to available RPS budget limitations.

276

20 ILCS 3855/1-5(8).

Long-Term Renewable Resources Procurement Plan August 6, 2018

(D) the Illinois Environmental Protection Agency under the Illinois Solid Waste

Program.

277

During the Illinois Commerce Commission proceeding for approval of the Plan, arguments were

made regarding whether a site regulated by the Illinois Environmental Protection Agency under the

Illinois Site Remediation Program were indeed “brownfield” sites, as many sites may enroll in the

Site Remediation Program before the extent of any contamination is known or without any

contamination having been demonstrated to be present. To ensure that the Brownfield Site Forward

Procurement “help[s] return blighted or contaminated land to productive use while enhancing public

health and the well-being of Illinois residents,”

278

the Commission’s Order adopted a new

requirement that this procurement must be conducted with “guidelines to ensure projects currently

feature or featured actual blight or contamination prior to remediation” for those sites qualifying as

a “brownfield site photovoltaic project” under the Illinois Site Remediation Program.

279

Additional

guidance around what constitutes “actual blight or contamination” will be developed by the

Procurement Administrator in conjunction with the Agency as part of the development of

participation guidelines for the Brownfield Site Forward Procurement.

5.8. Other Procurements to Meet RPS Targets

Assuming that the Brownfield Site Forward Procurement, the Adjustable Block Program, and the

First Subsequent Forward Procurement for new wind RECs all meet their target procurement

quantities, over 5 million RECs per year will be under contract by the end of the Summer of 2020

through contracts with multi-year delivery obligations.

280

In addition, about 1.9 million RECs per

year are already scheduled to be delivered under existing contracts

281

for the 2019-2020 delivery

year. This 6.9 million RECs per year from procurements and programs specifically mandated in the

IPA Act falls well short of the annual percentage-based RPS goals. The IPA estimates that unless

additional procurements are conducted in calendar years 2018 and 2019, for the delivery period of

2019-2020 and beyond, the annual REC shortage would be in excess of 15 million.

To help close this gap, the Agency must propose additional procurements to procure additional RECs.

The following sections outline additional procurements.

277

20 ILCS 3855/1-10.

278

20 ILCS 3855/1-5(8).

279

Docket No. 17-0838, Final Order dated April 3, 2018 at 49-50.

280

965,000 new wind RECs from the Initial Forward Procurement, 2,000,000 new wind RECs from the First Subsequent Forward

Procurement, 1,000,000 new photovoltaic RECs from the Initial Forward Procurement, 80,000 new photovoltaic RECs from the Brownfield

Site Forward Procurement, and 1,000,000 RECs from the Adjustable Block Program.

281

The Long-Term Power Purchase Agreements dating from 2010.

Long-Term Renewable Resources Procurement Plan August 6, 2018

5.8.1. Photovoltaic Forward Procurement

Procurement

Technology

Type

282

Procurement

Date

Term

Delivery Start

Annual REC

Target

Photovoltaic

Forward

Photovoltaic

(utility-

scale)

New

Fall 2018

15 Years

2020-2021

2 million

minimum

Following the First Subsequent Forward Procurement discussed in Section 5.7.1 and the Brownfield

Site Forward Procurement discussed in Section 5.7.2, the next consideration for the Agency is how

to expand the number of RECs procured from new photovoltaics projects. A procurement for

photovoltaic RECs will likely be necessary to conduct prior to considering additional procurements

for new wind RECs after the First Subsequent Forward Procurement because of the statutory

requirement for the Agency to balance RECs from new wind projects with those from new

photovoltaic projects. Section 1-75(c)(1)(G)(iv) states in part that,

If […] the cumulative amount of renewable energy credits projected to be delivered from

all new wind projects in a given delivery year exceeds the cumulative amount of

renewable energy credits projected to be delivered from all new photovoltaic projects

in that delivery year by 200,000 or more renewable energy credits, then the Agency shall

within 60 days adjust the procurement programs in the long-term renewable resources

procurement plan to ensure that the projected cumulative amount of renewable energy

credits to be delivered from all new wind projects does not exceed the projected

cumulative amount of renewable energy credits to be delivered from all new

photovoltaic projects by 200,000 or more renewable energy credits, provided that

nothing in this Section shall preclude the projected cumulative amount of renewable

energy credits to be delivered from all new photovoltaic projects from exceeding the

projected cumulative amount of renewable energy credits to be delivered from all new

wind projects in each delivery year and provided further that nothing in this item (iv)

shall require the curtailment of an executed contract.

The Initial Forward Procurement procured 1,000,000 RECs annually from new utility scale

photovoltaic projects. Assuming the Adjustable Block Program reaches its target of 1,000,000 RECs,

then 2,000,000 RECs annually from new photovoltaic projects will have been procured. Unlike for

RECs from new wind projects, where Section 1-75(c)(1)(G)(iii) describes the utilization of a

“Subsequent Forward Procurement” to meet future years’ targets, the law is silent as to the approach

taken to procure additional RECs from new utility-scale photovoltaic projects after the Initial

Forward Procurement.

The matching requirements for RECs from new wind and new photovoltaic projects also references

both utility-scale and distributed generation/community renewable generation photovoltaics. If the

Adjustable Block Program only procures 1,000,000 RECs by the end of the 2020-2021 delivery year,

more RECs from new photovoltaic projects will be needed to match the quantity of RECs from new

wind projects that go beyond the initial 3,000,000 new wind REC target from the Initial Forward

Procurement and the First Subsequent Forward Procurement. Those additional RECs from new wind

282

Type refers to whether the generating facility is new or existing.

Long-Term Renewable Resources Procurement Plan August 6, 2018

projects would be procured through the Second Subsequent Forward Procurement of at least

1,000,000 new wind RECs as described in Section 5.8.2 below. The purpose of going beyond the initial

targets of 2,000,000 RECs each for new wind and new photovoltaics is to help ensure a long-term

supply of RECs to meet the increasing annual RPS percentage goals that rise to 25% in 2025 (as well

as to anticipate the next target of 3,000,000 RECs from each category by 2025). While the Adjustable

Block Program may well exceed expectations, it is likely that an additional utility-scale photovoltaic

REC procurement will be required to help meet this target.

In the Plan filed for ICC Approval, the Agency included the Photovoltaic Forward Procurement

proposed herein, for annual delivery of a minimum of 1 million RECs from new utility-scale

photovoltaic projects, that would be conducted in early 2019. As discussed in Section 5.7.1, in

approving this Plan, the Commission increased the target volume of the Photovoltaic Forward

Procurement to 2 million RECs. Furthermore, the Commission also “direct[ed] the IPA to conduct this

procurement as soon as possible to increase the likelihood that RECs can be delivered for the 2020-

2021 delivery year.”

283

Accordingly, the Agency will endeavor to conduct this procurement in the fall

of 2018.

284

5.8.2. Second Subsequent Forward Procurement

Procurement

Technology

Type

285

Procurement

Date

Term

Delivery

Start

Annual REC

Target

286

Second Subsequent

Forward

Wind

(utility-

scale)

New

Fall 2019

15 Years

2021-2022

1 million

minimum

If available budgets and projected RECs from new photovoltaic projects are sufficient to allow for an

additional Subsequent Forward Procurement, the Agency proposes to conduct a Second Subsequent

Forward Procurement. This procurement would be conducted in the fall of 2019 and will seek to

procure RECs from new utility-scale wind projects. It would also follow the model described in

Section 5.7.1. The final target for this Second Subsequent Forward Procurement could be adjusted

upward from 1 million RECs if the projected quantity of RECs from new photovoltaic projects is

sufficient to maintain the new wind target within 200,000 RECs per year of the new photovoltaic

targets. The Agency will review the results of the Adjustable Block Program, the Brownfield Site

Forward Procurement, the First Subsequent Forward Procurement, and the Photovoltaic Forward

Procurement to make this determination.

This Second Subsequent Forward Procurement from new utility-scale wind projects would only

occur if at least 3.765 million new photovoltaic RECs are projected to be procured by the end of the

2020-2021 delivery year. This limitation exists because the Initial Forward Procurement, First

Subsequent Forward Procurement, and Second Subsequent Forward Procurement must be for a total

283

Docket No. 17-0838, Final Order dated April 3, 2018, at 43.

284

See id.

285

Type refers to whether the generating facility is new or existing.

286

REC Target is subject to available RPS budget limitations. The final target REC volume for this procurement will be set in early 2019.

Long-Term Renewable Resources Procurement Plan August 6, 2018

of 3.965 million RECs

287

annually from new wind projects, under Sections 1-75(c)(1)(G)(i) and (iii)

of the Act as well as the recent Commission order. For a further example, if the projection were for

the delivery of 4.2 million RECs from new photovoltaic projects annually (e.g., 1 million from the

Adjustable Block Program, 1 million from the Initial Forward Procurement, and 2.2 million from the

Photovoltaic Forward Procurement) by the end of 2020-2021, then the Second Subsequent Forward

Procurement volume could be increased from 1 million RECs to 1.435 million RECs annually to stay

at the 200,000 REC matching requirement.

5.8.3. Other Renewables 15-Year Forward Procurement

Procurement

Technology

Type

288

Procurement

Date

Term

Delivery

Start

Annual REC

Target

Other

Renewables

Forward

Any other than

wind/photovoltaic

New

To be

determined

15 Years

To be

determined

To be

determined

The Agency will also look beyond RECs from new wind and new photovoltaic projects to meet the

annual RPS goals. Given the introduction of new language into the IPA Act specifically explaining the

benefit of “developing new renewable energy resources in Illinois,”

289

the Agency understands the

general goal and spirit of P.A. 99-0906 to be to prioritize procurements for RECs that result in the

development of new renewable energy facilities over procuring RECs from existing facilities. While

RECs from Forward Procurements could be more expensive than RECs from Spot Procurements, the

Agency believes this intent provides the basis to consider procurements focused on developing new

renewable energy facilities that are not wind or photovoltaics.

Section 1-10 of the IPA Act defines Renewable Energy Resources as follows:

“`Renewable energy resources’ includes energy and its associated renewable energy

credit or renewable energy credits from wind, solar thermal energy, photovoltaic cells

and panels, biodiesel, anaerobic digestion, crops and untreated and unadulterated

organic waste biomass, tree waste, and hydropower that does not involve new

construction or significant expansion of hydropower dams. For purposes of this Act,

landfill gas produced in the State is considered a renewable energy resource.

`Renewable energy resources’ does not include the incineration or burning of tires,

garbage, general household, institutional, and commercial waste, industrial lunchroom

or office waste, landscape waste other than tree waste, railroad crossties, utility poles,

or construction or demolition debris, other than untreated and unadulterated waste

wood.”

Section 1-75(c)(1)(C) of the Act states that “at least 75% [of the RECs satisfying the Section 1-

75(c)(1)(B) percentage goals] shall come from wind and photovoltaic projects,” which opens the

287

To be precise, the Initial Forward Procurement obtained 965,000 annual RECs from utility-scale wind power facilities, and the First

Subsequent Forward Procurement will seek to obtain 2,000,000 annual RECs from utility-scale wind facilities, as described in Sections

3.10 and 5.7.1. See Docket No. 17-0838, Final Order dated April 3, 2018 at 43.

288

Type refers to whether the generating facility is new or existing.

Long-Term Renewable Resources Procurement Plan August 6, 2018

door for consideration by the Agency of procurements for RECs from other generating technologies.

The Agency believes that there is value in increasing the diversity of sources of RECs for its

procurements, up to that 25% limit.

Furthermore, by conducting a Forward Procurement for RECs

from new renewable energy generating facilities that are not powered by wind or photovoltaics, the

Agency will help ensure the long-term supply of RECs to meet RPS goals after the 2020-2021 delivery

year.

In its filed Plan, the Agency proposed to first conduct a Request for Information to collect and monitor

market data to determine whether it can cost-effectively conduct an Other Renewables Forward

Procurement of RECs from new renewable energy generating facilities that are not wind or

photovoltaic,

290

and then conduct an Other Renewables Forward Procurement in the Fall of 2019. In

its Order approving the Plan, the Commission correctly observed that “the IPA has no experience or

market data regarding non-wind and non-solar renewables” and thus adopted a proposal under

which the IPA “will still conduct the Request for Information prior to the 2019 Plan update,” but

would then use the results of that Request for Information process to “inform the IPA regarding any

proposal it might make in that update.”

291

Thus, prior to determining whether to propose this procurement, the Agency will conduct a Request

for Information to gauge developer interest in the procurement. If the Agency, in consultation with

ICC Staff, determines that there is sufficient interest to make a procurement viable and cost effective,

the Agency will propose this procurement as part of its Plan update in 2019. The final target REC

volume for this procurement would be set based on the performance of other procurements and

programs, market feedback (including through the Request for Information process), and analysis of

expected available budget.

5.8.4. Community Renewable Generation Program Forward Procurement

Procurement

Technology

Type

292

Procurement

Date

Term

Delivery

Start

Annual REC

Target

Community

Renewable Generation

Program Forward

Any non-

photovoltaic

(with

subscribers)

New

Fall 2019

15 Years

2020-2021

or later

To be

determined

Section 1-75(c)(1)(N) of the IPA Act contains specific provisions requiring the creation of a

Community Renewable Generation Program:

The long-term renewable resources procurement plan required by this subsection (c)

shall include a community renewable generation program. The Agency shall establish

the terms, conditions, and program requirements for community renewable generation

projects with a goal to expand renewable energy generating facility access to a broader

290

The Agency understands that hydropower facilities featuring new turbines added to existing non-hydropower dams would not be

eligible to participate as these facilities would constitute a newly constructed “hydropower” dam, and would thus be prohibited under

Section 1-10 of the IPA Act’s limitation of eligible hydropower only to “hydropower that does not involve new construction or significant

expansion of hydropower dams.”

291

Docket No. 17-0838, Final Order dated April 3, 2018 at 52.

292

Type refers to whether the generating facility is new or existing.

Long-Term Renewable Resources Procurement Plan August 6, 2018

group of energy consumers, to ensure robust participation opportunities for residential

and small commercial customers and those who cannot install renewable energy on

their own properties.

In turn, “community renewable generation projects” are defined in Section 1-10 of the Act as

including wind, solar thermal, photovoltaic, biodiesel, crops and untreated and unadulterated

organic waste biomass, tree waste, and non-new hydropower. The Agency expects that the most

likely type of project to participate in a program to support community renewable generation

projects would be photovoltaic projects, and those projects must participate in the Adjustable Block

Program.

293

However, there may be interest in developing other potential community renewable

generation projects that use other sources of renewable energy such as wind, solar thermal, or

biomass. This Section describes the competitive procurement process that would be used to procure

RECs from community renewable generation projects that are not photovoltaic (photovoltaic

community renewable generation projects will participate in the Adjustable Block Program

described in Chapter 6).

Details related to terms, conditions, and program requirements and other aspects (e.g., portability

and transferability of subscriptions, and monetary bill credits) of community renewable generation

programs are described in detail in Chapter 7.

The creation of the Community Renewable Generation Program does not provide any specific

quantitative targets for the program or explicitly state that the program would procure RECs from

the community renewable generation projects, other than to specify the mechanisms for procuring

RECs from photovoltaic community renewable generation projects:

The Agency shall purchase renewable energy credits from subscribed shares of

photovoltaic community renewable generation projects through the Adjustable Block

program described in subparagraph (K) of this paragraph (1) or through the Illinois

Solar for All Program described in Section 1-56 of this Act.

The Agency notes that, outside of its use of the Renewable Energy Resources Fund as described in

Section 1-56 of the IPA Act, it does not (and cannot) directly “purchase” RECs from systems, in part

because it has no funding source from which to do so; instead, it facilitates the purchase of RECs by

the utilities. Other provisions of Section 1-75(c) of the Act, as well as Section 16-108(k) of the Public

Utilities Act, contemplate that utilities would directly “purchase” RECs through the Adjustable Block

Program; thus, the IPA will interpret this provision to mean facilitation by the Agency of purchase by

utilities. RECs from photovoltaic community renewable generation projects are considered part of

the Adjustable Block Program REC targets. RECs from other types of community renewable

generation projects could be applied to other portions of the RPS targets.

For community renewable generation projects that are not photovoltaic, the Agency proposes to

conduct a Community Renewable Generation Program Forward Procurement for RECs from non-

photovoltaic projects. This REC procurement will occur in 2019. RECs from winning projects will

begin delivery in the 2020-2021 delivery year or later and will have a delivery term of 15 years. The

requirements to participate in this procurement will mirror the requirements for a photovoltaic

293

Specifically, Section 1-75(c)(1)(N) provides that “[t]he Agency shall purchase renewable energy credits from subscribed shares of

photovoltaic community renewable generation projects through the Adjustable Block program described in subparagraph (K) of this

paragraph (1) or through the Illinois Solar for All Program described in Section 1-56 of this Act.”

Long-Term Renewable Resources Procurement Plan August 6, 2018

community renewable generation project to apply to the Adjustable Block Program. The key

difference will be that, rather than applying for a set price for RECs, the application will be the initial

submittal for a competitive procurement that has bids selected based primarily on price, as is done

for the other competitive procurements conducted by the IPA. The final target REC volume for this

procurement will be set in early 2019 based on the performance of other procurements and

programs and analysis of expected available budget.

The Community Renewable Generation Program Forward Procurement will also include these

features:

• REC price will be based on bid price. There will not be additional adders beyond that price.

• RECs will be paid for on delivery (as opposed to the front-loaded payment structure of the

Adjustable Block Program community solar projects).

• Projects must maintain subscriber participation levels, and the quantity of REC that will be

paid for each year will be tied to the subscription level maintained (measured in capacity, not

number of subscribers). Winning bidders will be required to report annually to the Agency

and to the utility purchasing the RECs on subscription levels.

5.9. Spot Procurements

The RPS goals identified in Chapter 3 for the initial years of this Plan are not likely to be met by all

the procurements proposed in the previous sections of this Chapter plus the programs described in

Chapters 6, 7, and 8. This is especially true for the initial years covered by this Plan during which new

projects are under development and construction and not yet delivering RECs. The procurements

described in the previous sections are intended to maximize the opportunities to procure RECs from

new projects, resulting in the development of new renewable energy generation that will provide

RECs. This section describes the Spot Procurements that could meet the RPS goals for the initial years

of the Plan as well as fill in any remaining gaps after the various Forward Procurements are

conducted.

While this Plan was not to be approved by the Commission until well into the 2017-2018 delivery

year, the Act requires that

For the delivery year beginning June 1, 2017, the procurement plan shall include cost-

effective renewable energy resources equal to at least 13% of each utility's load for

eligible retail customers and 13% of the applicable portion of each utility's load for

retail customers who are not eligible retail customers, which applicable portion shall

equal 50% of the utility's load for retail customers who are not eligible retail customers

on February 28, 2017.

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Section 1-75(c)(1)(B) of the Act thus creates a requirement that the Plan offer proposals to procure

RECs from new or existing generating facilities to meet the 13% goal for the 2017-2018 delivery year

using available RPS funds for the delivery year. Furthermore, a similar provision (14.5%) exists for

the 2018-2019 delivery year (with the portion of load to which RPS requirements apply for non-

eligible retail customers increasing to 75%), and then increasing by 1.5 percentage points each year

thereafter for all retail load (other than the ARES carve-out discussed in Section 3.3).

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20 ILCS 3855/1-75(c)(1).

Long-Term Renewable Resources Procurement Plan August 6, 2018

A key consideration for Spot Procurements is that the pool of eligible RECs would be smaller than for

many of the previous REC procurements conducted by the IPA. This is due to the narrowing of

geographic eligibility of facilities producing RECs to only Illinois and select facilities in adjacent states

(those that can meet the public interest criteria provisions of Section 1-75(c)(1)(I)), as well as the

prohibition of RECs from generating units with costs recovered through regulated rates found in

Section 1-75(c)(1)(J).

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A review of the public reports in GATS and M-RETS suggest that there may be significant quantities

of RECs in Illinois and adjacent states that could be eligible for the Spot Procurements. While the

ways in which RECs from previous years were used does not necessarily indicate future REC

availability, 5 million Illinois wind RECs from the 2016-2017 delivery year were not retired, and 5

million wind RECs from Iowa and Wisconsin were not retired, while another 1 million hydroelectric

RECs from Wisconsin were likewise not retired.

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A REC not being retired may be because the owner

was unable to sell it, but may also be because the owner chose not to sell it because it wished to retain

the rights to the environmental attributes associated with the REC. The IPA has not been able to

ascertain why these large quantities of RECs remain unretired, but they do indicate that there may

be opportunities for the IPA to procure such RECs for the 2017-2018 and subsequent delivery years.

Conducting the procurements may also provide information on the extent to which those unsold

RECs are available for use in meeting the Illinois RPS annual goals.

The Agency’s proposal for Spot Procurements included in its filed Plan proposed that each Spot

Procurement be designed to procure the remaining RECs required to meet that delivery year’s REC

goals using the available (e.g., unallocated to other contracts) RPS budget for that delivery year, and

would only be for RECs from the applicable delivery year (in other words, the vintage

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of the RECs

would be required to match the delivery year for which the Spot Procurement is meant to meet the

RPS goals).

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The procurements were also proposed to require contain the additional provisions

discussed below, but otherwise would have been conducted in a manner similar to the previous IPA

REC procurements and consistent with the requirements of Section 16-111.5 of the PUA, to the extent

practicable.

For each Spot Procurement, there would have been two groups of RECs to be procured, with targets

adjusted to ensure that at least 75% of RECs used to meet the Illinois RPS targets would come from

wind and photovoltaics for each procurement. Those two groups are:

1. Wind/photovoltaic RECs

2. Non-wind and non-photovoltaics RECs

For Spot Procurements, RECs would not have needed to be from a specific generating facility

identified at the time of bidding; thus, the obligation to deliver RECs could not have been excused by

a unit-related issue (although the unit would have been required to be eligible to deliver RECs for

compliance with the Illinois RPS). RECs that are otherwise contractually committed through any

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These new restrictions are discussed in Chapter 4 of this Plan.

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These illustrative examples do not factor in the public interest criteria that may limit availability of RECs from adjacent states or the

requirement that RECs come from generating units that do not have their costs recovered through regulated rates.

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Vintage refers to the month and year of the generation used to create a REC.

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While mooted by its cancellation of Spot Procurements, the Commission’s Order in Docket No. 17-0838 nevertheless agreed with the

Agency in indicating that the law demonstrates “a preference for meeting compliance year targets with compliance year generation”

consistent with this vintage matching requirement. Docket No. 17-0838, Final Order dated April 3, 2018 at 55-56.

Long-Term Renewable Resources Procurement Plan August 6, 2018

other procurement or program administered by the IPA would not have been acceptable. In other

words, eligible facilities that have surplus RECs (not otherwise contractually committed RECs) could

have bid surplus RECs in Spot Procurements.

The Procurement Administrator would have to allocate bids to each utility, including splitting bids

where necessary with the goal of matching, to the extent possible, each utility’s average REC price

and each utility’s REC Cost Allocation discussed in Section 3.1.

As discussed above in Section 5.7, the Commission’s April 3, 2018 Order in Docket No. 17-0838

determined that there will be no Spot Procurements for meeting the REC goals of the 2017-2018

through 2019-2020 delivery years authorized under this Plan.

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5.10. Consideration of Potential Procurements after 2019 and Through 2030

This Chapter has focused on competitive procurements to be conducted in calendar years 2018 and

2019 designed to meet the specific technology-based RPS targets through the end of the 2020-2021

delivery year, including the 2 million RECs each from new wind and photovoltaic projects and the

2% requirement from brownfield site photovoltaics, and contribute to eventually meeting the annual

RPS percentage goals found in Section 1-75(c)(1)(B) of the Act. At this time, the IPA is proposing to

review updated load forecasts, budgets, and actual program and procurement results as part of its

review and revision of the Plan to be conducted in 2019 for implementation in 2020, and will propose

specific procurements to meet future years’ goals and/or targets as part of that Plan revision.

Nonetheless, in considering the procurements that might be proposed in the 2019 Plan update, due

to the limitations on new wind being procured that would cause RECs from new wind projects to

exceed RECs from new photovoltaic projects by more than 200,000 annually, the first priority will be

to ensure that there are enough RECs from new photovoltaic projects procured to allow for the next

forward procurement of RECs from new wind projects. This will likely require both ensuring the

ongoing success of the Adjustable Block Program as well as additional competitive procurements for

RECs from new utility-scale and brownfield site photovoltaic projects.

Looking beyond 2019, assuming the review of initial results and budget limitations conducted as part

of the 2019 Plan update do not lead the Agency to reconsider radically its approach to procurement

and programs, the Agency plans for its procurement schedule from 2020 to 2030 to generally follow

the schedule outlined in this Plan for the initial years. Subject to budget availability, this approach

would consist of annual procurements of RECs from utility-scale new wind projects and from new

utility-scale and brownfield site photovoltaic projects, and other new projects of other renewable

generating technologies through 15-year forward procurements (with the Agency continuing to

assess and monitor the market interest in 15-year forward procurements for generating technologies

other than wind and solar). Subject to budget availability, the Agency may continue to propose

conducting spot procurements as necessary to meet the annual goals in Section 1-75(c)(1)(B) of the

Act that are not being met through the various Forward Procurement REC contracts and RECs from

the Adjustable Block Program. To the extent that committing future budgets to Forward Procurement

contracts is feasible, the Agency would seek to emphasize obtaining RECs through those

procurements and over time reduce the reliance on Spot Procurements to meet the statutorily

mandated annual REC percentage goals.

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See Docket No. 17-0838, Final Order dated April 3, 2018 at 41-44.

Long-Term Renewable Resources Procurement Plan August 6, 2018

6. Adjustable Block Program

6.1. Background

Sections 1-75(c)(1)(K) and (L) of the IPA Act, as amended by Public Act 99-0906, require the Agency

to establish an Adjustable Block Program for the procurement of RECs from new photovoltaic

distributed generation systems and from new photovoltaic community renewable generation

projects (colloquially known as “community solar”). The Adjustable Block Program stands in contrast

to the competitive procurements described in Chapter 5 in that it features administratively

determined prices for RECs and is open on an ongoing basis, rather than having discrete procurement

events.

Prior to the adoption of the Adjustable Block Program model, the development of new photovoltaic

distributed generation in Illinois had been supported in other ways. From 1999 to 2015, the

Department of Commerce and Economic Opportunity (“DCEO”) offered rebates for photovoltaic

projects; these rebates covered up to 25%-30% of the project cost and supported over 1,100 solar

PV projects with a total capacity of 13 MW.

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The DCEO rebates were available once per year and

the available budget was quickly allocated, leading to uncertainty for installers about whether their

projects would or would not receive a rebate in any given year. No funds have been appropriated for

the rebate program for the past two years, and it is not known whether funds will be appropriated

again before the enacting legislation expires in 2020.

Additionally, the IPA conducted Supplemental Photovoltaic Procurements in 2015 and 2016 under

authority granted by Section 1-56(i) of the IPA Act, and the Agency proposed and conducted

Distributed Generation procurements for the utilities from 2015 through 2017 (although these

procurements for the utilities were not limited to photovoltaic systems or to new systems) to meet a

statutory DG procurement target in the pre-P.A. 99-0906 RPS. The previous procurements

administered by the IPA featured competitive bidding for projects, and each winning bidder received

a contract through which RECs actually delivered were paid for at the bidder’s bid price. While this

approach created the market efficiency that is inherent in competitive bidding processes, installers

of projects found it difficult to sell projects when the potential REC revenue would not be known until

a bid was accepted (or alternatively there would be no REC revenue if a bid was not accepted). To

mitigate that challenge, the Agency allowed bidders to bid on forecasted blocks of RECs for systems

below 25 kW and give developers time to identify projects using a known REC price.

The Adjustable Block Program is intended to address these issues by featuring an approach that is

continuously open, rather than relying on specific procurement events (or rebate application

windows), features a clear set of prices, and can tap into a much larger budget. The program also

expands the model to accommodate community solar so that homes and businesses that cannot place

solar on their property can nonetheless participate in, and benefit from, direct access to renewable

energy.

The Adjustable Block Program approach has been previously implemented in similar manners in

other states and countries. The Adjustable Block Program will offer a set price for RECs from

qualifying projects, and the price will be adjusted in volumetric blocks (hence the “adjustable block”

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See Renewable Energy, Energy Efficiency, and Coal Resources Development Law of 1997, 20 ILCS 687/6-1 et seq.; also see

https://www.illinois.gov/dceo/AboutDCEO/ReportsRequiredByStatute/2013%20RERP%20Annual%20Report.pdf

https://energy.gov/savings/renewable-energy-resources-trust-fund.

Long-Term Renewable Resources Procurement Plan August 6, 2018

name) based on market response. The Agency’s goal is to design a system of adjustable blocks with

prices that will elicit the maximum amount of deployment at the least possible cost, with a high level

of certainty and transparency for consumers and market participants.

6.2. Lessons From Other Jurisdictions

Illinois is far from being the first to adopt an approach of administratively-determined incentives or

a block program to manage growth of the photovoltaic industry. Experience from other markets can

inform best practices for setting prices and program design. Solar photovoltaic power has been a

rapidly developing technology in recent years, with rapid price declines and industry growth. This

dynamic environment has made it challenging for policymakers to design incentives that ensure

healthy growth, without costing taxpayers and ratepayers too much or causing unsustainable “boom

and bust” cycles that harm the industry and consumers.

To inform the program design of the Adjustable Block Program, the Agency’s review and analysis of

other programs included relevant experiences from Germany, Spain, California, and particularly

Massachusetts and New York. Appendix C provides a summary of those experiences.

While the New York and Massachusetts programs are both based on a declining block structure, and

pay incentives on a first-come, first-served basis, key design aspects vary. The NY SUN program has

3 regions (Long Island, Con Edison, and Upstate) each with a distinct number of blocks, block sizes

and block prices. Incentives are paid in dollars per Watt (capacity), declining differently for each

region and sector, except for the residential sector where prices decrease by $0.10/W across all

regions. Like the proposed Illinois Adjustable Block Program, NY SUN pays small systems at the time

of energization, whereas commercial projects receive a partial payment upfront with the remainder

paid in installments over subsequent years.

The proposed Massachusetts SMART program (which builds upon the past success of earlier

programs in that state) will have the same block sizes for all the distribution companies, with the

same compensation rate across the state. The incentive will be expressed in $/kWh (energy) and will

decrease by a uniform 4% as it moves from one block to the next.

In the Massachusetts program for projects with capacities of 25 kW or less, the executed contract

shall include a budget that identifies key project components and a timeline and corresponding

payment schedule for installation of the project.

6.2.1. Managing Initial Demand

Some incentive programs have encountered problems dealing with a large quantity of applications

coming in very quickly upon the application window opening. California’s Self Generation Incentive

Program (“SGIP”) is a prime example. In 2016, $40 million of SGIP funding was made available.

Applicants filed 658 reservation requests totaling $181 million in requested incentives in the first 10

minutes following program opening.

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Some applicants were found to be deploying questionable

strategies to get their application earlier in line, including filing applications from within the same

server network as the application recipient. One vendor volunteered to give up half of its rewarded

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Eric Wesoff, Greentech Media, “Update: Stem’s Response to the California SGIP Subsidy Award Process Imbroglio,” May 16, 2016.

https://www.greentechmedia.com/articles/read/Update-Stems-Response-to-the-California-SGIP-Subsidy-Award-Process-Imbrog

Long-Term Renewable Resources Procurement Plan August 6, 2018

incentives to avoid litigation. As a result, the California PUC reformed the program to add a number

of protections against awards being monopolized by early applicants:

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• Replacing the first-come, first-served system with a lottery in which projects having

additional greenhouse gas/grid benefits are assigned priority;

• Making all of the incentive money available on a continuous basis in a declining incentive

“step” structure, akin to the California Solar Initiative; and

• Restricting each project developer to a cap of 20 percent of the incentive budget, rather than

the previous 40 percent cap that applied to equipment manufacturers

In the development of the structure of the Adjustable Block Program, the Agency has taken into

account its review of the experiences of other jurisdictions, what it has learned from previous

procurements it has administered, and the feedback it has received from stakeholders. For issues

that are not expressly addressed in the Act, the Agency has made policy decisions to implement the

program that it believes will result in a cost effective and successful program, with those decisions

then vetted through the Commission’s Plan approval process in Docket No. 17-0838.

6.3. Block Structure

The core of the Adjustable Block Program is the concept of a “block.” The program delineates

incentives for various categories of eligible projects using blocks of generation capacity at certain

prices per REC levels. The blocks are intended to create a progression from one price level to another

based on the response of the market. A strong response from the market will result in a rapid

progression to a lower price level, for example, while a weak response could elicit an increase in

incentives if it is determined to be necessary. Figures 6-1 and 6-2 in Section 6.4 provide an illustration

of how the blocks adjust by price.

Progression from one level to another is triggered by a certain volume of deployment, not by a time-

based deadline. This deployment-based design is intended to act as a safety valve in case incentives

are set at too high a level, which has been a problem in previous attempts at administratively-

determined prices. It can also provide long term certainty by giving an indication of future prices

and quantities to all potential market participants.

The initial goal for the Adjustable Block program is to have 1,000,000 RECs delivered annually by the

end of the 2020-2021 delivery year (i.e., May 31, 2021). See Chapter 3 for more discussion of goals.

Using a capacity factor of 17% (see Section 6.14.5), this would result in approximately 666 MW of

new photovoltaic generation. This goal is not a cap; if demand for new projects is strong enough, and

funding available, there is no barrier (other than the monetary RPS budget discussed in Section 3.17)

to going beyond that level.

In order to achieve that goal, the Agency has developed a block structure that it expects will allocate

three blocks per category to meet the expected demand for this program (e.g., 1 million RECs per

year by the end of the 2020-2021 delivery year), which would roughly be one block per category per

year through 2020. However, the block structure is open ended, so while the initial blocks are

designed to roughly match the goals through the 2020-2021 delivery year, if demand in any given

category is stronger than anticipated (and funding available), additional blocks after Block 3 will

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Eric Wesoff, Greentech Media, “California PUC Proposes Long-Overdue Reform on SGIP Subsidy,” May 23, 2016.

https://www.greentechmedia.com/articles/read/california-puc-proposes-long-overdue-reform-on-sgip-subsidy

Long-Term Renewable Resources Procurement Plan August 6, 2018

100

open to accommodate that demand. (Likewise, if demand is lower in a category, a block may remain

open longer.) In addition, the block size, structure, and prices will be reviewed and updated as needed

as part of the Plan update in 2019 (to take effect in calendar year 2020).

To encourage simplicity, the Agency will allocate incentives into two groups by service

territory/geographic category, based upon load forecasts contained in Chapter 3.

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• Group A: for projects located in the service territories of Ameren Illinois, MidAmerican, Mt.

Carmel Public Utility, and rural electric cooperatives and municipal utilities located in MISO.

• Group B: for projects located in the service territories of ComEd, and rural electric

cooperatives and municipal utilities located in PJM.

Incentive levels vary by group and are based upon the project’s location. While the program

administrator will strive to allocate REC delivery contracts with the electric utility in whose service

territory the project is located (where applicable, as the IPA lacks authority to procure REC contracts

on behalf of municipal utilities or rural electric cooperatives), in order to allocate RECs

proportionately among Ameren Illinois, ComEd, and MidAmerican to meet their RPS obligations, that

will not always be possible.

The Agency also considered creating an additional group or groups for MidAmerican, Mt. Carmel

Public Utility, rural electric cooperatives, and municipal utilities. However, given their small share of

the load in Illinois, the resulting group or groups would be quite small. By consolidating them into

the larger groups, block sizes are more administratively manageable, and prices are more

transparent and easily understood. The assignment to Groups of projects in the service territories of

Mt. Carmel Public Utility, MidAmerican, rural electric cooperatives and municipal utilities is intended

to approximately match those smaller entities to a larger utility with comparable electric rates.

Within each group, the blocks are divided by the allocations specified in Section 1-75(c)(1)(K) of the

Act, which are 25% for systems up to 10 kW, 25% for systems greater than 10 kW and up to 2,000

kW, 25% for photovoltaic community renewable generation, and 25% to be allocated by the Agency.

Consistent with the Commission’s Order in Docket No. 17-0838, the 25% that is left to the Agency’s

discretion will be held in reserve, with a reduction in size made to Block 3 to account for that reduced

capacity.

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The allocations will be:

• 25% for DG PV systems up to 10 kW (Small systems)

• 25% for DG PV systems greater than 10 kW and up to 2,000 kW (Large systems)

• 25% for photovoltaic community renewable generation projects (Community Solar)

For systems in the Large DG PV and Community Solar categories, the use of adjustments (as discussed

below in Section 6.5) are used to differentiate the price for RECs from different sized systems. In the

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The combined allocation for Ameren Illinois and MidAmerican would be 29.66% and the allocation for ComEd would be 70.34%. For

simplicity, these have been rounded to 30% and 70% for determining the size of blocks for Group A and Group B, respectively.

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See Docket No. 17-0838, Final Order dated April 3, 2018 at 60. That the discretionary capacity is taken only from the third block is

evident from the Order’s statement that it “adopts the proposal of the Joint Solar Parties to hold 25% of the Adjustable Block Program

capacity by megawatt in reserve,” as this detail was present in the Joint Solar Parties’ proposal, as well as the Order’s statement that

capacity would be reserved “as outlined in the IPA’s BOE.”

Long-Term Renewable Resources Procurement Plan August 6, 2018

101

alternative, the Agency considered subdividing those categories into smaller blocks, but the Agency

is not convinced that such an approach would be more efficient or a better way to match prices to

demand from the market.

Projects that participate in the Illinois Solar for All Program (as described in Chapter 8) will generally

follow the program terms and conditions of the Adjustable Block Program, but will apply separately,

and will not be considered part of these Groups and categories for the purpose of filling the capacity

of each Block. Those projects will also be subject to additional terms and conditions, as well as a

different contractual process.

6.3.1. Transition between Blocks

When a block’s capacity is filled, the next block for that category (with a different price) will open at

a price expected to be 4% lower than the previous block. In order to smooth the transition between

blocks, and to avoid unnecessary rushes in the application process, the closing of each block will be

a soft closing, as explained below. The Agency anticipates that there will be strong pent-up demand

for participation in the Adjustable Block Program. Therefore, the treatment of block closing will be

different for each Block 1 than for subsequent blocks.

• For each Block 1, projects submitted within 14 days of the program opening will be

considered for that Block. If the total quantity of reviewed and approved projects submitted

in Block 1 during that first 14 days exceeds 200% of the Block 1 volume, then the Agency will

assess the total dollar value of projects submitted and the available (uncommitted) current

and future year RPS budgets

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of the applicable utility.

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The Agency would then select,

through a lottery, projects that would be included in the approval of initial batches for

inclusion in Block 1.

• If after 14 days project applications would use more than 200% of Block 1 volume, then there

would be a lottery to select projects. For community solar projects the following additional

provisions would apply:

o Priority will be given to projects that propose to include at least 50% small

subscribers. 50% of the available funding would be reserved for these projects. If the

number of proposed projects with small subscribers exceeds that funding, then there

would be a first lottery for just that pool of projects. (If the proposed projects do not

use up that funding, the balance of available funds would be available for other

projects that are part of this initial application period.) Projects not selected would

then be placed in a lottery for the remaining 50% of funding along with projects that

do not include small subscribers.

o To ensure that projects that propose to include small subscribers (in order to get

prioritization) live up to that commitment, those projects will be required to meet

their proposed subscription levels within one year of energization. Failure to do so

would result in the projects not receiving any small subscriber adder and would be

subject to a 20% penalty on the total value of the REC contract.

• If after 14 days applications do not exceed 200% of Block 1 volume, then the Block would

remain open until filled, as described in the Plan.

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Excluding hourly and ARES ACP funds held in reserve (see Section 3.19), consistent with the Docket No. 17-0838 Order’s requirement

that ACP funds be used to fund forward procurements. See Docket No. 17-0838, Final Order dated April 3, 2018 at 8-9.

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This assessment will account for the differences in payment schedules for projects up to 10 kW (full payment on energization) and over

10 kW (20% payment on energization with the balance paid out over the following four years; see Section 6.6 for further discussion).

Long-Term Renewable Resources Procurement Plan August 6, 2018

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• Projects not selected in the initial lotteries would be held for approval until such time as

funding is available and would be included in the next block at the applicable price.

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Projects submitted after the first 14 days would be included in the subsequent block, but they

would not be included in subsequent approved batches until all initial projects are either

approved or withdrawn by the Approved Vendor. Each block will be evaluated

independently, and the Agency will announce an estimate of available funding prior to the

opening of the Block 1s.

• For subsequent blocks (and for each Block 1 if it is not filled in the first 14 days), the block

will be held open for 14 days after the block volume is used up. The Agency will announce

when a block has been filled and when the closing date will be.

Table 6-1 shows the amount of nameplate capacity that will be initially allocated to each block for

each group and category.

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The final amount for each block may change to accommodate the soft

closing described above. In other words, if the initial demand for the Group A, Small category in the

first 45 days is 30 MW, the final amount of capacity in that block would be 30 MW, and the next block

would open with 22 MW of expected capacity available. However, if Group A, Large category only had

10 MW of demand in the first 45 days, it would remain open until its 22 MW of capacity were filled

(subject to any adjustments in the final 14 days), and then the next 22 MW block for the Group A,

large category would open.

Table 6-1: Illustrative Block Opening Volumes (MW)

Block Group

Block Category

Block 1

Block 2

Block 3

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Group A

(Ameren Illinois, MidAmerican, Mt.

Carmel, Rural Electric Cooperatives and

Municipal Utilities located in MISO)

Small

5.5

Large

5.5

Community Solar

5.5

Group B

(ComEd, and Rural Electric Cooperatives

and Municipal Utilities located in PJM)

Small

Large

Community Solar

Total

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55.5

Subject to the conditions outlined above, a project will receive the price of the block that is open at

the time the project application is submitted. If a block closes while a project application is being

reviewed and the project is not accepted, the capacity associated with that rejected project will be

assigned to the next block.

As discussed further in Section 6.15.3 below, should a system in a given block fail to be developed,

that system’s portion of the block will be forfeited. The volume associated with the forfeited system

will be added to the block that is currently open at the price for that block.

The public will be notified of the availability of capacity in each Block via an online dashboard, as

discussed in more detail in Section 6.10.

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The order of release of projects for approval will be determined in the initial lottery.

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Each MW of nameplate capacity represents approximately 1,490 RECs for the first year of production.

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As discussed above, Block 3 volumes have been decreased in for consistency with the Commission’s Order in Docket No. 17-0838

requiring that the 25% of discretionary capacity be held in reserve. See Docket No. 17-0838, Final Order dated April 3, 2018 at 60.

Long-Term Renewable Resources Procurement Plan August 6, 2018

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6.4. REC Pricing Model

Historically the IPA has procured standard wholesale products (e.g., energy and capacity) as well as

renewable energy resources (e.g., RECs) through a competitive procurement process that featured

pay-as-bid Requests for Proposals. Under that model, the price paid for a product is the price that the

successful bidder bids. Bids for a specific product or category of products are ranked on price and

then selected until the target volume for the procurement is met. The competitive nature of this

process creates market efficiencies as bidders are forced to sharpen their bids to succeed. For this

process to be successful, it is critical that information about prices and bids is kept confidential;

bidders should bid based upon their own information and not information about other bidders’ bids.

In contrast, the Adjustable Block Program model is based upon the principle of having a “transparent

schedule of prices.”

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Each block as described above in Section 6.3 will have an administratively

determined, pre-announced price, and adders will be used (where specified) to further adjust the

price for the RECs from each system.

Given this change in approach for the pricing of RECs to be used for the Adjustable Block Program,

the IPA has developed a REC Pricing Model featuring a methodology for pricing RECs that emphasizes

transparency. The methodology uses publicly available data, and the model used is based upon an

industry standard photovoltaic pricing approach. The intent of the REC Pricing Model is to model a

REC price for typical systems in order to create a set of standard REC prices for use in this program.

The REC Pricing Model is based on the CREST model developed by the National Renewable Energy

Laboratory (“NREL”).

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The REC Pricing Model determines REC prices by balancing the calculated

Cost of Energy from the CREST model with the revenue that a system would be expected to receive

through net metering. In developing the REC Pricing Model, the default inputs in the CREST model

were updated to use publicly available data from the most recent NREL solar photovoltaic system

cost study,

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certain information received by the Agency in the responses to the Request for

Comments the Agency issued in June 2017, information contained in comments on the draft Plan, and

information contained in Objections to the filed Plan. Several different system sizes were modeled,

and community solar was modeled by adjusting for the difference in net metering rates between

community solar and distributed generation (e.g., energy-only net metering for community solar). A

more detailed explanation of the model and input assumptions is contained in Appendix D. In

addition, the model itself is available as Appendices E-1 through E-5.

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The IPA adapted and modified the CREST model for the purposes of calculating REC prices for this

Plan. CREST is an economic cash flow model that estimates the cost of energy in terms of cents per

kilowatt-hour associated with specific input assumptions regarding technology type, location,

system capital and operating costs, expected production, project useful life, and various project

financing variables. Modifications were not made to the modeling tool itself, but rather to the input

assumptions and post processing of the results. The Agency also notes that these prices are not

comparable to the REC prices from previous IPA procurements because these are based on

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20 ILCS 3855/1-75(c)(1)(K).

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See: https://financere.nrel.gov/finance/content/crest-cost-energy-models.

312

Ran Fu, Donald Chung, Travis Lowder, David Feldman, Kristen Ardani, and Robert Margolis. “U.S. Solar Photovoltaic System Cost

Benchmark: Q1 2016.” https://www.nrel.gov/docs/fy16osti/66532.pdf

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Excel versions of Appendix E are available on the Agency’s website, www.illinois.gov/sites/ipa/Pages/Renewable_Resources.aspx.

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assumptions around a 15-year delivery of RECs, rather than bids received for a 5-year delivery or 1-

year delivery of RECs.

In the filed Plan, the Agency recommended that after the Commission approves this Plan in 2018, the

Agency shall update specific inputs where the data may have changed and publish final prices within

60 days after the approval of the Plan. Accordingly, the Agency published updated REC prices on June

4, 2018 in Docket No. 17-0838 as a compliance filing; consistent with the Commission’s Order in

Docket No. 17-0838, those prices “reflect the Commission’s approved values as required by Section

1-75(c)(1)(M) of the IPA Act.”

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Table 6-2 contains the calculation of REC prices, factoring in the size category adjustments described

in Section 6.5.1.

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Docket No. 17-0838, Final Order dated April 3, 2018 at 73-74. Section 1-75(c)(1)(M) of the Act provides that “[p]rogram modifications

to any price, capacity block, or other program element that do not deviate from the Commission's approved value by more than 25% shall

take effect immediately and are not subject to Commission review and approval,” and thus the June 4 prices reflect the “Commission’s

approved value” for purposes of subsequent adjustments made by the IPA under this authority.

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Table 6-2: Block Group REC Prices ($/REC)

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Block Group

Block Category

Block 1

Block 2

Block 3

Group A

(Ameren

Illinois,

MidAmerican,

Mt. Carmel,

Rural Electric

Cooperatives,

and Municipal

Utilities

located in

MISO)

Small

≤10 kW

$85.10

$81.70

$78.43

Large

>10 - 25 kW

$78.70

$75.55

$72.53

>25 - 100 kW

$64.41

$61.83

$59.36

>100 - 200 kW

$52.54

$50.44

$48.42

>200 - 500 kW

$46.85

$44.98

$43.18

>500 - 2,000 kW

$43.42

$41.68

$40.02

Community

Solar

≤10 kW

$96.12

$92.28

$88.58

>10 - 25 kW

$87.07

$83.59

$80.24

>25 - 100 kW

$70.95

$68.11

$65.39

>100 - 200 kW

$60.47

$58.05

$55.73

>200 - 500 kW

$55.46

$53.24

$51.11

>500 - 2,000 kW

$52.28

$50.19

$48.18

Co-located systems exceeding

2 MW in aggregate size

$47.03

$45.15

$43.34

Group B

(ComEd, and

Rural Electric

Cooperatives

and Municipal

Utilities

located in

PJM)

Small

≤10 kW

$72.97

$70.05

$67.25

Large

>10 - 25 kW

$73.23

$70.30

$67.49

>25 - 100 kW

$65.61

$62.99

$60.47

>100 - 200 kW

$53.75

$51.60

$49.54

>200 - 500 kW

$48.07

$46.15

$44.30

>500 - 2,000 kW

$44.64

$42.85

$41.14

Community

Solar

≤10 kW

$91.89

$88.21

$84.69

>10 - 25 kW

$82.82

$79.51

$76.33

>25 - 100 kW

$66.65

$63.98

$61.42

>100 - 200 kW

$56.12

$53.88

$51.72

>200 - 500 kW

$51.09

$49.05

$47.08

>500 - 2,000 kW

$47.88

$45.96

$44.13

Co-located systems exceeding

2 MW in aggregate size

$42.59

$40.89

$39.25

After Block 1, prices are expected to decline by 4% with each transition between Blocks. The Agency

will monitor performance during the initial Blocks and may elect to modify the price change between

blocks based upon the speed that each Block is filled. The process for making changes is described in

Section 6.8.

Figure 6-1 and 6-2 illustrate block prices for Group A and Group B, incorporating the various size

category adjustments.

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In the “Large” and “Community Solar” categories the prices listed include the Size Category Adjustments described in Section 6.5.1.

Long-Term Renewable Resources Procurement Plan August 6, 2018

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Figure 6-1: Group A Blocks

Figure 6-2: Group B Blocks

Long-Term Renewable Resources Procurement Plan August 6, 2018

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6.5. Adjustments and Adders

The following set of adjustments and adders are intended to adjust the base REC price to meet

specific additional purposes. These include adjusting for system size, adjusting for the additional

costs of small subscribers to community solar, and potentially accounting for the changes to net

metering, smart inverter rebates and federal tax credits.

While the Act seeks to encourage projects “in diverse locations…not concentrated in a few geographic

areas,”

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at this time the Agency is not proposing any specific geographic adders. The split of the

blocks between utility service territories should help address geographic diversity, and the Agency

notes that for the Supplemental Photovoltaic Procurements (which featured no geographic

preferences), resulting new photovoltaic systems have been well distributed across the state.

Nevertheless, the Agency will review this determination as part of the Plan update, and if geographic

diversity is not being sufficiently achieved, the Agency may propose a geographic adder in the future

to encourage projects in underrepresented areas.

6.5.1. Size Category Adjustments

The Agency proposes a set of adjustments based on project size for projects greater than 10 kW and

up to 2,000 kW. As there are significant economies of scale for larger systems compared to smaller

systems, the Agency believes that setting a single REC price for all projects in this range will either

over-incentivize large projects or under-incentivize small projects. Having a diversity of project sizes

is important for creating a healthy and diverse distributed solar market, with robust opportunities

for participation by all customers. These adjustments reflect REC pricing to reasonably match system

sizes.

These adjustments will only be available for systems over 10 kW in size in both the Large and

Community Solar categories and are reflected in the REC prices listed in Table 6-2. The Agency does

not believe there will be significant cost differences for systems within the “no more than 10 kW”

category requiring similar price adjustments.

Table 6-3: Size Category Adjustments

Size

$/REC

Group A

Group B

Over 10 kW to 25 kW

$35.28

$28.59

Over 25 kW to 100 kW

$20.99

$20.97

Over 100 kW to 200 kW

$9.12

$9.11

Over 200 kW to 500 kW

$3.43

Over 500 kW to 2000 kW

No adjustment

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20 ILCS 3855/1-75(c)(1)(K).

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These adjustments were calculated using the REC pricing model described in Section 6.4 with the

system costs based on a typical sized system for each size category. While the adjustments were

calculated using the REC Pricing Model as described above, the Agency notes that the resulting higher

REC prices for smaller systems could lead to more systems being developed, which may help

encourage the geographic diversity of the system locations.

6.5.2. Co-location of Distributed Generation Systems

The total capacity of distributed generation systems energized after June 1, 2017 at a customer’s

location will be considered a single system.

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(For example, three 100 kW systems at a single

location will be considered a 300 kW system.) If a system at a single location is subsequently

expanded, the Agency reserves the right to revise the incentive amounts paid for the original system,

and to set new incentives based on the total expanded system size rather than just treat the expansion

as a separate system. For the purpose of establishing an incentive level, a system’s location would be

a single building (regardless of the number of utility accounts at the location) for rooftop

installations, and a single property parcel for ground-mounted systems (if a property had both

rooftop and ground-mounted systems, it will be considered a single system).

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Exceptions will be

made if it can be demonstrated that two projects on one roof serve to offset the load of separate

occupants (residential or commercial) of a building.

Additional discussion of co-location of community solar projects, including the approach to co-

location of community solar projects adopted in the Commission’s Final Order in Docket No. 17-0838,

is included in Section 7.3. For the purposes of consideration of co-location, distributed generation

systems and community solar projects would be considered separately and not impact each other.

6.5.3. Community Solar

Community solar projects may face additional costs and feature reduced eligibility for direct energy-

related revenues than distributed generation systems. On the revenue side, subscribers to such

projects are eligible only for energy-only net metering,

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while on the cost side, there is the cost of

acquiring, maintaining, and managing subscribers. The prices for community solar RECs reflect those

differences. The REC prices for these projects also includes the Size Category Adjustments discussed

above.

To ensure that the benefits of solar energy are widely shared by Illinois residents, the Adjustable

Block Program will offer an additional incentive for community solar projects with a higher level of

small subscribers (residential and small commercial customers with subscriptions below 25 kW). To

account for additional costs related to small subscribers, the following schedule of adders will be

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Any system developed under this program would require a separate GATS or M-RETS ID from any system developed through a different

program (e.g., the Supplemental Photovoltaic Procurement or the Utility DG procurements) or without programmatic support. This would

allow for a clear demarcation between systems and their associated RECs.

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Please note that this is a different standard than the IPA used for determining the size of co-located systems participating in its

Supplemental Photovoltaic Procurement process, for which the separate measurement of a system’s output could be used to establish that

system’s size (thus allowing co-location more liberally while still retaining eligibility for a smaller system size).

319

220 ILCS 5/16-107.5(l)(2). The IPA also notes that in ICC Docket No. 17-0350, the proceeding to approve ComEd’s proposed community

solar net metering tariff pursuant to Section 16-107.5(l-5) of the PUA, several parties argued that volumetric transmission charges should

be part of the net metering supply credit granted to community solar projects, while ComEd argued that transmission charges should be

excluded. The Commission’s September 27, 2017 Order in this matter determined (page 15) that the transmission services charge should

be excluded from the community solar net metering credit.

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available to community solar projects that have minimum levels of small subscribers. For more

discussion of issues related to small subscribers, see Section 7.6.2.

Table 6-4: Community Solar Adders

Adder

$/REC

Group A

Group B

Less than 25% small subscriber

No adder

25% to 50% small subscriber

$11.17

$10.88

Over 50% to 75% small subscriber

$22.34

$21.77

Greater than 75% small subscriber

$33.51

$32.65

The small subscriber adders will be determined on the percentage of the energy output of the project

subscribed to by small subscribers, and not the number of small subscribers. As described in more

detail in Sections 6.15.3 and 6.17, a community solar project will have to demonstrate a level of small

subscribers at the time of energization to receive an adder initially, and will have to maintain the

small subscriber subscription levels or face having to pay penalties to remove the added value of the

adders if the level is not maintained.

At this time, the Agency is not proposing an adder that would distinguish between “developer-driven”

projects and “community-led” projects. Such a distinction may be difficult to make in practice, may

invite opportunities for abuse, and may create additional complexities to program administration.

The Agency believes the combination of the Size Category Adjustment, which would provide benefits

to smaller projects, plus the option of participating in the Illinois Solar for All low-income community

solar sub-program, adequately addresses the needs of those types of projects. For more details on

this determination, see Section 7.5.

6.5.4. Adders to Adjust for Changing System Revenue

As discussed in Section 6.8.1 below, the Agency anticipates that as net metering caps are met, smart

inverter rebates are adjusted or created, and Federal tax incentives decrease, the revenue a system

would receive from other sources will decline. Not accounting for that in REC prices could make a

system that would have been economically viable no longer viable after those decreases.

At this time, the Agency is not proposing specific adders to address these challenges, but notes that

Section 1-75(c)(1)(M) of the Act provides that “[p]rogram modifications to any price, capacity block,

or other program element that do not deviate from the Commission's approved value by more than

25% shall take effect immediately and are not subject to Commission review and approval,” allowing

the Agency to make small adjustments to REC prices to account for certain challenges.

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If necessary,

the Agency will use this authority to propose adders to account for these changes following the

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The Agency’s June 4, 2018 published prices (which mirror those included in this Final Plan) in its Compliance Filing reflect the

“Commission’s approved value” for purposes of subsequent adjustments made by the IPA under this authority. See Docket No. 17-0838,

Final Order dated April 3, 2018 at 73-74.

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process described in Section 6.8, or utilize the Commission approval process for revising its Plan for

any larger changes.

6.6. Payment Terms

The Act sets up a clear schedule of payments for RECs for projects. Section 1-75(c)(1)(L) specifies

the following schedule.

• For systems up to 10 kW, “the renewable energy credit purchase price shall be paid in full by

the contracting utilities at the time that the facility producing the renewable energy credits is

interconnected at the distribution system level of the utility and energized.”

• For distributed generation systems greater than 10 kW and up to 2,000 kW and community

renewable solar projects, “20 percent of the renewable energy credit purchase price shall be

paid by the contracting utilities at the time that the facility producing the renewable energy

credits is interconnected at the distribution system level of the utility and energized. The

remaining portion shall be paid ratably over the subsequent 4-year period.”

The Agency proposes that the standard for being “energized” as used above must include the

completion of the interconnection approval by the local utility and the registration of the system in

GATS or M-RETS so that generation data can be tracked and RECs created.

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In addition, as discussed

in Section 6.15.4, to avoid a system being completed but RECs not created and delivered, before a

system can be considered “energized” so as to initiate the processing of an invoice for REC delivery

contract payments, automatic assignment of RECs to the applicable utility will need to be established.

The Agency believes that by ensuring proper registration in the tracking system up front, future

administrative challenges can be minimized.

For systems over 10 kW and community solar projects, it is not clear from the law how exactly the

“subsequent 4-year period” would be calculated, and whether the frequency of payments should be

annually, quarterly, or monthly. The Agency proposes that after the first payment of 20%, the balance

of payments be made on a quarterly basis over the following 16 quarters. For example, if the first

payment is made on September 1, 2018 (upon interconnection and energization), assuming

continued compliance with contractual requirements, the next payments would occur approximately

on December 1, 2018, March 1, 2019, etc., with the final payment on approximately September 1,

2022. This would be 17 total payments that bookend a four-year period of time. Payment amounts

would be on a set schedule and could be adjusted to reflect changes in REC quantities (per Section

6.16.2), or community solar subscription levels (per Section 6.15.4).

Section 1-75(c)(1)(L) also requires that:

(vi) If, at any time, approved applications for the Adjustable Block program exceed funds

collected by the electric utility or would cause the Agency to exceed the limitation

described in subparagraph (E) of this paragraph (1) on the amount of renewable energy

resources that may be procured, then the Agency shall consider future uncommitted

funds to be reserved for these contracts on a first-come, first-served basis, with the

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This proposed standard is only intended to relate to the contractual payment terms for the Program. Section 1-75(c)(1)(K) specifies

that, “[o]nly projects energized on or after June 1, 2017 shall be eligible for the Adjustable Block program.” The Agency views this to mean

that a project must be interconnected to the applicable utility after June 1, 2017 and that the registration date of the system in GATS or M-

RETS does not impact that determination. The added contractual standard is meant to ensure that energized systems will produce the

RECs that they are receiving upfront payments for.

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delivery of renewable energy credits required beginning at the time that the reserved

funds become available.

The Agency does not currently anticipate that approved applications for the Adjustable Block

Program will exceed funds collected. However, the Agency will monitor this situation and address

any potential concerns in greater detail in the next Plan update.

Additional provisions of Section 1-75(c)(1)(L) require that:

• “The electric utility shall receive and retire all renewable energy credits generated by the project

for the first 15 years of operation.”

• “Each contract shall include provisions to ensure the delivery of the renewable energy credits

for the full term of the contract.”

These provisions are discussed further in Section 6.16.

6.7. Contracts

The Agency notes that while payments will be made according to the terms described in Section 6.6,

the Adjustable Block Program and its REC delivery contracts will feature ongoing performance

requirements to ensure that RECs are delivered across the 15-year term of the contracts, especially

after payments have been made. Section 6.16 describes in more detail how those performance

requirements will be implemented.

The Agency, in consultation with its Program Administrator and/or its Procurement Administrator,

will develop standard REC delivery contracts between the utilities and Approved Vendors much as

its Procurement Administrator has done for the competitive procurement processes. This will

include the opportunity for interested parties to comment on the contracts. Ultimately the contracts

will reflect the consensus of the Agency, the utilities, and Commission Staff. Contracts, once finalized,

will not be subject to negotiation.

The initial contracts—those first developed under this process—will be used through the end of the

2018-2019 delivery year. On an annual basis, the Agency will review and update the contracts

through a process that includes input from interested parties.

The Agency notes that the Act provides that “[n]o contract shall be executed for an amount that is

less than one renewable energy credit per year.”

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Given that each contract will be for a batch of

projects that, to be approved, must be for at least 75 kW,

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this minimum requirement will be easily

met. (See Section 6.14 for more information on batches.)

Contracts will be assignable. The assignee must agree to, and abide by, the applicable terms and

conditions required of an Approved Vendor (or a Single Project Approved Vendor in the case of the

assignment of a single project from a contract). Consistent with the Commission’s Order in Docket

No. 17-0838, the assignor and the assignee will be required to notify the contracting utility of any

assignment, and provide the utility with all pertinent financial, settlement and contact information.

324

322

20 ILCS 3855/1-75(c)(1)(L)(v).

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While the minimum batch size is 100 kW, 75% of the capacity of the systems in a batch must be approved for the contract to be executed.

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See Docket No. 17-0838, Final Order dated April 3, 2018 at 74.

Long-Term Renewable Resources Procurement Plan August 6, 2018

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6.8. Adjustments to Blocks and Prices

The Act contains two provisions that allow the Agency to review and adjust block quantities, sizes,

and prices. The provisions are contained in Section 1-75(c)(1)(K):

“The Agency may periodically review its prior decisions establishing the number of

blocks, the amount of generation capacity in each block, and the purchase price for each

block, and may propose, on an expedited basis, changes to these previously set values,

including but not limited to redistributing these amounts and the available funds as

necessary and appropriate, subject to Commission approval as part of the periodic plan

revision process described in Section 16-111.5 of the Public Utilities Act.”

And in Section 1-75(c)(1)(M):

“If necessary, the Agency may make prospective administrative adjustments to the

Adjustable Block program design, such as redistributing available funds or making

adjustments to purchase prices as necessary to achieve the goals of this subsection (c).

Program modifications to any price, capacity block, or other program element that do

not deviate from the Commission's approved value by more than 25% shall take effect

immediately and are not subject to Commission review and approval. Program

modifications to any price, capacity block, or other program element that deviate more

than 25% from the Commission's approved value must be approved by the Commission

as a long-term plan amendment under Section 16-111.5 of the Public Utilities Act. The

Agency shall consider stakeholder feedback when making adjustments to the Adjustable

Block design and shall notify stakeholders in advance of any planned changes.”

In essence, changes of less than 25% to the prices and other program components indicated in the

Agency’s June 4, 2018 REC Pricing Model compliance filing and in this final Plan can be made by the

Agency without seeking review and approval from the Commission, while larger changes will require

that review and approval as part of the Agency’s regular annual procurement planning process.

The Agency is aware of four key events that could significantly impact REC pricing. The first is that

when a utility reaches its net metering cap (see Section 6.8.1 for more discussion), net metering for

new enrollments by distributed generation systems will change from full retail net metering to

energy-only net metering. The second is that, upon the net metering cap being met, the distributed

generation rebate for smart inverters will change from $250/kW (for non-residential customers and

community renewable participants) to a rebate based upon the locational value of the system to the

grid, while a new distributed generation rebate will be created for residential customers. The third

is that the Federal Solar Investment Tax Credit will step down from 30% to 26% for projects that

start construction in 2020, and then to 22% in 2021; it will be eliminated for residential projects after

that time and be reduced to 10% for other projects. And fourth, U.S. President Donald Trump

exercised his power under the federal Trade Act to impose import tariffs on crystalline solar

photovoltaic panels and modules in January 2018, following an unfair trade practices proceeding at

the United States International Trade Commission (“ITC”).

325

While the IPA’s REC Pricing Model has

325

United States International Trade Commission, Investigation No. TA-201-75, Crystalline Silicon Photovoltaic Cells,

https://www.usitc.gov/investigations/title_7/2017/crystalline_silicon_photovoltaic_cells_whether_or/safeguard.htm

Long-Term Renewable Resources Procurement Plan August 6, 2018

113

incorporated the projected market effect of those import restrictions,

326

there could be further

changes to federal trade policy in this area.

Each of these changes would impact the value proposition for developing a project and could require

an adjustment in REC prices to keep project development viable. The Agency will notify stakeholders

and provide opportunities for feedback for changes to reflect these circumstances, or others that may

arise that would also require changes to be made.

In addition to these factors, and in keeping with the adjustable nature of the Adjustable Block

Program, the Agency recognizes that despite its best efforts to set REC (and adder) prices at “just

right” levels, it is possible that factors that impact prices may need to be updated to reflect changing

market dynamics. In response to very low or very high demand for the program, the Agency may

adjust REC and adder prices, block sizes, and other variables as needed to maintain a vigorous and

healthy market for distributed solar and to reach programmatic goals. The Agency will monitor

program activity and consider such change if it determines they are warranted.

The Agency intends to wait at least six months after program launch before considering making

significant changes to help encourage program stability. However, if program participation is

extremely low, or if it becomes clear that REC prices were set too high, the Agency may elect to act

sooner than that.

When the Agency becomes aware of a situation that would require a change to block quantities, size,

price, or other factors, including, but not limited to, the situations described herein, the Agency will

post an announcement to its website regarding the proposed changes and will hold either a

stakeholder meeting, or an online webinar to provide an opportunity for stakeholder input.

Stakeholders will also be invited to submit written comments on the proposed material changes

which will be posted to the Agency’s website. The Agency will consider feedback it receives prior to

finalizing changes it makes that are less than 25% and do not require Commission review and

approval, and will likewise consider that feedback in filings made before the Commission to update

the Adjustable Block Program.

6.8.1. Net Metering Cap Adjustment

Under Section 16-107.5(j) of the PUA, net energy metering is generally credited at a value that

accounts for the value of energy and delivery until net metering accounts for 5% of the total peak

demand of each electricity provider’s eligible customers. At that time, net metering for any new

installations will be for energy only.

327

The Agency will work with the utilities to keep informed on when the net metering caps may be met.

At that time, the Agency will review the performance of the program and make price and policy

adjustments needed to achieve compliance with RPS goals. As noted above, the Agency will be able

to make adjustments to offset the impact of the change in net metering revenue if they are less than

a 25% change in the price of RECs. If the change in price is greater than 25%, then the Agency will be

able to cap the adder and block price adjustment at 25% and will seek Commission review and

approval of a revised schedule of REC prices as outlined in Sections 1-75(c)(1)(K) and (M) of the Act.

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See Docket No. 17-0838, IPA REC Pricing Model Update of February 27, 2018, at 1-2.

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220 ILCS 5/16-107.5(j), (n).

Long-Term Renewable Resources Procurement Plan August 6, 2018

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At this time, the Agency does not expect the net metering cap to be met prior to its next Plan revision

cycle (i.e., not before the Fall of 2019).

6.8.2. Smart Inverter Rebate

Under Section 16-107.6(e) of the PUA, when a utility reaches net metering load equaling 3% of its

total peak demand, the Commission will initiate an investigation to adjust the smart inverter rebate

from $250/kW (for non-residential customers and community renewable participants) to a new

value, and to establish an initial smart inverter rebate value for residential customers. Once the

resulting rebate value is approved by the Commission, it will take effect when the load of net metering

enrollment for that utility reaches 5% of the utility’s total peak demand. It is currently not clear if the

5% level will be reached before the end of the 2020 delivery year, and even if it is, if any of the plans

for changing the inverter rebate will have been approved by the Commission. Therefore, at this time

the Agency is not proposing a specific adder to adjust for the change to the inverter rebate (which

could also be an increase in the rebate level for some projects, thus not requiring any new adders).

The Agency will take part in each utility’s investigation proceeding and will consider proposing new

adders, if needed, as those investigations proceed. The adoption of any new adder will either follow

the process outlined in Section 6.8 or be proposed as part of the Plan update.

6.8.3. Federal Solar Investment Tax Credit Adjustment

The U.S. Congress has set a schedule for a decline and partial phase out of federal tax credits for solar

photovoltaics.

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Projects that start construction in 2017, 2018, and 2019 will receive a 30%

Investment Tax Credit; projects that start construction in 2020 and 2021 will receive 26% and 22%,

respectively; for construction starts after that, the credit will drop permanently to 10% for

commercial projects and 0% for residential projects.

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After 2015 legislation, project owners who

start construction before 2022 may claim the applicable credit once construction begins, as long as

the project is operational by the end of 2023.

Additionally, federal tax legislation

330

enacted by the United States Congress and signed by the

President in December 2017 introduced a provision called the Base Erosion and Anti-Abuse Tax.

331

The provision defines a new concept of a “base erosion minimum tax amount” that certain

corporations will pay, equal to the excess (if any) of:

(A) 10 percent (5% in 2018 only, and later increasing to 12.5% after 2025) of a company’s

modified taxable income,

332

minus

(B) the company’s regular tax liability, reduced by the tax credits to which it is entitled

(excluding the R&D credit under 26 U.S.C. § 41 and excluding 80 percent of certain other

328

Consolidated Appropriations Act of 2016, Public Law 114-113, December 18, 2015, at § 303 (modifying 26 U.S.C. § 48(a)); see also

https://energy.gov/savings/business-energy-investment-tax-credit-itc

https://www.seia.org/research-resources/impacts-solar-investment-tax-credit-extension.

329

26 U.S.C. §§ 48(a)(2)(A), (a)(3)(A)(i), (a)(6)(A).

330

See Pub. Law 115-97 (Dec. 22, 2017), https://www.congress.gov/115/bills/hr1/BILLS-115hr1enr.pdf.

331

Id. at § 14401 (adding new 26 U.S.C. § 59A).

332

“Modified taxable income” will be calculated by not including the effect of foreign transfer payments. Id. (new 26 U.S.C. §§ 59A(c)(1),

(2), (d)(4)).

Long-Term Renewable Resources Procurement Plan August 6, 2018

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Section 38 credits, including the Investment Tax Credit (but not excluding any of such Section

38 credits after 2025)).

333

This provision applies to corporations with average annual revenues of at least $500 million and

which make certain levels of tax-deductible transfer payments to foreign affiliates.

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This provision

is widely thought to diminish the value of the Investment Tax Credit for solar generation for “tax

equity” investors, which are often parts of large multinationals. To the extent that the potential

investor’s U.S. income tax liability for a given year would fall below the defined 10% level after

deducting 20% of the Investment Tax Credit from tax liability, the investor would essentially be

required to pay back that 20% of the Investment Tax Credit to the U.S. Treasury.

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The status of the

tax credit could change from year to year depending on the investor’s broader tax and financial

profile.

The phase-out of the federal Investment Tax Credit, and any possible legislative change to that

schedule, will affect project economics for distributed solar in Illinois. Like other anticipated

changes, the Agency will review the performance of the program and make price and policy

adjustments needed to achieve compliance with RPS goals. For example, the Agency could offer an

adder to reflect the change in the federal Investment Tax Credit from 30% to 26%. This adjustment

will probably not be larger than 25%, so would not require Commission review and approval. The

Plan Update scheduled to be conducted in 2019 for implementation in 2020 will address any future

adjustments for projects that start construction in 2021 or later.

6.8.4. Tariffs on Foreign Photovoltaic Modules and Cells

On May 17, 2017, Suniva, Inc., a Georgia (U.S.)-based maker of crystalline silicon photovoltaic

(“CSPV”) cells and modules, filed an amended petition for import relief at the United States

International Trade Commission (“ITC”) under Sections 201 and 202(a) of the federal Trade Act of

1974, 19 U.S.C. §§ 2251, 2252(a), alleging that imports of the same product are being imported into

the United States in such increased quantities as to be a substantial cause of serious injury, or the

threat thereof, to the domestic industry.

336

SolarWorld Americas, Inc., another U.S. manufacturer of

CSPV modules, joined the petition on May 25, 2017. The joint petitioners proposed a tariff of

$0.40/watt on imported CSPV cells and a floor price of $0.78/watt on imported CSPV modules. A

hearing on this harm issue was held at the ITC on August 15, 2017.

On September 22, 2017, the ITC, exercising its authority under Section 202(b) of the Trade Act, voted

4-0 to find that there was a serious injury caused by the importation of crystalline silicon photovoltaic

cells and modules. The ITC ruled to exclude Singapore, Australia, Canada, and other free trade partner

333

Id. (new 26 U.S.C. §§ 59A(a), (b)(1), (b)(2)(B)).

334

Id. (new 26 U.S.C. § 59A(e)(1)).

335

https://pv-magazine-usa.com/2017/12/02/senate-approves-tax-bill-likely-with-provision-to-hobble-itc-ptc.See, e.g., “Tax Reform Act

– Impact on Renewable Energy Projects,” December 20, 2017, at http://www.bakerbotts.com/ideas/publications/2017/12/tax-reform-

act---renewable-energy; Georgina Gustin, “Tax Overhaul Preserves Critical Credits for Wind, Solar and Electric Vehicles,” December 22,

2017, at https://insideclimatenews.org/news/18122017/tax-bill-vote-renewable-credits-solar-wind-clean-energy-jobs-evs-investment-

anwr.

336

See 82 Fed. Reg. 25331-25333, June 1, 2017

(https://www.usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2017/Solar%20Panels/Safeguard/cspv_-_institution.pdf

Long-Term Renewable Resources Procurement Plan August 6, 2018

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countries from the finding—although it found serious injury caused by imports from free trade

partners Mexico and South Korea.

337

A hearing regarding remedies was held at the ITC on October 3, 2017.

338

The ITC Commissioners

announced their remedy recommendations on October 31, 2017.

339

The ITC issued a lengthier

written report containing its injury findings and remedy recommendations due to the U.S. President

on November 17, 2017,

340

satisfying its obligation under Sections 202(e) and (f) of the Trade Act.

The ITC’s Chairman recommended a tariff on CSPV cells of 10% ad valorem for the first 500 MW of

imports in a given year and then a 30% tariff rate for additional imports.

341

For CSPV modules, the

Chairman recommended a 35% tariff rate.

342

In all cases, the Chairman’s recommended tariff rates

would decline steadily over the second, third, and fourth years of a four-year tariff program. The

Chairman also recommended that the President initiate international negotiations to “address the

underlying cause of the increase in imports of CSPV products and alleviate the serious injury

thereof.”

343

Two other Commissioners issued a joint remedy proposal similar in structure to the

Chairman’s.

344

A fourth Commissioner issued a recommendation that the President impose a

quantitative restriction on imports of CSPV products, including cells and modules, starting at 8,900

MW in the first year and increasing annually by 1,300 MW in each of the second, third, and fourth

years of a four-year quota program; she also recommended that the quotas be administered via

import license auctions at a minimum price of $0.01/watt, with auction revenue used to assist

domestic CSPV manufacturers.

345

On November 27, 2017, the United States Trade Representative, exercising the President’s authority

under Section 203(a)(5) of the Trade Act, asked the ITC for additional information to assist the

President in “determining the appropriate and feasible action to take that will facilitate efforts by the

domestic industry to make a positive adjustment to import competition and provide greater

economic and social benefits than costs.” The Trade Representative asked the ITC to “identify any

unforeseen developments that led to the articles at issue being imported into the United States in

such increased quantities as to be a substantial cause of serious injury.”

346

Following this letter, the

ITC responded on December 28, 2017, identifying various support programs by the government of

337

See, e.g., “Solar Tariff Case Advances as ITC Finds ‘Injury’,” Greentech Media, September 22, 2017,

https://www.greentechmedia.com/articles/read/solar-trade-case-advances-as-itc-finds-injury

; see also U.S. ITC News Release 17-133,

September 22, 2017, https://www.usitc.gov/press_room/news_release/2017/er0922ll832.htm.

338

https://www.usitc.gov/calendarpad/events/usitc_hearing_crystalline_silicon_photovoltaic_.htm_0.

339

https://www.usitc.gov/press_room/news_release/2017/er1031ll857.htm;

https://www.usitc.gov/sites/default/files/press_room/documents/solar201_remedy_commissionerstatements.pdf.

340

U.S. ITC, Crystalline Silicon Photovoltaic Cells (Whether or not Partially or Fully Assembled into Other Products), Investigation No. TA-201-

75, Volume I: Determination and Views of Commissioners, Publication 4739, November 2017, available at:

https://www.usitc.gov/publications/safeguards/pub4739-vol_i.pdf

341

Id. at 2.

342

Id.

343

Id.

344

Id.

345

Id. at 3.

346

Joe Ryan, “Trump Seeks Details on Solar Imports Before Setting Tariffs,” Bloomberg Markets, November 29, 2017, available at:

https://www.bloomberg.com/news/articles/2017-11-29/trump-seeks-more-detail-on-solar-imports-before-setting-tariffs

; also see

https://d12v9rtnomnebu.cloudfront.net/paychek/1243576-629905.pdf (letter from United States Trade Representative).

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China for domestic production of solar components as “unforeseen” causes of increased imports into

the United States.

347

The President then issued a Proclamation on January 23, 2018 imposing certain import restrictions,

pursuant to his authority under Section 203(a) of the Trade Act, 19 U.S.C. § 2253(a).

348

The tariffs

will last for 4 years, starting February 7, 2018. For solar cells, following the first 2,500 MW of imports

in any year, the duty rate will be 30% in the first year, then 25% in the second year, then 20%, then

15%. For solar modules, the same annual duty rates apply, without any exemption.

Accordingly, the Agency included a modification to the REC Pricing Model related to the projected

market effect of these new import restrictions in its February 27, 2018 REC Pricing Model Update.

349

The Commission approved that aspect, inter alia, of the February 27, 2018 REC Pricing Model

Update.

350

The Agency filed its “final” REC prices (i.e., the “Commission’s approved values” for

purposes of any Section 1-75(c)(1)(M) adjustments) as a compliance filing with the Illinois

Commerce Commission on June 4, 2018, reflecting these and other adjustments.

However, the tariffs have been challenged or may be limited in certain ways. Pursuant to the

President’s January 23, 2018 Proclamation, the United States Trade Representative accepted

requests for exclusions of particular products during March and April of 2018; the Trade

Representative has not yet rendered a decision on those requests.

351

Certain Canadian solar

component manufacturers filed a complaint at the US Court of International Trade in February 2018

alleging that President Trump’s solar component import restrictions were unlawful in various ways;

that litigation is still pending and has been appealed in part to the United States Court of Appeals for

the Federal Circuit.

352

Legislation has also been introduced in the United States House of

Representatives to repeal President Trump’s import restriction.

353

The Agency will monitor these

developments and, if any significant changes to solar component import restrictions occur, consider

making commensurate changes to the final REC Pricing Model pursuant to its authority under Section

1-75(c)(1)(M) of the IPA Act.

6.9. Approved Vendors

Participation in the Adjustable Block Program will take place through, and conditional upon, an

Approved Vendor process developed by the Agency. The Approved Vendor model is based upon the

experiences the Agency gained through the development and implementation of the Supplemental

Photovoltaic Procurement as well as observations of programs in other states. While arguably there

could be more flexibility available to consumers through a program under which any entity may

347

The ITC report of December 28, 2017 may be found at

https://solarbuildermag.com/wp-content/uploads/2018/01/ITC_Report_Suniva.pdf

(accessed May 20, 2018).

348

See https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/january/president-trump-approves-relief-us (January

22, 2018); https://www.whitehouse.gov/presidential-actions/presidential-proclamation-facilitate-positive-adjustment-competition-

imports-certain-crystalline-silicon-photovoltaic-cells (January 23, 2018); https://www.gpo.gov/fdsys/pkg/FR-2018-01-25/pdf/2018-

01592.pdf (January 25, 2018).

349

Docket No. 17-0838, IPA REC Pricing Model Update, February 27, 2018, at 2.

350

Order, Docket No. 17-0838, April 3, 2018, at 74.

351

https://www.regulations.gov/document?D=USTR-2018-0001-0001;

https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=commentDueDate&po=0&dct=PS&D=USTR-2018-0001.

352

See, e.g.: https://www.cit.uscourts.gov/SlipOpinions/Slip_op18/18-15.pdf (order denying plaintiffs’ motion for a temporary restraining

order and preliminary injunction); https://www.cit.uscourts.gov/SlipOpinions/Slip_op18/18-30.pdf (order denying plaintiffs’ motion for

an injunction pending appeal or, in the alternative, a stay of proceedings pending appeal).

353

H.R. 5571 (115th Congress), https://www.congress.gov/115/bills/hr5571/BILLS-115hr5571ih.pdf.

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receive a contract, by having Approved Vendors—i.e., ensuring that any entity receiving a REC

delivery contract is registered with and vetted by the Agency, and has met conditions predicate—the

Agency will be better able to monitor compliance with program terms and conditions, ensure the

accuracy and quality of information submitted, and reduce the administrative burden on the

contractual counterparties. This model will benefit consumers because they will be able to verify that

an entity that proposes to develop a photovoltaic system for them (or sell them a subscription to a

community solar project) is a legitimate entity participating in the program. An Approved Vendor

that fails to live up to the requirements of the Adjustable Block Program and is a “bad actor” could

have a significant negative impact on the entire renewable energy market in Illinois that would

extend beyond just its own actions. It is important for the Agency to have the ability to monitor the

program and ensure high quality performance by the Approved Vendors.

The Agency does not anticipate restricting Approved Vendors by the entity type; as such, the types

of Approved Vendors could include a company that specializes in the aggregation and management

of RECs; a for-profit developer or installer of photovoltaic systems; a municipality; or non-profit

serving a specific sector of the community, among others.

Approved Vendors will be the entity that is the contractual counterparty with the utility, and thus

will be the entity that receives payments from the utility for REC deliveries as contract obligations

are met. Approved Vendors are therefore the entities responsible for submitting paperwork to the

Program Administrator (as the responsible party for the information contained in that paperwork),

maintaining collateral requirements, and provide ongoing information and reporting. As such, the

Approved Vendors will have to coordinate the downstream information from installers/developers

as well as individual system owners (who may well provide required information through the

installer/developer).

The Agency will not require a specific delegation of duties between the Approved Vendor,

installer/developer, and system owner; rather, it believes that the market is better suited to allow a

variety of business arrangements to develop. The key consideration is that the Approved Vendor is

ultimately responsible for the fulfillment of contractual obligations, including any obligations

delegated to subcontractors, in a manner consistent with the requirements of this Plan and of the

Approved Vendor’s contract with the counterparty utility.

Approved Vendors will have to agree to the following terms:

• Participate in registration and complete any training developed by the Agency

• Abide by these ongoing program terms and conditions

• Provide information to the Agency on the Approved Vendor’s organizational history, capacity,

financial information, regulatory status in Illinois and other states (including current

complaints or other actions against the Vendor or prior complaints within the past five

years), etc. (The Agency will work with its Adjustable Block Program Administrator on the

specific scope and format of these submissions after the conclusion of the Plan approval

proceeding.)

• Be registered to do business in Illinois

• Disclose to the Agency names and other information on installers and projects, while

otherwise maintaining confidentiality of information

• Document that all installers and other subcontractors comply with applicable local, state, and

federal laws and regulations, including for example, maintaining Distributed Generation

Installer Certification

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• Provide samples of any marketing materials or content used by the Approved Vendor, and/or

their subcontractors/installers and affiliates, to the Agency for review, as requested.

354

• Agree to make changes to marketing materials as instructed by the Agency.

355

• Register in GATS or M-RETS and demonstrate the ability to manage project application and

REC management functions in the applicable tracking system

• Pay applicable application fees

• Provide and maintain credit and collateral requirements

• Submit Annual Reports on a timely basis

The Agency intends to open the registration and training process for Approved Vendors

approximately two to three months prior to the opening of programs.

Approved Vendors will have to renew their approval once a year. Failure by an Approved Vendor to

follow the requirements of the Adjustable Block Program could result in the entity having the

suspension of or losing its status as an Approved Vendor and thus losing the ability to bring new

projects in to the Programs. Losing that status would not relieve an Approved Vendor of its

obligations to ensure that RECs from its projects that have been energized continue to be delivered

to the applicable utility; failure to do so could result in having the vendor’s credit collateral drawn

upon. (See Section 6.16 for more discussion of contractual obligations.)

The Agency recognizes that there may be certain projects where the Approved Vendor model may

not be completely appropriate, and therefore will allow an Approved Vendor who has only one

project to apply under a more limited set of requirements as a Single Project Approved Vendor.

Specifically, this designation may apply to a project that is owned by that Single Project Approved

Vendor (as opposed to a situation where the Approved Vendor is an intermediary between the

system developer and/or owner and the contracting utility). In this situation, the following

provisions related to Approved Vendors would not apply:

• Provide samples of any marketing materials or content used by the Approved Vendor, and/or

their subcontractors/installers and affiliates, to the Agency for review, as requested.

• Agree to make changes to marketing materials as instructed by the Agency.

In addition, the requirements of Section 6.13 would not apply, but if the project is a community solar

system, all applicable community solar requirements related to subscribers would apply.

Single Project Approved Vendors will need to request that status prior to submitting the system, and

the Program Administrator and Agency will review requests to ensure that this process is not used

to avoid the more general requirements of this program through the establishment of nominally

separate entities. The minimum size for a project submitted by a Single Project Approved Vendor will

be 100 kW.

354

This requirement applies to, at minimum, printed materials, advertising through television and radio, websites (including affiliate

websites), web ads, marketing via email or social media, and telemarketing scripts.

355

This requirement is not meant to impede the ability to market to customers, but rather to ensure that any types of marketing are not

deceptive, confusing, or misleading. Likewise, the Agency is concerned about misrepresentations that could be made about the relationship

between an Approved Vendor (or the subcontractors/installers) and the Agency or program.

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The Agency will also encourage the hiring of graduates of job training programs (as described in

Section 8.10) to work on installations of projects supported by the Adjustable Block Program. The

Program Administrator will provide information to Approved Vendors to support this goal.

6.10. Program Administrator

The Agency issued a Request for Qualifications to start the process of selecting a Program

Administrator

356

for the Adjustable Block Program on January 18, 2018.

357

The Request for

Qualifications was a means to select qualified bidders who were then invited to respond to a Request

for Proposals.

358

Responses to the Request for Proposals were received on April 13, 2018.

359

The

Program Administrator selection process is expressly exempted from the Illinois Procurement

Code.

360

After the evaluation of proposals received and consultation with the Staff of the Illinois Commerce

Commission, the Agency selected InClime, Inc. (“InClime”) to serve as the Program Administrator for

the Adjustable Block Program. The Illinois Commerce Commission formally approved the execution

of a contract between the IPA and InClime at its July 12, 2018 Regular Open Meeting.

The Program Administrator will run the day to day operations of the Adjustable Block Program. This

includes, but is not limited to:

• Assisting the Agency with Approved Vendor registration and training

• Developing a Program Manual

• Establishing an online portal for Approved Vendors to submit projects (and providing

technical support to Approved Vendors) and collecting application fees

• Maintaining an online dashboard to show block status

• Reviewing and approving submitted batches of projects

• Preparing contracts for Commission review and utility execution

• Ongoing monitoring of project development status

• Verifying completion of projects and the processing of approvals for payments, as well as

conducting on-site inspections for quality assurance purposes.

• Reviewing Annual Reports submitted by Approved Vendors

• Providing information for the public including developing a program brand, and maintaining

an online list of Approved Vendors and educational materials related to distributed

generation and community solar

• Assisting in workforce development efforts to the extent feasible

The Program Administrator will be authorized to charge fees to Approved Vendors as described in

Section 6.14.4 for processing applications. The Program Administrator will operate under a contract

with the Agency and may also be reimbursed directly by the utilities for a portion of the cost of the

356

Section 1-75(c)(1)(M) of the Act authorizes the Agency to “retain one or more experts or expert consulting firms to develop, administer,

implement, operate, and evaluate the Adjustable Block program.”

357

The Request for Qualifications was posted to the Agency’s website, www.illinois.gov/IPA.

358

This process generally follows the process contained in Section 1-75(a)(1) to (5) that the Agency has used to select its Procurement

Administrator and Procurement Planning Consultant.

359

The Agency also issued a separate Request for Qualifications/Request for Proposals for a dedicated Program Administrator or

Administrators for the Illinois Solar for All Program.

360

20 ILCS 3855/1-75(C)(1)(M).

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services provided to them including, but not limited to, the preparation of contracts and review of

Annual Reports. Program Administrator costs, other than those covered by fees collected directly by

the Program Administrator from Approved Vendors, would be considered part of the administrative

costs discussed in Section 3.17. The Program Administrator may not also be an Approved Vendor.

6.11. Program Launch

This Plan was approved with modification by the Commission on April 3, 2018, and in July the Agency

received approval from the Commission for the selection of its Program Administrator. With these

two elements in place, implementation of the Adjustable Block Program has commenced. Due to the

scope and complexity of the Adjustable Block Program, and the need for the Agency and the Program

Administrator to develop standard contracts, a Program Manual, an online portal (including beta

testing), and other tasks, it is reasonable to assume that it will take several months for the Program

to launch. The Agency will work with the Program Administrator to find ways to expedite program

opening, if possible.

Additionally, the Agency will provide updates on its website on the expected schedule for the

program launch—including the publishing of draft guidelines, disclosure forms, contracts, and other

documents (and the timeline for feedback on these documents), and the expected dates for the

opening of vendor enrollment, block opening, and batch submittal. The Agency’s Program

Administrator is currently designing a standalone website for Adjustable Block Program updates,

information, and participation.

6.12. Project Requirements

Projects that are eligible for the Adjustable Block Program will have to meet two sets of requirements.

The first relates to the technical aspects of the system itself, and the second to the customer (and

additionally to subscribers, in the case of community solar). The purpose of the first set of

requirements is to ensure that high-quality systems are installed that will be capable of generating

the expected quantity of RECs over the 15-year duration of the contracts. The purpose of the second

set of requirements is to ensure consumer protections.

6.12.1. Technical System Requirements

In this Section the Agency outlines what technical information will have to be submitted for each

project. These standards apply for both distributed generation and community solar projects. The

application process is described in more detail in Section 6.14.

The technical system requirements are as follows:

• Information about the system location, and size, including but not limited to

o A description of the technical specifications of the main system components including

the make and model, manufacturer, number (quantity) of panels, of panels and

inverters and meters, array location (roof or ground mount), tilt, orientation, and

shading percentage.

361

o Site map or other project details

• Proof of site control and/or host acknowledgement

361

Eligible equipment will include any equipment listed on the Go Solar California equipment list (see:

http://www.gosolarcalifornia.ca.gov/equipment/index.php

); other equipment will be reviewed and considered on a case by case basis

and may require additional documentation.

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• Project-specific estimate of REC production during the 15-year delivery term using PV Watts

or a similar tool

362

• For systems over 25 kW, a signed Interconnection Agreement

363

• For systems over 25 kW, evidence of having obtained all non-ministerial permits that,

according to the commercially reasonable investigation of the Approved Vendor, are

necessary to the project at the time of application to the Adjustable Block program

364

• Shading study

For systems that have been energized prior to application the following information will also be

required:

• GATS or M-RETS unit ID

365

• Certificate of Completion of Interconnection

• Net metering application approval letter (if applicable)

• Photographic documentation of the installation

The Agency recognizes that there may be special situations where some portion of these documents

may not be available (for example, some rural electric cooperatives and municipal utilities may not

have standardized interconnection documents). The Agency will be willing to consider alternative

documentation to demonstrate completion of interconnection in those situations.

6.12.2. Metering Requirements

In developing metering standards for the Supplemental Photovoltaic Procurements that took place

in 2015 and 2016, the Agency developed a metering standard

366

that included:

• Systems registered in M-RETS must utilize an ANSI C.12 certified revenue quality meter.

• Systems over 25 kW registered in GATS must utilize a new meter that meets ANSI C.12

standards.

362

Actual REC volumes for a system will be based off a standard capacity factor as described in Section 6.14.5.

363

While the Adjustable Block Program provides for separate categories for systems up to 10 kW, and greater than 10 kW and up to 2,000

kW, for the purposes of the requirements related to each project, the Agency has determined that 25 kW is an appropriate breakpoint

between different levels for certain requirements. While most residential systems are below 10 kW, the Agency observed from its

Supplemental Photovoltaic Procurements that there can be larger residential systems, particularly in rural areas. 25 kW is a common

breakpoint used in programs in other states and is thus adopted by the Agency for these requirements.

364

See Docket No. 17-0838, Final Order dated April 3, 2018 at 75. Additionally, the Agency understands the distinction between ministerial

and non-ministerial permits to be as suggested by the Massachusetts net metering program (see: http://www.massaca.org/pdf/FAQ.pdf

“A ministerial permit is a permit that is granted based upon a determination that the request complies with established

standards. Such determinations are arrived at objectively, involve little or no discretionary judgment, and are usually issued by

a single official or his/her designee. Non-ministerial permits are permits in which one or more officials consider(s) various

factors and exercise(s) some discretion in deciding whether to issue (typically with conditions) or deny permits.

Examples of ministerial permits include, but are not limited to building permits and electrical permits.

Examples of non-ministerial permits include, but are not limited to wetlands Order of Conditions, Special Permit, Zoning

Variance, Endangered Species, and MEPA Certificate.” (The Agency notes that for Illinois, “MEPA Certificate” would be replaced

by permits issued by the Illinois Environmental Protection Agency.)

365

GATS or M-RETS registration must be complete and unit ID verifiable through GATS or M-RETS public reports.

366

See: https://www.illinois.gov/sites/ipa/Documents/IPA-metering-accuracy-standard-5-14-15.pdf.

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• Systems over 10 kW and less than 25 kW in size registered with GATS must utilize a meter

that meets ANSI C.12 standards. Meters that are refurbished (and certified by the meter

supplier) are allowed.

• Systems of 10 kW in size and below registered with GATS must utilize either a meter that is

accurate to +/- 5% (including refurbished and certified meters), or an inverter that is

specified by the manufacturer to be accurate to +/-5%. The inverter must be UL-certified and

must include either a digital or web-based output display.

The Agency did not allow production estimates. A production estimate consists of GATS

automatically generating RECs for a system based on the system size and engineering modeling of

expected kilowatt hour generation. Production estimates do not require the system owner (or

aggregator) to provide ongoing data to GATS.

In responses to the Agency’s Request for Comments, several commenters suggested allowing

production estimates for smaller systems. While several states do allow production estimates for

smaller systems, because production estimates do not require any actual data being transmitted to

the tracking system to verify production, this appears to the Agency to be problematic because there

would be no way to verify the system’s ongoing operation. By contrast, a meter read (from either a

meter, or an inverter output) only needs to be submitted once per year to GATS.

Given the upfront payments for RECs paired with the 15-year requirement for RECs to be delivered,

the Agency believes that getting actual data on system performance is essential to ensuring the

integrity of the RPS, and having meter reads as infrequent as annually (although they could be as

frequently as monthly) appropriately balances the need for accurate data and the compliance

burdens on the system operators.

367

Therefore, the Agency proposes to continue to require metered

output for the generation of RECs. The use of inverter readings for systems up to 10 kW will continue

to be allowed.

368

In other words, the metering standard developed for the Supplemental Photovoltaic

Procurement is proposed to be the metering standard for the Adjustable Block Program, with the

caveat that meter reads will only be required on an annual basis.

Additionally, in Docket No. 17-0838, questions were raised regarding the applicability of these

metering standards to DC-based technologies. In its Order approving the Plan, the Commission

sought for the IPA to “ensure that its Plan does not inadvertently prohibit participation from systems

that do not convert the DC electricity produced to AC electricity,” with any resulting resolution

presenting to the Commission “before or in the 2019 Plan update.” The IPA will thus work with

stakeholders on solutions for facilitating permissible participation in the Adjustable Block Program

from DC-based systems..

369

6.13. Customer Information Requirements/Consumer Protections

In addition to the information about the technical system information described in Section 6.12.1, for

distributed generation projects Approved Vendors will be required to submit information to the

Agency regarding the customer hosting the system and the information that was provided to that

367

The Agency also understands that GATS requires an annual reading in states that use production estimates so this standard is in fact

functionally similar to the use of production estimates.

368

The Agency notes that while using an inverter rather than a meter may save on installation costs, if the inverter were to suffer a system

failure and lose data, no RECs could be created. A meter may be a more reliable way to ensure REC creation.

369

Order, Docket No. 17-0838, April 3, 2018, at 78-79.

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customer. The purpose of requiring this information is to ensure consumer protections. Installing a

photovoltaic system is a significant financial commitment on behalf of that system’s host (and

potential owner) and a system that has been sold (or leased) to a customer using incorrect,

inaccurate, or deceptive information could put the financial security of Illinois residents or

businesses at risk and poison the ongoing viability of the solar market in Illinois. In addition, a project

that successfully applies to this program stands to receive a financial benefit from the program in the

form of a REC delivery contract and by extension from the ratepayers who fund it. Requiring clear

and consistent information on the relationship between the end customer, the installer/developer,

and the Approved Vendor is critical to ensuring that the fiscal risks and controls of this program are

properly and prudently managed.

These requirements are program terms and conditions for participation in a state-administered

incentive program that provides the opportunity for additional project revenue through REC delivery

contracts. In developing these requirements, the Agency recognizes that it is not a regulatory agency

and does not have jurisdiction over all distributed generation installations or community solar

projects across the state. It can, however, create common sense provisions to ensure that entities

developing projects seeking to participate in this program are held to high standards for consumer

protection. Ultimately, the Adjustable Block Program is a ratepayer funded program intended to

benefit the state’s residents through enhanced ability to participate in the clean energy economy, and

in the Agency’s view, it is essential to ensure that this program produces not only project

development, but also a transparent, positive experience for system hosts and subscribers.

The information that must be provided to all customers (and such provision documented to the

Agency) includes:

• Contracts: A copy of the contract for the lease, sale, or financing arrangement. A list of

contract requirements will be developed by the Agency in conjunction with its Program

Administrator, and will be provided to Approved Vendors. At a minimum, Approved Vendors

may also use model leases and model financing instruments provided by the Solar Energy

Industries Association (“SEIA”)

370

, or other contracts that meet requirements provided by the

Agency. While the Agency will not require that a specific contract form be utilized or require

the submittal and approval of all contracts, it retains the right to request copies of contracts

from Approved Vendors and develop new requirements for contracts.

• Disclosure Form: The Agency, in conjunction with its Program Administrator, will develop

and provide to Approved Vendors standard Disclosure Forms to be completed and provided

to each program participant prior to contract execution. For distributed generation projects,

the form will at minimum, include standard information on the system equipment and

components, warranty, installer, and lease or financing structure. The form will also include

a standardized estimate of the price and performance of the system as installed, including

anticipated first year production, expected annual system production decreases, expected

overall percentage degradation over the life of the system, a standard forecast for retail

electricity prices, a net cash flow analysis, and a target rate of return of each project. The form

will also include a disclosure that cash flows may change if the utility’s net metering tariffs or

distributed generation rebates change prior to the completion of the system (e.g., the changes

that occur when net metering enrollment reaches 5%). The Agency will provide standard

electricity prices (and other inputs) to be used for these estimates as to allow equivalent

370

Solar Energy Industries Association, “Model Leases and PPAs,” https://www.seia.org/research-resources/model-leases-and-ppas.

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comparisons between different offers. For community solar subscribers, the form will include

similar applicable provisions as well as conform to the provisions listed in Section 7.6.2.

371

• Brochure: The Agency will require Approved Vendors to distribute to program participants

prior to the execution of the contract with the program participant, a consumer protection

brochure in both print and electronic form prepared by the Program Administrator and

approved by the Agency. That brochure will inform consumers of their rights, procedures for

filing complaints, and point to more information on the program website.

Full details will be provided to vendors who apply for participation in the Adjustable Block Program

or the Illinois Solar For All program.

Vendors must also agree to provide sales and marketing information, included contract prices and

sales volumes, to the Agency on a confidential basis. The Agency will use this information for internal

purposes to track market progress.

Additionally, the IPA has developed its Plan mindful of the state’s experience with the retail energy

supply market and the marketing and sale of energy-related products. As such, it seeks to tap into

the experience and institutional knowledge reflected in the state’s conditions applicable to

alternative retail electric suppliers. While the Agency recognizes that Approved Vendors will not

necessarily be Alternative Retail Electric Suppliers, and thus as Approved Vendors are not governed

as a matter of law by the Commission’s Rules applicable to ARES, it believes that the Commission’s

Title 83, Part 412 rules provide a workable blueprint for expectations of Approved Vendors. Thus, as

a condition of ongoing approval, for distributed generation systems or community solar subscription

shares below 25 kW in size,

372

Approved Vendors will be expected to comply with marketing

standards equivalent to the following sections of Commission-approved rules for marketing practices

by alternative retail electric suppliers. (83 Ill. Adm. Code Part 412, Subpart B):

• 412.105(a)-(c)

• 412.110 (a)-(i)

• 412.120

• 412.130

• 412.140 (a)-(b), (d)

• 412.150

• 412.160 (a)-(b), (d)

• 412.170

• 412. 180

• 412.210 (applicable only to community solar)

371

In the responses to the Request for Comments that the Agency issued in June, 2017, several commenters suggested that the Agency

consider adopting the standard disclosure forms developed by the SEIA earlier in 2017 (see:

https://www.seia.org/research-

resources/solar-transaction-disclosures). While there may be aspects of those forms that are worth considering, the Agency is concerned

that they do not fully capture the information the Agency believes that potential program participants need to have, in particular,

standardized comparisons of energy costs. Therefore, the Agency will instead develop its own disclosure forms that will capture aspects

of the SEIA disclosure forms, best practices from other states, as well as addressing the need to standardize energy cost comparisons.

For a general discussion of challenges related to the marketing of solar and consumer protection policies, see Barbara R.

Alexander and Janee Briesemeister, “Solar Power on the Roof and in the Neighborhood: Recommendations for Consumer Protection

Policies,” March 2016 (

http://utilityproject.org/wp-content/uploads/2016/03/Solar-Power-Consumer-Protection-Report-March-

2016.pdf), in particular, Appendix B.

372

In its filed Plan, the Agency originally proposed that these requirements apply to systems below 100 kW in size. However, in its Order

approving the Plan, the Commission adopted a proposal of the Joint Solar Parties that compliance with standards equivalent to the Part

412 rules be limited only to systems or subscriptions below 25 kW in size. See Docket No. 17-0838, Final Order dated April 3, 2018 at 108.

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• 412.240 (applicable only to community solar)

Key items referenced elsewhere in Part 412 (including disclosure forms, contract assignability, and

green marketing) are addressed separately in this Plan to the extent applicable to Approved Vendors.

As was addressed extensively in filings made in Docket No. 17-0838 (the Commission’s proceeding

for approval of the Plan), the IPA understands and appreciates that these guidelines must be reduced

down to more detailed and specific requirements to provide clear and uniform expectations for

Approved Vendor conduct. Thus, consistent with the Commission’s Order in Docket No. 17-0838, the

IPA will “fully develop its procurement terms and conditions after the Commission’s approval of the

Plan and selection of the Program Administrator” and will work with its Program Administrator to

ensure that stakeholder feedback is received and valued prior to finalization of specific program

participation requirements, including the consumer protection requirements described above. The

Agency endeavors to ensure that final consumer protection provisions will be available at least 30

days prior to the opening of the Adjustable Block Program application process.

373

6.13.1. Systems Energized Prior to Finalization of Consumer Protection

Requirements

Additionally, as was also raised during the Docket No. 17-0838 proceeding, these consumer

protection requirements are intended to apply to all Approved Vendors submitting projects into the

Adjustable Block Program—but, as Section 1-75(c)(1)(K) of the Act envisions participation from

“projects energized on or after June 1, 2017,” some projects submitted as batches into the Adjustable

Block Program will involve marketing, sales, disclosures, contracts, and other arrangements

completed prior to the full development and finalization of these consumer protection requirements.

Thus, for such systems, the Commission’s Order in Docket No. 17-0838 requires the following for

consumer protection:

1. A signed contract amendment, that brings the contract or subscription agreement into

full compliance with the minimum contract requirements from the Plan;

2. The disclosure form, signed by the customer post-contract execution; and

3. Proof that the brochure was provided to the customer.

374

Failure to meet these requirements by the time the system is submitted to the IPA will result in

rejection of the related system from the Adjustable Block program.

The IPA will also do the following: specify when these materials must be submitted to qualify the

project for participation in the programs (perhaps through a guidance document issued upon

finalization of the disclosure form, informational brochure, and any other necessary items); provide

declaration forms that project developers can complete and sign if their customers are not responsive

to good faith attempts to contact or for customers that refuse to sign an amended contract or

disclosure form; include information in consumer protection documents for the customer that he or

she can contact the relevant program administrator or the IPA for additional information, to ask

373

Docket No. 17-0838, Final Order dated April 3, 2018 at 107-108.

374

These requirements stem from the Joint Solar Parties’ Response in Docket No. 17-0838, at p. 7, and were adopted by the Commission

on p. 108 of its Order in Docket No. 17-0838 (“The Commission agrees with various parties that projects that have energized since June 1,

2017 should be eligible to participate in the Adjustable Block Program. The Commission finds that the proposal presented by the Joint

Solar Parties in their Response (JSP Resp. at 7) as modified by the AG’s Reply (AG Rep. at 2-3) provides an appropriately tailored pathway

for the projects to participate.”).

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questions, or to submit concerns or a complaint. The IPA and its Program Administrator retain the

ability to exclude projects that in their determination represent deceptive marketing or bad faith

business practices through complaints or other information brought to their attention (whether or

not customers have signed contract amendments or disclosure forms), and will “monitor, to the

extent possible, potential Approved Vendors’ conduct to ensure good-faith attempts of compliance

with the spirit of pending consumer protection requirements.”

375

Consistent with the Commission’s Order, this streamlined compliance path applies only to those

projects energized between June 1, 2017 and before the IPA’s consumer protections provisions are

finalized.

376

6.13.2. Community Solar

For community solar projects, the Approved Vendor will have to submit the Technical System

Requirements information and, if not a copy of the contract between the project developer and the

Approved Vendor (if they are separate entities), basic information concerning the underlying project

(owner, size, location and interconnection date at a minimum, to be provided as part of the Adjustable

Block application forms).

377

The Agency reserves the right to request additional information about

the project structure and financing in order to review project feasibility and contractual

arrangements that could jeopardize consumer protections. There are additional program terms and

conditions related to subscribers of community renewable generation projects (both community

solar and those that use other technologies) that are discussed in Section 7.6.2.

Community solar projects will not be required to demonstrate that they have acquired subscribers

as part of their initial application. However, as described in Section 6.15.4, by the time that such

systems are energized, minimum subscriber requirements must be met in order to be eligible to be

paid for RECs.

The application for a REC delivery contract for a community solar project will require the applicant

to describe the proposed subscription model (e.g., typical length and structure of contract, economic

terms, marketing channels, etc.) and expected mix of residential and non-residential subscribers. The

Agency will assess whether the subscription model will reasonably meet program terms and

conditions described in Section 7.6 and will use the subscriber mix to determine what adder, if any,

will be given to the system, but the final adder (if any) used will depend on the subscription level

demonstrated once the system is energized.

6.13.3. Monitoring of Consumer Complaints

The Program Administrator will provide consumer protection materials on a program website and

through printed materials. The Program Administrator will also provide a toll-free consumer

protection hotline and email address, and they will receive, respond to, and document complaints

about marketing practices, sales practices, installations, and other aspects of solar marketing.

If warranted, the Program Administrator will refer complaints to the Agency and to appropriate state

and federal agencies, including the Consumer Protection Division of the Illinois Attorney General’s

Office, or the Illinois Commerce Commission (e.g., for failure of installers to maintain their status as

375

See Docket No. 17-0838, AG Reply at 2-3; Docket No. 17-0838, Final Order dated April 3, 2018 at 107.

376

Docket No. 17-0838, Final Order dated April 3, 2018 at 107.

377

See id at 107-108.

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Certified Distributed Generation Installers). To the extent feasible, the Agency will work with its

Program Administrator to maintain a public database of complaints (with any confidential or

particularly sensitive information redacted from public entries). Approved Vendors found by the

Agency to have violated consumer protection standards may be subject, at minimum, to suspension

or revocation of their Approved Vendor status by the Agency, and if in violation of local, state, or

federal law, also potential civil or criminal penalties from other relevant authorities.

The Agency will provide an annual written report to the Commission documenting the frequency and

nature of complaints, and any enforcement actions taken.

6.14. Application Process

The following section outlines the process and procedure that Approved Vendors will use to submit

projects to the Program Administrator for review and approval, as well as how projects, once

approved, will be placed into contracts with the utilities.

6.14.1. Batches

Approved Vendors will submit projects that are bundled into batches. Once approved, or modified,

each batch will result in a contract with one utility. Utilities may use one master agreement with

multiple confirmations for multiple batches from an Approved Vendor rather than having multiple

contracts with the same vendor.

378

The systems within the batch will be listed on a schedule attached

to the contract and may not be substituted once approved. While projects may be submitted to the

Agency on an ongoing basis, and given preliminary approval on the project level, final approval and

resulting prices will be based upon the time when the batch of projects is submitted.

A batch may contain projects in different groups/blocks (and thus with different prices) and with

different adders. The price for the RECs for each system will be based on the price available within

the applicable block on the date of the submittal. The failure of any system to be developed (and thus

the forfeiture of any collateral associated with that specific system) will not impact any of the other

systems on the same schedule, although the Agency will monitor system failure rates. Approved

Vendors with high failure rates may be required to provide additional information to the Agency for

subsequent applications.

The Program Administrator will determine which utility will serve as the counterparty for each

contract. While a batch may contain projects in multiple utility service territories, the Program

Administrator will strive to assign contracts to the utility where the bulk of the projects are located,

but may not always be able to do so because the Program Administrator will also consider how

assigning contracts to each utility will allow each utility to meet its pro-rata share of the RPS REC

targets. The REC price for each system will be based on the location of the system and the applicable

Group for that system’s physical location, and not based on the identity of the counterparty utility to

that contract.

After a batch of projects is approved by the Procurement Administrator, the annual number of RECs

and payment amount(s) for the batch will be provided to the utility by the Program Administrator

for purposes of contract/confirmation preparation (i.e., the utilities will track the RECs by batch

378

See Docket No. 17-0838, Final Order dated April 3, 2018 at 109.

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rather than by individual unit). Utilities will send a report of RECs delivered by batch semi-annually

to the Program Administrator.

379

6.14.2. Systems below 25 kW

In responses to the Request for Comments that the Agency issued in June 2017, several commenters

recommended that systems under 25 kW only be submitted once they are completed and energized,

to minimize administrative burdens and avoid project attrition. While the Agency is sympathetic to

those ideas, this Plan does not adopt that recommendation for several reasons. First, it may be

difficult, or impossible, to have appropriate consumer protections if the Agency sees information

about a system only after it is completed. Preventing problematic behavior (such as deceptive

information about system costs and payback times) should be done prior to the homeowner or

business paying for the system; that would not be the case if systems apply after being energized.

Second, because the Agency is requiring projects to be submitted in batches, there could be a lag

between when a system is completed and when the Approved Vendor has enough systems to submit

the batch, which could lead to a delay in payment for the RECs. The system requirements described

in Section 6.11 adequately recognize the differences in the project development cycle between

smaller and larger systems.

To be clear, there is nothing that would prevent an Approved Vendor from submitting a new system

that has already been energized (for example, systems energized after June 1, 2017 but prior to the

launch of the program), but the Approved Vendor will have to assume the risk that the system may

not meet the required terms and conditions and could be rejected and thus not be included in a

contract for the purchase of the system’s RECs. A system that is rejected could be resubmitted at a

later date if the deficiencies are cured, but the Agency cautions that some deficiencies may be difficult

or impossible to cure (particularly when related to ensuring consumer protections from the

beginning of the project’s life).

380

6.14.3. Batch Size

Each batch must contain at least 100 kW of proposed projects, and may be as large as 2 MW. A batch

could contain a single 100 kW or larger project. To provide employment opportunities for minority-

owned and female-owned business enterprises as specified in Section 1-75(c)(7) of the Act, a

minority-owned or female-owned business may request to submit an initial batch of only 50 kW, with

any subsequent batches subject to the standard 100 kW requirement. An Approved Vendor that is a

small business

381

may also request approval to submit an initial batch of only 50 kW, then future

batches of 100 kW.

For each project, there will be a non-refundable application fee paid to the Program Administrator

or the Agency of $10 per kW, not to exceed $5,000 per project. This fee will be used to offset the

administrative costs of running the program and will decrease the administrative fees that would

otherwise be taken from the utility RPS budgets.

379

See id.

380

See Section 6.13 above for further discussion of consumer protections applicable to systems energized after June 1, 2017 but before

consumer protection requirements are finalized.

381

As defined in the Small Business Advisory Act (20 ILCS 692/5): “`Small business’ means any for profit entity, independently owned and

operated, that grosses less than $4,000,000 per year or that has 50 or fewer full-time employees. For the purposes of this Act, a `small

business’ has its principal office in Illinois.”

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6.14.4. Batch Review

The Program Administrator will review the projects contained in a batch and, as needed, request

additional information from the Approved Vendor in order to verify the submitted information and

approve the project. An Approved Vendor will be given up to two weeks to cure deficiencies in an

application.

If, after any attempts to cure deficiencies has been made, 75% or more of the kW volume in a batch

is reviewed and approved by the Program Administrator, the Program Administrator will assign the

batch (less any projects not approved) to a utility,

382

and prepare the confirmation information (and,

in that case, master agreement information, if it is the Approved Vendor’s first batch) or the contract

information related to that batch.

383

The Program Administrator will then submit the contract information for the batch to the

Commission for approval. The Program Administrator will simultaneously forward the contract

information to the applicable utility.

384

If less than 75% of the kW volume of a batch is approved, the batch will be rejected in its entirety.

Batches will be reviewed in the order that they are received. Systems that are reviewed and approved

but are in a batch that is rejected may be submitted in a future batch and will be subject to an

expedited review process. The application fee for a batch that contains systems that were previously

reviewed and approved only needs to be for the newly submitted systems in that batch.

An Approved Vendor that repeatedly submits batches that are rejected may be subject to having its

Approved Vendor status reviewed, and possibly terminated.

6.14.5. Converting System Size into REC Quantities

For each system that is approved, a 15-year REC payment amount and obligation level will be

calculated for that system and that payment amount will be included in the contract. Approved

Vendors will have the option of using a standard capacity factor, or proposing an alternative capacity

factor based upon an analysis conducted using PV Watts or an equivalent tool. Alternative capacity

factors may be proposed as part of each system’s application and will be subject to review and

approval by the Program Administrator.

The calculation for the standard capacity factor will be based on the following average capacity

factors which, as discussed below, are based upon the capacity factor used in the Fall 2017 Utility DG

procurement and adjusted for an expected degradation rate over 15 years.

385

382

It is unlikely that a batch would need to be split between utilities because of RPS budget constraints, but should that occur, the splitting

of the batch would not split individual systems.

383

See Docket No. 17-0838, Final Order dated April 3, 2018 at 115-116.

384

See id.

385

In Docket No. 17-0838, informed by analysis of select Illinois locations using the PVWatts model, the Joint Solar Parties proposed to use

a 14% (DC) capacity factor for all distributed generation systems and a 15.5% (DC) capacity factor for all community solar projects for the

purposes of the REC Pricing Model calculations. (See Docket No. 17-0838, JSP Objections at 32-33). The Agency agreed to use those capacity

factors for the REC Pricing Model, and the Commission’s Order in Docket No. 17-0838 adopted these REC Pricing Model Adjustments. (See

Docket No. 17-0838, Final Order dated April 3, 2018 at 73). Those capacity factors, adjusted for degradation over 15 years, would translate

to AC capacity factors of 16.22% and 17.96% respectively. The Joint Solar Parties also provided a capacity factor of 18.6% DC for a tracking

system, although they did not propose using that capacity factor anywhere in the REC Pricing model. That capacity factor, adjusted for

degradation, would be 21.54% AC. However, because the Joint Solar Parties did not propose changing the standard capacity factors

contained in this Section for purposes of calculating contractual REC production amounts, these capacity factors remain unchanged from

the filed Plan.

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• Fixed-mount system 16.42%

• Tracking system 19.32%

These numbers vary from the capacity factor used by the Agency for the Supplemental Photovoltaic

Procurements and the Utility Distributed Generation Procurements for the following reasons.

First, prior to the Fall 2017 Utility Distributed Generation Procurement, the Agency used a capacity

factor of 14.38%. This capacity factor was calculated using a DC rating. Public Act 99-0906 included

a definition of “nameplate capacity,” referring to “the aggregate inverter nameplate capacity in

kilowatts AC.”

386

With this change for the Fall 2017 Utility Distributed Generation Procurement, the

Agency updated the capacity factors to reflect an AC rating and established them as 17% for a fixed

mount system and 20% for a tracking system.

Second, the Supplemental Photovoltaic Procurement and the Distributed Generation Procurement

were for five-year REC contracts. While photovoltaic panels experience annual degradation in their

output, it was not factored into the capacity factors for those procurements. Given the 15-year REC

delivery obligation for the Adjustable Block Program, degradation is a more significant concern, and

thus a 0.5%/year average output degradation factor was used to calculate the capacity factors listed

above.

Using these capacity factors which have been adjusted by the degradation rate, for every 1 kW of

capacity, approximately 21 RECs would be expected to be generated over 15 years for a fixed-mount

photovoltaic system. For a tracking system, for every 1 kW of capacity, approximately 25 RECs would

be expected to be generated over 15 years.

387

6.14.6. Batch Contract Approval

The Commission meets approximately every two weeks. The Program Administrator will strive to

efficiently process approved batches for submittal to the Commission. The Agency understands that

Commission practice is that items for consideration by the Commission must be submitted to be

placed on its open meeting agenda at least one week prior to each meeting.

When the Program Administrator submits contract information to the Commission for approval, that

submittal will include the Program Administrator’s recommendation for approval of the batch, with

a summary of factors relevant to Plan compliance. (Projects and/or batches that are not approved by

the Program Administrator are not submitted to the Commission.) This process would be similar to

that required for approval of contracts under annual electricity procurement plans pursuant to

Section 16-111.5(f) of the PUA, or contracts under the Supplemental Photovoltaic Procurement Plan

pursuant to Section 1-56(i)(5) of the Act.

388

The Agency will work with Commission Staff on a Staff Report detailing the standards that the

Commission should use in its review process and a targeted deadline for its review. The Staff Report

will be submitted to the Commission at least 30 days before the opening of the Adjustable Block

Program.

389

386

20 ILCS 3855/1-10.

387

kW size is translated to RECs by the following formula: 1 kW * capacity factor /1000 [kw/MW] * 8760 [hours/year] * 15 [years].

388

See Docket No. 17-0838, Final Order dated April 3, 2018 at 115-116.

389

See id.

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Once a batch is approved by the Commission, the applicable utility will execute the contract. The

Approved Vendor will then be required to sign the contract within seven business days of receiving

it.

390

A collateral requirement to be held by the utility equal to 5% of the total contract value will be

required in the form of either cash or a letter of credit with the utility within 30 business days of

Commission approval of the contract.

6.15. Project Development Timeline and Extensions

6.15.1. Development Time Allowed

Once a contract for a batch has been executed by the Approved Vendor and the utility, the next step

is for projects not yet developed to be developed and energized. These times are based upon the

contract execution date so that any delays in processing and approving an application will not reduce

the time available for development.

• Distributed generation projects will be given one year to be developed and energized.

• Community solar projects will be given 18 months to be developed, energized, and

demonstrate that they have sufficient subscribers.

A project that is not completed in the time allowed (plus any extensions granted) will be canceled

and removed from the schedule on its contract, and the REC volume associated with the project will

be eliminated. The Approved Vendor will also forfeit the posted collateral associated with the project.

A project that is not completed in time and is canceled may be subsequently included in a future batch

submitted by an Approved Vendor, but will be treated like any other system being submitted in that

new batch.

6.15.2. Extensions

Extensions will be granted for the following circumstances.

• An indefinite extension will be granted if a system is electrically complete (ready to start

generation) but the utility has not approved the interconnection. The Approved Vendor must

document that the interconnection approval request was made to the utility within 30 days

of the system being electrically complete, yet not processed and approved.

• A 6-month extension will be granted for documented legal delays, including permitting

delays.

• A 6-month extension will be granted upon payment of a refundable $25/kW extension fee,

for distributed generation systems, and up to two 6 month extensions for community solar

projects (the second extension is only for achieving the required subscriber rate, not for

project completion and energization, and will require an additional refundable $25/kW fee).

The extension fee(s) would be payable to the contracting utility, and would be refunded as

part of the first (or only for systems up to 10 kW) REC payment.

• The Agency may also, but is not required to, approve additional extensions for demonstration

of good cause.

390

See id.

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6.15.3. Project Completion and Energization

The Approved Vendor will provide the Program Administrator with a status update on each project

that is under development but not yet energized at least every six months and will inform the Agency

of any significant changes to the system.

391

For community solar projects, the update will include an

update on the status of acquiring subscribers. The Agency and Program Administrator will provide a

standardized form (including standard status categories to simplify reporting) for this purpose.

Once a project is energized, the following information will be required to approve the final project

and authorize the start of payment for RECs.

• Final system size

• Final system specific capacity factor and 15 year REC production estimate

• GATS or M-RETS unit ID

392

• Certificate of Completion of Interconnection or comparable documentation

393

• Net metering application approval letter (if applicable)

• Photographic documentation of the installation

• Disclosure of any changes to the system technical specifications that occurred between the

initial application and the completion of the project

If the final system size is larger than the proposed system size such that it would cause the system to

change from the up to -10 kW to the over-10 kW category, the payment terms will be adjusted from

the full payment on energization to 20% on energization and the balance over the next four years.

The price per REC will also be changed to the applicable REC price for the over 10 kW category in

effect at the time when the system is energized.

For systems over 10 kW, any adders received will be based on the final system size if that final system

size would cause the adders to decrease. A system that is developed at a size smaller than the original

application will not be eligible for additional adders.

The quantity of RECs used for the calculation of the payment for RECs will be based on the lesser of

the RECs calculated based on the proposed system size and capacity factor, and the RECs calculated

based on the final system size and capacity factor. In this way, a system that is built smaller than

planned will not benefit from excess REC payments that could result from purposefully submitting

the project at a larger size than really intended. On the opposite side, if a project’s final system size is

significantly larger than the planned system size, an increase in the payment due could present

unexpected budget management challenges. An Approved Vendor would have the option of canceling

and resubmitting a system if the final size is larger than the proposed system in order to align the

REC quantities or if it desires to have the system change from a distributed generation project to a

community solar project, or vice versa. However, the resubmittal will be at the price of the Block open

at the time, not the original submittal. A new application fee will be required because the Agency will

need to review the system design which would be different from what was originally submitted (e.g.,

391

For systems under 25 kW the status update would only be required for a system where there is a change in status (e.g., a project being

completed, or canceled).

392

GATS or M-RETS registration must be complete and unit ID verifiable through GATS or M-RETS public reports.

393

Comparable documentation would only apply for a rural electric cooperative or municipal utility that does not provide a Certificate of

Completion of Interconnection.

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because of the change in system size). If a project is resubmitted, the collateral associated with the

original system would be applied to the resubmitted system, if approved.

The Agency will reserve the right to request more information on an installation, and/or conduct on-

site inspections/audits of projects to verify the quality of the installation and conformance with the

project information submitted to the Agency. Projects found not to conform with applicable

installation standards and requirements, or projects found not to be consistent with information

provided to the Agency will be subject to removal from the program if the deficiencies cannot be

remedied. Likewise, Approved Vendors who repeatedly submit projects that have these problems

may be subject to losing their Approved Vendor status.

6.15.4. Additional Requirements for Community Solar Projects

A community solar project will have to demonstrate that it has met a minimum subscription level to

be considered energized and eligible to receive payment for RECs. At least 50% of the capacity of the

project must be subscribed at the time of energization in order to receive payment for RECs, and that

payment will be based upon calculating the number of RECs that correspond with the amount of the

project’s capacity that has been initially subscribed. The Approved Vendor will report subscription

levels on a quarterly basis during the first year. The calculation of the number of RECs for payment

will be updated after one year of operation (based on the final quarterly report of that first year) to

allow for the acquisition of additional subscribers. A community solar project may request one

additional extension (with a non-refundable extension payment as provided for in Section 6.15.2) to

its energized date if it needs additional time to acquire subscribers.

The Agency recognizes that each of the five payments for a greater than 10 kW system may be a year

apart but that each payment represents 1/5 of the total payout. Thus, to the extent that an Approved

Vendor demonstrates additional subscriptions or updated subscription mixes that would entitle the

Approved Vendor to a greater payment, the Agency shall ensure the Approved Vendor-utility

contract requires that the second payment reflect the increased value for quarters where the

additional subscriptions or updated subscription mix entitled the Approved Vendor to additional

revenue. If subscriber levels (or mixes) change in such a manner that contract value is reduced, the

additional payments would also be adjusted downwards accordingly.

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The calculation of the maximum number of RECs due payment will be determined by the project’s

subscription level after one year of operation (and will be subject to the maintenance of subscription

levels as described in Section 6.17). For example, if a project is expected to produce 1,000 REC/year

and after one year of operation is 95% subscribed (on a project capacity basis), then the annual REC

production value used for the contract payment level would be 950 RECs. Under the REC delivery

contract, the Approved Vendor would then be obligated to deliver to the utility 95% of the RECs

produced by that system each year. The ownership (and any subsequent transfer or sale) of the

remaining 5% of RECs would be outside of the contract.

The adders for small subscriber participation (i.e., for a minimum of 25%, 50%, or 75% of energy

sales) will only be added (on a prorated basis) to the REC price if the project demonstrates that level

of participation for the subscribed amount at the time of energization. If the subscription level has

not been met by the time of energization, the adder will be held back from the initial payment and

the system will have to wait until it has been in operation for one quarter to demonstrate that it has

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See Docket No. 17-0838, Final Order dated April 3, 2018 at 118.

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begun to meet the small subscriber participation level to begin to receive this adder. If the small

subscriber subscription rate is met, then the full value of the adder will be added pro-rata to the

remaining payments.

If a community solar project fails to attract sufficient subscribers by the time of energization, but also

meets the definition of a distributed generation project (i.e., is located on-site, behind a customer’s

meter, and used primarily to offset a single customer’s load), it may request to be recategorized as a

distributed generation project and receive a REC payment at the lesser of the original price and the

price of the distributed generation block open at the time this determination is made. A community

solar project that does not meet the definition of a distributed generation project that fails to attract

subscribers will not be eligible for this option and would not be eligible for REC payments. Likewise,

a proposed distributed generation system may switch to being a community solar project before

energization and receive the REC price of the currently open community solar block, and any

appropriate adders. In both of these situations a project may only switch one time.

Ongoing requirements for overall subscription levels and small subscriber participation are

discussed further in Section 6.16.

6.15.5. REC Delivery

Once a system is energized, it will be required to begin REC delivery. For systems larger than 5 kW,

the first REC must be delivered within 90 days of when the system is energized and registered in

GATS or M-RETS. For systems smaller than 5 kW, 180 days will be allowed. The 15-year delivery term

will begin in the month following the first REC delivery and will last 180 months.

Approved Vendors will be required to set up an irrevocable 15 year Standing Order for the transfer

of RECs from the system to the utility.

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As the Agency understands that automatic transfers can only

be terminated with the assent of both parties, this will reduce the risk to the utility that the RECs

could be sold to another party after the utility has paid for them.

As part of the Annual Report discussed in Section 6.17, the Approved Vendor will report on any

systems that have not delivered a first REC, and report on any systems that have not delivered RECs

for more than a year from their previous delivery. The report will also detail what corrective actions

will be taken. In the event of failure to remedy the RECs not being delivered, the utility will have the

ability to call on the ongoing performance collateral it holds from the Approved Vendor.

6.16. Ongoing Performance Requirements

A significant challenge for the Adjustable Block Program is that the payment for RECs is front loaded;

all RECs are paid for on energization for systems up to 10 kW, and all payments for systems over 10

kW will be made within the first four years of energization. Yet the contracts for REC delivery have a

15-year obligation for the RECs to be delivered. This creates a situation in which, absent any

additional measures, the buyer (the utility) will be unable to use the typical contractual tool of

withholding payments for the item not yet received to ensure REC delivery. Fortunately, the Act

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See Section 10.2 of the GATS Operating Rules available at https://www.pjm-eis.com/~/media/pjm-eis/documents/gats-operating-

rules.ashx.

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anticipated this issue and requires that “[e]ach contract shall include provisions to ensure the

delivery of the renewable energy credits for the full term of the contract.”

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The Agency proposes the following approach to ensure REC delivery over the full term of the

contracts. This approach will also ensure proper matching of adders for photovoltaic community

renewable generation projects at different levels of residential subscription levels.

REC delivery obligations will be managed at a portfolio level. As projects are completed and become

energized, each Approved Vendor will therefore have a portfolio of systems with REC delivery

obligations from the various contracts that it has with each utility. The obligation to ensure REC

delivery will be at the contract level rather than the individual project level. In this way, the natural

variation that some systems will produce more RECs than forecast and others fewer RECs will reduce

the risk of contract default, compared to project-level contracts, and allow for some ease in contract

administration.

6.16.1. Credit Requirements

An Approved Vendor is required to post collateral equivalent to 5% of the total contract value when

each Batch’s contract is approved. The Approved Vendor may choose for the utility to withhold the

collateral amount for each system from the last REC payment for the system (or only REC payment

for small systems) in exchange for not needing to maintain the ongoing collateral requirement. In

this situation, the collateral would be reduced as described below, and fully returned at the end of

the contract (net any amounts that were drawn to meet contractual obligations). As systems are

energized, this collateral amount (or deferred payment) will be maintained through the life of the

contract, and can be reduced in the later years of the contract when the collateral requirement

exceeds the remaining value of the contract. This requirement will be maintained at the portfolio

level, not the individual contract or system level.

By maintaining collateral requirements at the portfolio level, the Agency is allowing Approved

Vendors to manage the risk that some systems may underperform (or have other problems), and

others will not, or even overperform. This allows the collateral level to be lower than it would be if

maintained at the system level.

Nonetheless, an Approved Vendor will be responsible for delivering RECs each year under its

contracts (subject to the reduction options described in the following Section). On an annual basis,

failure to deliver RECs for the previous year will result in the utility drawing on the collateral to be

compensated for the undelivered RECs from that year that already received payment. After any such

drawing the Approved Vendor will need to restore its collateral level to bring it back up to the 5% of

remaining value of the portfolio within 90 days. If the amount of collateral held for an Approved

Vendor is insufficient to compensate the utility, the Approved Vendor will be required to pay the

utility for the balance of the value of the undelivered RECs from that previous year. Failure to make

payment and/or maintain the collateral requirement will result in the Approved Vendor’s suspension

from participating in the Program.

Additionally, the Agency understands and appreciates that the natural degradation of photovoltaic

system’s productive capacity will likely result in reduced delivery quantities in the later years of a

system’s performance under a REC delivery contract. The Agency believes that the Plan’s intent to

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20 ILCS 3855/1-75(c)(1)(L)(iv).

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reduce annual contractual delivery requirements by 0.5% each year should help ensure that

collateral is not unfairly drawn upon due to reduced system performance.

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Reconciliation of REC deliveries and collateral requirements will be conducted on an annual basis

based on the Annual Reports filed by the Approved Vendors as described in Section 6.17.

6.16.2. Options to Reduce REC Delivery Obligations

Section 1-75(c)(1)(L) of the IPA Act provides that “[t]he electric utility shall receive and retire all

renewable energy credits generated by the project for the first 15 years of operation.”

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The capacity

factor as described in Section 6.14.5 will be used to calculate the number of expected RECs each

system generates, and thus the overall payment for that system. If a system produces more RECs than

expected from that calculation, then no adjustment would be made to payments or to the statutorily

mandated 15-year REC delivery term. However, if the system produces fewer than the expected

number of RECs, then the following conditions would apply.

The Agency expects each Approved Vendor to take the steps necessary to ensure that projects

contained within its portfolio meet all expected REC deliveries. This may include working with

system owners to ensure that ongoing maintenance and repairs of systems occurs as well as to ensure

that meter/inverter data is properly transferred to GATS or M-RETS for the creation of RECs.

Furthermore, Approved Vendors will be responsible for ensuring the ongoing transfer of RECs to the

applicable utility. However, because weather and other factors may impact annual production values,

REC delivery performance will be evaluated on a three-year rolling-average basis, although any

overproduction may be carried forward (or “banked”) for performance evaluation and collateral

purposes into future contract years without expiration.

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However, a project or portfolio is not

entitled to additional compensation if a carryforward remains as project-specific contracts expire.

400

There are circumstances where a system may not be able to deliver the RECs it was expected to

produce; the Agency believes that reasonable accommodations should be made for these situations

that appropriately balance the requirements for the utilities to comply with RPS targets and their

expectation to receive RECs for which payment has already been made while acknowledging that

unexpected situations may arise at no fault of the Approved Vendor.

In force majeure type circumstances (including, but not limited to, physical damage to the system

from fires, tornados, etc.) the Approved Vendor may request to have a delivery obligation suspended,

reduced, or eliminated without penalty.

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Approval of the request will require consensus between

the Agency and the applicable utility. Curtailments by either the utility (including those through a

smart inverter) or the RTO that result in reduced REC production would be considered an event that

allows for reduced REC delivery obligations.

In the case of reductions or eliminations of delivery obligations, the Approved Vendor will need to

demonstrate what measures have been taken that do not adequately cure the situation (such as filing

and receiving an insurance claim that is inadequate to restore the system to operation). For the

397

See Docket No. 17-0838, Final Order dated April 3, 2018 at 129.

398

20 ILCS 3855/1-75(c)(1)(L)(ii).

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All RECs must be delivered to the counterparty in the delivery year when produced, regardless of any overproduction under the contract.

See Docket No. 17-0838, Final Order dated April 3, 2018 at 129.

400

See Docket No. 17-0838, Final Order dated April 3, 2018 at 129.

401

Specific circumstances that constitute force majeure will be outlined in the contract development process.

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suspension of delivery obligations, the Approved Vendor will need to demonstrate that reasonable

measures are being taken to have a timely restoration of production. Approved suspension of

delivery obligations will change the end date for the 15-year REC delivery timeline to reflect the time

the delivery obligations were suspended.

An Approved Vendor may also determine that a system is not performing at the level expected. In

this circumstance, the Approved Vendor may request to have the delivery obligation related to that

system within its portfolio reduced in exchange for the return to the utility of a payment adjustment

to account for all undelivered RECs at the original delivery level as of the time of the request.

6.17. Annual Report

On an annual basis, each Approved Vendor will submit an Annual Report of the contracts and systems

in its portfolio.

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The Annual Report will serve as the basis for verifying that RECs from projects are

being delivered to the applicable utility, and, absent corrective actions taken by the Approved

Vendor, will be used to determine what actions should be taken by the utilities to enforce the

contractual requirements that RECs are delivered, including, but not limited to, drawing on collateral.

Additionally, the Annual Report will be used by the Agency to consider the ongoing eligibility of an

Approved Vendor to continue participation in the program.

For distributed generation systems, the report will include information on:

• RECs delivered by each of the systems in the portfolio

• Status of all systems that have been approved, but not yet energized, including any extensions

requested and granted

• Energized systems that have not delivered RECs in the year

• Balance of collateral held by each utility

• A summary of requests for REC obligations reductions due to force majeure events

• A summary of requests for REC obligations, suspensions, reductions, or eliminations due to

force majeure events

• Information on consumer complaints received

• Other information related to ongoing program participation

For community solar projects the report will also include:

• Percentage of each system subscribed on a capacity basis

• The number and type of subscribers (e.g., residential, small commercial, large

commercial/industrial), including capacity allocated to each type

• Subscriber turn-over rates

The Agency will review the annual reports to assess compliance with the requirements of the

Adjustable Block Program and, if there are shortfalls of REC deliveries or subscription levels for

photovoltaic community renewable generation projects, will coordinate with the applicable utility

on what remedies should be taken, including drawing on collateral.

403

402

Approved Vendors may request confidential treatment of the Annual Report. However, aggregated information from Annual Reports

may be publicly disclosed by the Agency to the extent that it does not disclose Approved Vendor-specific confidential information.

403

The Agency will request on a semi-annual basis a report from each utility on RECs delivered by contract.

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For community solar projects, subscription levels must be maintained to remain eligible for REC

payments. If the annual report shows that subscriber levels have fallen below 50% of the systems’

capacity on a rolling average basis, then if REC payments are still due, those payments will be reduced

as described earlier in this chapter; if all payments have been made, then the Agency will work with

the applicable utility on what remedies should be taken including drawing on collateral.

A similar review will be conducted for projects that have received a small subscriber participation

adder but do not maintain sufficient levels of small subscriber participation. If small subscriber

participation levels are not maintained and there are remaining REC payments due, those payments

will be reduced (to either the actual small subscriber adder category that has been maintained, or to

remove the adder altogether if the level falls below 25%). If all payments have been made, then the

Agency will work with the applicable utility on what remedies should be taken including drawing on

collateral.

Approved Vendors will be given 90 days to cure any deficiencies found by the Agency and/or utilities.

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7. Community Renewable Generation Projects

Community Renewable Generation is a relatively new concept in Illinois. It is intended to allow

consumers to participate in renewable energy generation even if they are unable to have an on-site

system at their home or business, and to offer a more direct connection to the benefits of renewable

energy than signing up for a renewable energy retail supply offer from an Alternative Retail Electric

Supplier (where information about the specific sources, costs and benefits of the renewable energy

and the underlying generating system(s) may not be readily available).

Community, or “shared,” renewable energy is growing nationally, most often in conjunction with

solar power. Community Solar Hub counts over 100 projects in 26 states, many led by rural electric

cooperatives.

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Illinois has at least two community solar projects already, built for rural electric

cooperatives.

Many policy issues that have been debated in other states are resolved in Illinois through the Act

itself, including elements of project size, ownership structures, and the number and type of

subscribers. In this Chapter, the Agency outlines the terms and conditions for the Community

Renewable Generation Program that are not prescribed by the Act.

7.1. Statutory Overview

The Act contains several key provisions designed to make community renewable generation

economically viable and practical in Illinois. These provisions create a program, provide it with

important structure, and increase the benefits to participants through changes to net metering and

bill crediting and the ability to monetize the value of RECs from the systems.

Section 1-10 contains several key definitions:

"Community renewable generation project" means an electric generating facility that:

(1) is powered by wind, solar thermal energy, photovoltaic cells or panels, biodiesel,

crops and untreated and unadulterated organic waste biomass, tree waste, and

hydropower that does not involve new construction or significant expansion of

hydropower dams;

(2) is interconnected at the distribution system level of an electric utility as defined in

this Section, a municipal utility as defined in this Section that owns or operates electric

distribution facilities, a public utility as defined in Section 3-105 of the Public Utilities

Act, or an electric cooperative, as defined in Section 3-119 of the Public Utilities Act;

(3) credits the value of electricity generated by the facility to the subscribers of the

facility; and

(4) is limited in nameplate capacity to less than or equal to 2,000 kilowatts.

"Subscriber" means a person who (i) takes delivery service from an electric utility, and

(ii) has a subscription of no less than 200 watts to a community renewable generation

project that is located in the electric utility's service area. No subscriber's subscriptions

may total more than 40% of the nameplate capacity of an individual community

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Community Solar Hub, https://www.communitysolarhub.com. Accessed September 1, 2017.

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renewable generation project. Entities that are affiliated by virtue of a common parent

shall not represent multiple subscriptions that total more than 40% of the nameplate

capacity of an individual community renewable generation project.

"Subscription" means an interest in a community renewable generation project

expressed in kilowatts, which is sized primarily to offset part or all of the subscriber's

electricity usage.

These three definitions create the core of the idea of community renewable generation, where

subscribers pay for shares or some other “interest” in a centralized (but small) renewable power

project, receiving bill credits in exchange. It can be seen as a way of giving customers choices about

their electricity generation in a manner that can serve as an alternative to the options created by the

establishment of retail choice through the Electric Service Customer Choice and Rate Relief Law of

1997.

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Section 1-75(c)(1)(N) creates the community renewable generation program:

(N) The long-term renewable resources procurement plan required by this subsection

establish the terms, conditions, and program requirements for community renewable

generation projects with a goal to expand renewable energy generating facility access

to a broader group of energy consumers, to ensure robust participation opportunities

for residential and small commercial customers and those who cannot install renewable

energy on their own properties. Any plan approved by the Commission shall allow

subscriptions to community renewable generation projects to be portable and

transferable. For purposes of this subparagraph (N), "portable" means that

subscriptions may be retained by the subscriber even if the subscriber relocates or

changes its address within the same utility service territory; and "transferable" means

that a subscriber may assign or sell subscriptions to another person within the same

utility service territory.

Electric utilities shall provide a monetary credit to a subscriber's subsequent bill for

service for the proportional output of a community renewable generation project

attributable to that subscriber as specified in Section 16-107.5 of the Public Utilities Act.

The Agency shall purchase renewable energy credits from subscribed shares of

photovoltaic community renewable generation projects through the Adjustable Block

program described in subparagraph (K) of this paragraph (1) or through the Illinois

Solar for All Program described in Section 1-56 of this Act. The electric utility shall

purchase any unsubscribed energy from community renewable generation projects that

are Qualifying Facilities ("QF") under the electric utility's tariff for purchasing the

output from QFs under Public Utilities Regulatory Policies Act of 1978. The owners of

and any subscribers to a community renewable generation project shall not be

considered public utilities or alternative retail electricity suppliers under the Public

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One aspect of the success of retail competition in Illinois has been municipal aggregation programs whereby a municipality negotiates

an electric supply offer from an ARES on an opt-out basis for eligible retail customers. The Agency understands that those customers who

participate in a municipal aggregation program remain individual customers and thus would be considered individually for the purposes

of the 40% cap on individual subscriptions. The aggregator would not be considered a subscriber to a community renewable generation

project.

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Utilities Act solely as a result of their interest in or subscription to a community

renewable generation project and shall not be required to become an alternative retail

electric supplier by participating in a community renewable generation project with a

public utility.

This Chapter describes the “terms, conditions, and program requirements” and how RECs are

purchased. Certain other aspects of the program requirements are requirements that are

administered by the applicable utility, and the Agency will coordinate with them to ensure

compliance with the Act.

While the Act defines community renewable energy as including solar, wind, biomass, and other

renewable sources, it creates an Adjustable Block Program only for photovoltaic generation,

directing the Agency to “purchase renewable energy credits from subscribed shares” of community

solar projects.

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By procuring their RECs, the Agency is able to offer an additional financial incentive

for customers choosing community solar.

Subscribers capture the value of their community energy subscription in the form of a “monetary

credit” applied to the subscriber’s subsequent utility bill for service, in proportion to the net output

of their subscription to the project. The determination of that credit is not the subject of this Plan,

and is established through tariffs filed by the utilities with the Illinois Commerce Commission as

discussed further below. Instead, the Agency’s role is simply in the procurement of RECs. While

subscribers may not (if their subscription does not take the form of equity in the project) necessarily

directly receive revenue for the RECs procured for the utilities by the Agency, that revenue should

factor into the economics faced by the project developer and impact the subscription offer made to

subscribers.

The monetary credits for net energy production flow from newly available provisions of the Public

Utilities Act that expand the concept of net metering, which had previously been available for

distributed generation, to become available for community renewable generation subscribers. The

previous version of Section 16-107.5(l) of the Public Utilities Act before the enactment of Public Act

99-0906 provided that electric utilities merely “shall consider” whether to allow community-owned

facilities or meter aggregation projects in a single building. The revised version of that Section adds

the requirement to Section 16-107.5 that utilities shall allow

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net metering for subscribers to

“community renewable generation projects,” as well as the other two types of community renewable

projects.

The new law requires an “electricity provider” (meaning an electric utility or alternative retail

electric supplier) to provide net metering credits for a community solar subscriber’s share of a

project’s net electricity production at the subscriber’s energy supply rate.

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Public Act 99-0906 also required that each electric utility file a community solar net metering tariff

by 90 days after the new law’s effective date of June 1, 2017. Each of ComEd, Ameren Illinois, and

406

As discussed elsewhere, the Agency understands “purchase” effectively to mean “procure” as used in this provision, as the Agency would

not directly enter into contracts with renewable providers using non-RERF (or otherwise non-state-held) funds.

407

220 ILCS 5/16-107.5(l)(1).

408

Community solar projects are to receive energy-only net metering credits starting from the enactment of Public Act 99-0906 on June 1,

2017 (or whenever each electricity provider implements the tariff or terms to do so following June 1, 2017), in contrast to other types of

distributed generation, which will continue to receive full retail rate net metering from June 1, 2017 until total net metering for that

electricity provider reaches 5% of the electricity provider’s peak demand, as discussed in Chapter 6.

Long-Term Renewable Resources Procurement Plan August 6, 2018

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MidAmerican filed a proposed tariff during August of 2017, and the Commission approved all three

tariffs on September 27, 2017.

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These tariffs are discussed further in Section 7.7 of this Plan.

ComEd’s new tariff consisted of modifications to its Rider POGCS (Parallel Operation of Retail

Customer Generating Facilities Community Supply), Rider POG (Parallel Operation of Retail

Customer Generating Facilities), Rider PORCB (Purchase of Receivables with Consolidated Billing),

and Rate RESS (Retail Electric Supply Service). Ameren’s new tariff consisted of a complete revision

to its Rider NM (Net Metering) to now incorporate provisions governing community renewable net

metering. MidAmerican’s new tariff created a new Rate NMS to embody its new community

renewable net metering program.

7.2. Eligible Generating Technologies and Procurement/Program Eligibility

Community renewable generation projects that are photovoltaic will be eligible to participate in the

Adjustable Block Program outlined in Chapter 6. Other types of community renewable generation

projects (the listing for which can be found in the definition of “renewable energy resources” found

in Section 1-10 of the IPA Act) will be eligible to participate in the competitive procurement outlined

in Chapter 5. These options define the process by which a system would come under contract with a

utility to sell its RECs, and each option features different payment terms. The Adjustable Block

Program has front-loaded REC payments, while competitive procurements will pay for RECs as they

are delivered. Other than these contractual differences, the Agency believes all community renewable

generation projects (including those participating in the Adjustable Block Program) should be

treated the same as to other terms and conditions that follow in this Chapter, unless specifically

noted.

For non-photovoltaic community renewable generation projects, the price per REC they will be paid

will be based upon the price of the winning bidder’s bid in the competitive procurement and is not

tied to any adders or requirements for residential subscription rates.

7.3. Co-location of Projects

Co-location is when multiple projects are located adjacent to each other, perhaps using the same grid

interconnection. Co-located projects can be structured to maximize income from incentives, such as

by dividing up a larger project into smaller pieces that qualify for higher incentives. Community

Renewable Generation Projects are defined in the Act as being smaller than or equal to 2,000 kW, and

for photovoltaic projects, the Adjustable Block Program includes adders for smaller projects. Co-

location strategies could therefore result in the gaming of prices.

Minnesota offers two points of experience with the issue of co-location, for both community wind

and community solar. Under both policies, larger projects were structured as a series of smaller

projects to qualify for higher incentives, undermining the legislative intent of promoting distributed,

community-owned projects. A 30 MW wind project, owned by 15 corporate entities with the same

owners, was developed under the Minnesota Community-Based Energy Development (C-BED) tariff

program, which was intended to encourage community-owned wind projects of 2 MW or less. That

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See ICC Docket No. 17-0350 (ComEd), ICC Docket No. 17-0368 (MidAmerican), and ICC tariff no. ERM 17-144 (Ameren Illinois).

Long-Term Renewable Resources Procurement Plan August 6, 2018

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program was reformed in 2003 to be more prescriptive, limiting ownership to Minnesota residents,

with a single owner limited to a 15% share of a project.

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The more recent Minnesota Community Solar Gardens policy led to a similar problem. While the

legislature capped project size at 1 MW, it did not address co-location issues. As a result, 15 co-

located, aggregated projects were proposed between 10 and 20 MW, three between 20 and 30 MW,

and two in the 30 to 50 MW range. One developer, Sunrise Energy Ventures, filed applications for

100 projects within the first hour of the program. When the state Public Utilities Commission (“PUC”)

imposed co-location caps of 5 MW for projects with filed applications and 1 MW for newly proposed

projects, Sunrise appealed to the Minnesota Court of Appeals. The Court, however, affirmed the PUC’s

decision to implement caps.

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While co-location can undermine the concept of smaller and more geographically diffuse projects, it

can also capture economies of scale from larger projects: large, available parcels with good

interconnection points can be low-cost and efficient ways to develop large amounts of renewables

quickly. Low development costs could help compensate for the higher marketing and customer

acquisition costs of community renewable generation, and provide greater benefits to low-income

customers. Also, different owners might apply to develop completely distinct projects at different

times, that just happen to be on adjacent parcels; restrictive rules would limit the development of

especially attractive parcels of land.

7.3.1. Co-location Standard

In enacting Public Act 99-0906, the General Assembly expressly included a size limit for community

renewable generation projects of 2,000 kW,

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and the Agency does not believe it should ignore the

intent of that size limit being included in the definition of community renewable generation projects.

Additionally, as discussed in Section 6.5.1, the Agency seeks to avoid the situation in which multiple

smaller projects are co-located in order to obtain the higher REC prices available to smaller systems.

To appropriately balance these competing issues, in recognition of a need to avoid problems of the

types seen in Minnesota,

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and consistent with the Commission’s Order in Docket No. 17-0838,

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the following policy is applicable to the co-location of Community Solar projects participating in the

Adjustable Block Program:

410

Jessica A. Shoemaker and Christy Anderson Brekken, Farmers’ Legal Action Group, Community Wind: A Review of Select State and Federal

Policy Incentives, August 2006, http://www.flaginc.org/wp-content/uploads/2013/03/CommWindAug061.pdf

411

Mitchell Williams, Selig Gates & Woodyard PLLC, “Community Solar Gardens: Minnesota Appellate Court Allows Public Utility

Commission to Implement Caps on Usage,” Lexology, August 23, 2016.

http://www.lexology.com/library/detail.aspx?g=c4690835-61c4-

40cf-8105-0cc8d3229c77.

412

See 20 ILCS 3855/1-10 ("’Community renewable generation project’ means an electric generating facility that . . . is limited in nameplate

capacity to less than or equal to 2,000 kilowatts.”).

413

These principles are derived from the definition adopted in Minnesota regarding co-location. See, Minnesota PUC, In the Matter of the

Petition of Northern States Power Company, dba Xcel Energy, for Approval of Its Proposed Community Solar Garden Program. Order

Adopting Partial Settlement As Modified. August 6, 2015. Docket No. E-002/M-13-867.

https://www.edockets.state.mn.us/EFiling/edockets/searchDocuments.do?method=showPoup&documentId={43AC9E59-AD57-44FE-

A57A-5F8A572D3C74}&documentTitle=20158-113077-01.

414

See Docket No. 17-0838, Final Order dated April 3, 2018 at 131.

Long-Term Renewable Resources Procurement Plan August 6, 2018

145

• No Approved Vendor may apply to the Adjustable Block Program for more than 4 MW of

Community Solar projects on the same or contiguous parcels (with each “parcel” of land

defined by the County the parcel is located in).

415

• Co-located projects summing to more than 2 MW of Community Solar may be permissibly

located in one of two ways:

o Two 2-MW projects on one parcel; or

o One 2-MW project on each of two contiguous parcels.

416

• A parcel of land may not have been divided into multiple parcels in the two years prior to the

project application (for the Adjustable Block Program), or bid (for competitive

procurements) in order to circumvent this policy. If a parcel has been divided within that

time period, the requirement will apply to the boundaries of the larger parcel prior to its

division.

• If there are multiple projects owned or developed by a single entity (or its affiliates) located

on one parcel of land, or on contiguous parcels of land, any size-based adders will be based

on the total size of the projects owned or developed on the contiguous parcels by that single

entity or its affiliates. Furthermore, the total combined size of projects owned or developed

by a single entity (or its affiliates) on contiguous parcels of land may not be more than 2 MW,

or more than 4 MW if co-located consistent with the provisions outlined above.

417

o “Affiliate” means, with respect to any entity, any other entity that, directly, or

indirectly through one or more intermediaries, controls, is controlled by, or is under

common control with each other or a third entity. “Control” means the possession,

directly or indirectly, of the power to direct the management and policies of an entity,

whether through the ownership of voting securities, by contract, or otherwise.

Affiliates may not have shared sales or revenue-sharing arrangements, or common

debt and equity financing arrangements.

o “Contiguous” means touching along a boundary or a point. For example, parcels

touching along a boundary are contiguous, as are parcels that meet only at a corner.

Parcels, however near to each other, that are separated by a third parcel and do not

touch along a boundary or a point are not contiguous.

• Projects owned or developed by separate entities (meaning that that they are not affiliates)

may be located on contiguous parcels. If there is a naturally good location from an

interconnection standpoint, one owner should not be allowed to prevent another owner from

developing a project in that location.

• Projects must have separate interconnection points.

Additionally, on May 2, 2018, the Commission entered an Amendatory Order in Docket No. 17-0838

authorizing the IPA to “investigate outside of this docket the probability of cost savings (if any) for

co-located projects that puts their average costs below those modeled in the IPA’s REC pricing model,

and if warranted based on the results of that investigation, establish a tier in its REC pricing model

applicable to co-located systems exceeding 2 MW in aggregate size.”

418

The IPA’s June 4, 2018 REC

Compliance Filing containing updated REC values reflects the establishment of a REC pricing model

tier applicable to co-located Community Solar systems exceeding 2 MW in aggregate size.

415

See id.

416

See id.

417

See id.

418

Docket No. 17-0838, Amendatory Order dated May 2, 2018 at 1-2.

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146

7.4. Eligibility of Projects Located in Rural Electric Cooperatives and Municipal

Utilities

The definition of community renewable generation projects specifically mentions rural electric

cooperatives and municipal utilities,

419

but does not explicitly include or exclude them from any

program or procurement to be run by the Agency. Moreover, the definition includes the concept of

that project having “subscribers,” a term which in turn has a definition that defines such “subscribers”

as “tak[ing] delivery service from an electric utility,” which as defined in the IPA Act does not include

cooperative and municipal utilities.

420

This results in ambiguity around whether a community

renewable generation project can be located within the service territory of a rural electric

cooperative or a municipal utility. Ultimately, the Agency recognizes the General Assembly’s choice

expressly to include those entities in defining “community renewable generation projects”—a term

only used in the IPA Act in connection with the Agency’s community renewable generation

program—and believes that community renewable generation projects (including community solar)

located in these service territories should, if possible, be included in this Plan.

The status of community renewable generation projects and distributed renewable energy

generation devices located in the service territories of rural electric cooperatives, municipal electric

utilities, and Mt. Carmel Public Utility Company was a contested issue in Docket No. 17-0838, and the

Commission’s Final Order in that proceeding determined that the Agency’s filed Plan was correct in

authorizing the participation of these projects in the Adjustable Block Program, the Community

Renewable Generation Program, and the Illinois Solar for All Program.

421

After the denial of its

application for rehearing, ComEd filed a petition for review with the Appellate Court of Illinois,

Second Judicial District on June 19, 2018 taking appeal of that determination. As the Appellate Court

has not granted (or been presented with a motion for) a stay or other injunctive relief, the

Commission’s decision granting the permission for such projects to participate governs the Agency’s

implementation of these programs and thus projects in the service territories of rural electric

cooperatives, municipal electric utilities, and Mt. Carmel Public Utility Company may receive REC

delivery contracts under these programs.

As mentioned above, there are already at least two community solar offerings from rural electric

cooperatives. Illinois’ first community solar project was a 126 kW installation in Elizabeth, built by

Jo Carroll Energy in December 2014.

422

That project allows Jo Carroll customers to buy individual

panels in the 460-panel ground-mounted system, with the energy produced credited against their

bills. Prairie Power sells kWh blocks of solar power to customers of its 10 distribution cooperatives

through the Bright Options Solar program. The program is supplied by two 500 kW solar installations

419

See 20 ILCS 3855/1-10 ("’Community renewable generation project’ means an electric generating facility that is . . . interconnected at

the distribution system level of an electric utility as defined in this Section, a municipal utility as defined in this Section that owns or

operates electric distribution facilities, a public utility as defined in Section 3-105 of the Public Utilities Act, or an electric cooperative, as

defined in Section 3-119 of the Public Utilities Act”).

420

Specifically, Section 1-10 of the IPA Act defines an electric utility as having “the same definition as found in Section 16-102 of the Public

Utilities Act,” which is “a public utility, as defined in Section 3-105 of this Act, that has a franchise, license, permit or right to furnish or sell

electricity to retail customers within a service area.” 220 ILCS 5/16-102. Section 3-105 of the PUA in turn defines “public utility” to

expressly exclude “public utilities that are owned and operated by any political subdivision, public institution of higher education or

municipal corporation of this State, or public utilities that are owned by such political subdivision, public institution of higher education,

or municipal corporation and operated by any of its lessees or operating agents” as well as “electric cooperatives as defined in Section 3-

119” of the PUA. 220 ILCS 5/3-105.

421

See Docket No. 17-0838, Final Order dated April 3, 2018 at 177-179.

422

Jo Carroll Energy, https://jocarroll.com/content/south-view-solar-farm.

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147

near Shelbyville and Astoria, both built in 2015.

423

Neither of these projects would be eligible to

participate in the Adjustable Block Program because they were energized prior to June 1, 2017, but

they indicate that rural electric cooperatives have thus far been the leaders in community solar in

Illinois.

The Agency proposes the following standard for allowing community renewable generation projects

in the service territories of rural electric cooperatives and municipal utilities to participate in the

Agency’s programs or procurements. These standards may require actions be taken by the rural

electric cooperative or municipal utility. As entities not regulated by the state, they are free to choose

to take these actions or decline to take these actions, but should they choose not to, then the residents

and businesses within their service territories would not benefit from receiving revenue through

these programs for its RECs, and thus the economics of such projects may not be as attractive to

developers or subscribers.

The requirements for participation that the Agency recommends for a rural electric cooperative or

municipal utility follow from those required in the Act for electric utilities:

• Be capable of “credit[ing] the value of electricity generated by the facility to the subscribers

of the facility.”

424

This can be accomplished though offering “virtual net metering”

substantially similar to the provisions contained in Section 16-107.5(l) of the Public Utilities

Act.

425

The value of electricity credited must be at no lower than the subscriber’s supply

rate.

426

• Provide a monetary credit to a subscriber's subsequent bill for service for the proportional

output of a community renewable generation project attributable to that subscriber.

427

• Purchase any unsubscribed energy from community renewable generation projects that are

Qualifying Facilities ("QF") under the electric utility's tariff for purchasing the output from

QFs under Public Utilities Regulatory Policies Act of 1978.

428

Prior to a photovoltaic community renewable generation project applying for the Adjustable Block

Program, or a community renewable generation project powered by other renewable technologies

participating in the competitive procurement, the Approved Vendor shall obtain a certification to the

Agency that the rural electric cooperative or municipal utility has met these conditions from the

subject cooperative or municipal utility. Absent this information, a project located in the service

territory of that rural electric cooperative or municipal utility will not be allowed to participate. All

the other programmatic requirements for community renewable generation projects (e.g., size limits,

co-location, consumer protections) would apply to projects located in rural electric cooperatives or

municipal utility service territories. For the purposes of rural electric cooperatives, these

requirements apply at the distribution cooperative level, rather than for generation and transmission

cooperatives (which do not directly interact with retail customers).

423

Prairie Power, https://www.ppi.coop/brightoptions.

424

See definition of “Community Renewable Generation Facility” in 20 ILCS 3855/1-10.

425

See 220 ILCS 5/16-107.5(l).

426

If the municipal utility or rural electric cooperative does not have unbundled rates (e.g., separate line items for delivery services and

electricity supply) then the applicable municipal utility or rural electric cooperative must indicate the portion of the bundled rate that

reasonably correlates to the cost of electricity supply service.

427

See 20 ILCS 3855/1-75(c)(1)(N).

428

See id.

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148

7.5. Types of Community Renewable Generation Projects

Community Renewable Generation remains a new concept for Illinois, and it is still developing

nationally. Practitioners are still developing the most viable business models, and new models are

likely to emerge, both for-profit and non-profit. In some models, customers take ownership of a share

of a community project, identifying specific solar panels. In others, the developer owns the project

and sells subscriptions for a contractually obligated term, or an indefinite term that can be ended at

will. The value of the generation can be conveyed to the customer by virtual net metering (as an

energy credit), by a value-of-solar tariff, or as a premium purchase.

One issue that the Agency has considered is the extent to which projects will be proposed by

commercial developers who then seek to identify subscribers, and by community-led projects where

interested parties in a community come together to seek to develop a project. A church parish, for

example, could put photovoltaic panels on the roof of the church, with subscriptions sold to

parishioners. Developer-led projects are likely to be larger and located where interconnection costs

are minimized, while community-led projects like the church parish could be smaller and face the

possibility of higher interconnection costs because the location is determined by community-focused

interests rather than pure engineering considerations.

While such community-led projects seem consistent with the intent of the Act, the Agency is not

proposing a specific adder for community-led projects at this time. There are several reasons for this.

First, the Agency has proposed adders that should encourage community-led projects like the church

parish example, such as for smaller sized systems and for a larger portion of residential subscribers.

Second, properly defining what is truly a community-led project could be problematic and subject to

gaming. It is possible, for example, that community groups will team with professional solar

developers to realize their projects, with varying ownership structures.

In addition to the adders available through the Adjustable Block Program, certain community-led

projects may instead participate in, and be eligible for a higher level of incentives through, the Illinois

Solar for All Program as described in Chapter 8. Developers of Community Solar projects that

participate in that program are required to “identify its partnership with community stakeholders

regarding the location, development, and participation in the project, provided that nothing shall

preclude a project from including an anchor tenant that does not qualify as low-income. Incentives

should also be offered to community solar projects that are 100% low-income subscriber owned,

which includes low-income households, not-for-profit organizations, and affordable housing

owners.”

429

Because a project does not have to rely exclusively on low-income subscribers (although

additional incentives are available for projects that do so) this option may bring an additional value

option to community-led projects.

It could also be difficult to ascertain if a project was really proposed by a community, or if a developer

proposed the project and found community organizations to represent the project, which would

clearly not be the intended outcome of a “community” adder. While a similar challenge exists for the

community solar projects that participate in the Illinois Solar for All Program in that they require

community participation, that program also features the requirement that economic benefits flow to

the (low-income) participants, which can help mitigate this concern.

429

20 ILCS 3855/1-56(b)(2)(B).

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149

7.6. Subscriber Requirements

With community renewable generation still an emerging concept, the level of consumer interest and

the most viable business models remain to be determined. The Agency seeks to allow creativity and

flexibility in developing projects while at the same time ensuring basic consumer protections.

7.6.1. Small Subscriber Participation

The Act requires that the Agency propose terms and conditions that “ensure robust participation

opportunities for residential and small commercial customers and those who cannot install

renewable energy on their own properties.”

430

Collectively the Agency considers “residential and

small commercial customers,” to be “small subscribers” so long as their subscription size is below 25

kW. In the responses to the Request for Comments issued by the Agency after its May workshops,

there were strong disagreements expressed about how this provision should be interpreted. Some

parties argued that it meant that all projects must include some level of residential or small

commercial participation, while others argued that the appropriate adders or other incentives would

lead to robust participation and that there should be no requirement.

While the Agency appreciates the arguments made by those who would wish to require residential

or small commercial participation in all projects, the Agency declines to adopt that proposal. The

above-quoted language of the Act refers to “robust participation opportunities”

431

for small

customers, and does not mandate robust participation.

Instead, as described in Section 6.5, the use of adders in the Adjustable Block Program recognizes the

value of small subscriber subscriptions, and the Agency expects that this adder, along with the

preference for a small subscriber commitment in the case of a lottery to select community solar

projects upon the opening of the Adjustable Block Program (as described in Section 6.3.1),

432

will be

sufficient mechanisms to ensure robust participation opportunities for small subscribers. The

Agency will review the actual level of small subscribers achieved by initial community renewable

generation projects and will not only use that review and any other available information as part of

the Plan Update conducted in 2019 and consider revising this determination if residential

participation rates (measured in capacity) are in aggregate under 25%, but also closely monitor small

subscriber participation prior to the 2019 Plan Update.

433

The level of interest in community renewable generation is still unknown, and it is possible that the

interest and uptake of subscriptions may be stronger from larger commercial customers. Nationally,

corporate customers have emerged as major buyers of renewable energy in order to meet

sustainability and financial goals. Illinois is home to many corporations that have made sustainability

commitments, which may constitute a significant market for community renewable generation.

If it turns out that the interest from potential small subscribers in community renewable generation

is limited, requiring small subscriber participation could impede the successful development of the

commercial community renewable generation market. As the Agency considers small subscriber

430

20 ILCS 3855/1-75(c)(1)(N).

431

Emphasis added.

432

See also Docket No. 17-0838, Final Order dated April 3, 2018 at 144.

433

See id.

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150

participation levels in the future, consideration of the issue will include both results in Illinois as well

as from other jurisdictions.

7.6.2. Marketing to Small Subscribers

Subscribing to a community renewable generation project is not the same as choosing to purchase

or lease a system to be located on your own property. It does, however, bear similarities to signing

up to take supply service from an Alternative Retail Electric Supplier. The Agency observes that the

history of questionable marketing practices of some Alternative Retail Electric Suppliers gives reason

to be concerned about the marketing of community renewable generation subscriptions.

434

While competition in the natural gas and electricity markets has created many benefits for the

residents and businesses of Illinois, those benefits have not been uniform, and in many instances,

particularly in residential markets, the benefits have been non-existent; in fact, at times supply offers

have been harmful to consumers. This Plan is not the place to have a full debate on acceptable

marketing practices, but the Agency would like to highlight past practices that some alternative gas

and electric suppliers have engaged in that cause concern for the Agency. These include improperly

associating the supplier with the local utility or a government agency or program; implying that a

customer must choose to enroll; inflating the price of green energy offers far beyond the actual

incremental cost of procuring renewable resources; and targeting elderly, non-English speaking, and

low-income customers who may have less access to quality information about energy prices.

The Agency recognizes that it may not be able to prohibit door to door or telemarketing sales of

community renewable generation subscriptions, but notes those marketing channels as ones of

particular concern because of the information asymmetry between the salesperson and the

consumer. The Agency believes an informed consumer is a wise consumer and strongly encourages

marketing channels that respect the opportunity for consumers to have complete and accurate

information about the decisions they may make regarding subscriptions, particularly those related

to upfront payments, the net price of energy, and termination fees and conditions. The Agency and/or

its Program Administrator may conduct additional monitoring of Approved Vendors (and/or their

partners/affiliates) that utilize door to door or telemarketing sales, and reserves the right to request

the Approved Vendor provide additional documentation of those marketing channels including, but

not limited to, access to call center recordings for either sales or third-party verifications.

That being said, there are a number of state and federal consumer protection laws, regulations, and

enforcement agencies that apply to all forms of marketing, including marketing of subscriptions to

Community Renewable Generation Projects.

435

434

See, e.g., ICC Docket No. 14-0512, Consumer Services Division and Office of Retail Market Development Staff Report to the Commission

dated August 20, 2014, https://www.icc.illinois.gov/downloads/public/edocket/384622.pdf

(detailing misleading and noncompliant

marketing tactics employed by one ARES); ICC Docket No. 15-0438, Consumer Services Division and Office of Retail Market Development

Staff Report to the Commission dated July 20, 2015, https://www.icc.illinois.gov/docket/files.aspx?no=15-0438&docId=232481

(detailing

several misleading telephone marketing tactics employed by a different ARES); ICC Docket No. 15-0512, First Notice Order, September 22,

2016, at 55 (expressly relying on information submitted with the ICC Staff Initial Comments dated November 5, 2015

(

https://www.icc.illinois.gov/downloads/public/edocket/417068.pdf), which detailed trends in allegations of ARES wrongdoing

including unauthorized switching, misrepresentation of the nature of the transaction, misrepresentation of identity of the ARES,

misrepresentation of price or savings, failure to disclose cancellation fees or right to cancel, and more); ICC Docket No. 17-0273, Order,

August 15, 2017, at 4-5 (denying a certificate of service authority to an ARES that, previously operating in Illinois under a prior corporate

structure, had amassed numerous complaints related to sales and marketing).

435

Diana Chace and Nate Hausman, Clean Energy States Alliance, Consumer Protection for Community Solar: A Guide for States, June 8,

2017. http://cesa.org/resource-library/resource/consumer-protection-for-community-solar-a-guide-for-states

Long-Term Renewable Resources Procurement Plan August 6, 2018

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Table 7-1: Federal Statutes that Apply to Community Solar

Statute

Topic

CAN-SPAM Act

Electronic marketing

Consumer Leasing Act

Leasing disclosures

Electronic Funds Transfer Act

Consumer rights in electronic fund transfers

Equal Credit Opportunity Act

Discrimination in credit transactions

Fair Credit Reporting Act

Collection and use of consumer information

Federal Trade Commission Act

Unfair and deceptive trade practices

Magnuson-Moss Warranty Act

Consumer product warranties

Right to Financial Privacy Act

Financial privacy from government intrusion

Truth in Lending Act

Lending disclosures and standardization

Telephone Consumer Protection Act

Telemarketing and automated telephone equipment

Unfair Deceptive Practices Act (UDAAP)

Misleading financial products and services

Uniform Commercial Code

Sales and commercial transactions

Source: CESA, Consumer Protection for Community Solar: A Guide for States, 2017.

Table 7-2: Illinois Statutes that Apply to Community Solar

Statute

Topic

Consumer Fraud and Deceptive Business

Practices Act (815 ILCS 505)

Enrollment, marketing, billing, and collection by

electric service providers

Electronic Mail Act (EMA) (815 ILCS 511)

Regulates e-mail solicitations

Telephone Solicitations Act (815 ILCS 413)

and the Restricted Call Registry Act (815 ILCS

402)

Regulates telemarketing practices

Personal Information Protection Act (815

ILCS 530)

Requires companies that collect personal information

to take reasonable measures to protect it and report

unauthorized access to consumer’s personal

information.

These laws and regulations provide a starting point for protecting consumers, but their enforcement

agencies typically only track and enforce violations if triggered by consumer complaints. In order to

ensure that subscribers are well-informed and thus afforded adequate consumer protections, the

Agency will require that all projects adhere to the following terms and conditions for subscriptions.

Drawing from the consumer protection guidelines for community solar adopted by the Maryland

Public Service Commission, the Agency proposes to require that Approved Vendors (or their

subcontractors) seeking REC delivery contracts associated with Community Renewable Generation

Facilities participating in the Adjustable Block Program or in Illinois Solar for All must include each

of the following in any contracts entered into with subscribers:

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152

(a) A plain language disclosure of the subscription, including:

(i) The terms under which the pricing will be calculated over the life of the contract

and a good faith estimate of the subscription price expressed as a monthly rate or on

a per kilowatt-hour basis;

(ii) Whether any charges may increase during the course of service, and, if so, how

much advance notice is provided to the subscriber.

(b) Contract provisions regulating the disposition or transfer of a subscription, as well as the

costs or potential costs associated with such a disposition or transfer;

(d) All recurring (monthly, yearly) charges;

(e) A statement of contract duration, including the initial time period and any rollover

provision;

(f) Terms and conditions for early termination, including:

(i) Any penalties that the Project Developer may charge to the subscriber; and

(ii) The process for unsubscribing and any associated costs.

(g) If a security deposit is required:

(i) The amount of the security deposit;

(ii) A description of when and under what circumstances the security deposit will be

returned;

(iii) A description of how the security deposit may be used; and

(iv) A description of how the security deposit will be protected.

(h) A description of any fee or charge and the circumstances under which a customer may

incur a fee or charge;

(i) A statement explaining any conditions under which the Project Developer may terminate

the contract early, including:

(i) Circumstances under which early cancellation by the Project Developer may occur;

(ii) Manner in which the Project Developer shall notify the customer of the early

cancellation of the contract;

(iii) Duration of the notice period before early cancellation; and

(iv) Remedies available to the customer if early cancellation occurs;

(j) A statement that the customer may terminate the contract early, including:

(i) Amount of any early cancellation fee;

(k) A statement describing contract renewal procedures, if any;

(l) A dispute procedure;

(m) The Agency’s and Commission’s phone number and Internet address;

(n) A billing procedure description;

(o) The data privacy policies of the Project Developer;

(p) A description of any compensation to be paid for underperformance;

(q) Evidence of insurance;

(r) A description of the project’s long-term maintenance plan;

(s) Current production projections and a description of the methodology used to develop

production projections;

(t) Contact information for the Project Developer for questions and complaints;

(u) A statement that the Project Developer does not make representations or warranties

concerning the tax implications of any bill credits provided to the subscriber;

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153

(v) The method of providing notice to the subscribers when the project is out of service for

more than three business days, including notice of:

(i) The estimated duration of the outage; and

(ii) The estimated production that will be lost due to the outage.

(w) Any other terms and conditions of service.

As referenced above, the Agency and its Procurement Administrator will also be developing Standard

Disclosure Forms for use in the marketing of community renewable generation project subscriptions.

In addition, to ensure portability and transferability of subscription contracts, as required by Section

1-75(c)(1)(N) of the Act, any such contract should provide that the subscriber (i) may retain the

subscription as long as the subscriber changes addresses for utility service within the same utility

service territory, and (ii) may assign or sell the subscription to another person within the same utility

service territory, without any fee owed to the subscription counterparty. The Agency understands

that the community renewable net metering tariffs for Ameren Illinois, ComEd, and MidAmerican

approved by the Commission on September 27, 2017 are consistent with these principles.

7.6.3. Marketing Claims Related to the Ownership of RECs and Community

Renewable Generation Subscriptions

The Agency’s Adjustable Block Program for community solar, and the competitive procurement for

other forms of community renewable generation, are both based on the core requirement that the

value to the project developer (and in turn the ability to make a financially attractive offer to

subscribers) is based upon the sale of the project’s environmental attributes (in the form of RECs)

from the project to a utility. Those RECs are then retired by the utility to meet the annual RPS goals

of that utility, and the original REC holder’s claims to those environmental attributes are effectively

extinguished through that sale.

This raises the issue of what marketing claims may be made related to a subscription in a community

renewable generation project receiving a REC contract (including community solar projects

participating in the Adjustable Block Program), as such projects will have already contractually

committed the sale of their environmental attributes to a third party. With the underlying

“renewable” or “solar” element of that generation having been decoupled and sold to the utility, can

it still be marketed as a “community solar” project? Moreover, can the subscriber make any claims

for any commercial purpose about any “green” (or similar) aspect of his or her energy sourcing?

Guidance from the Federal Trade Commission would appear to limit what claims can be made about

energy sourced from projects whose RECs are transferred to another entity.

436

The guidance

suggests that appropriate disclaimers about the fate of the RECs may satisfy rules against deceptive

marketing. Yet, at some point, the issue begins to border on the absurd: a lengthy factual explanation

of a community solar subscription and this Agency’s various RPS programs would be permissible,

but a shorthand description used to market that subscription may be legally problematic.

While the Agency recognizes that it is not the Federal Trade Commission (or the state’s Office of

Attorney General) and thus cannot provide reliable guidance on what marketing claims may be

permissible, the Agency can play an important role in ensuring that any potential subscribers

understand the value of a community solar subscription—even if more direct statements cannot be

436

See 16 C.F.R. § 260.15(d), Example 5; see also U.S. EPA, “Making Environmental Claims,” https://www.epa.gov/greenpower/making-

environmental-claims.

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154

made about the environmental attributes of the underlying energy. To this end, the Agency proposes

to work with its Program Administrator on the development of a “brand” associated with Adjustable

Block Program participation. This “brand,” and associated content (including public-facing web

content) would allow potential subscribers to a community solar project to understand that

subscriptions to such a project help the state meet its renewable energy goals and may support the

development of a new generating facility—but without risking the project developer itself making

false or misleading claims about “renewable” or “clean” energy. The Agency plans to work closely

with representatives of the community solar industry, the state’s Office of the Attorney General, the

Staff of the Illinois Commerce Commission, and other parties in developing this approach and any

associated content.

7.7. Utility Responsibilities

While the Agency, through the Adjustable Block Program and competitive procurements, will be

responsible for the procurement of RECs from community renewable generation projects, it is not

responsible for all aspects of a successful program. There are several additional key aspects of

making community renewable generation projects successful that fall outside of the control of the

Agency.

• The crediting of the value of energy through net metering

• Ensuring the portability and transferability of subscriptions within a utility service territory.

The Agency will work with the system owners and developers as well as the utilities (and with rural

electric cooperatives and municipal utilities should they choose to participate) to reflect these

aspects in the terms, conditions, and operational aspects of the programs and procurements

conducted by the Agency. The Agency will also coordinate with the utilities for the sharing of any

pertinent data and information that each party collects and maintains regarding projects and

subscriptions.

Public Act 99-0906 required each electric utility to file a tariff within 90 days after the Act’s effective

date, June 1, 2017, to implement net metering for community renewable projects.

437

All three utilities

did so.

ComEd’s community renewable generation net metering tariff was approved by the Commission in

Docket No. 17-0350 on September 27, 2017. The Commission resolved a dispute among the Company

and intervenors around indemnification by approving ComEd’s proposal that both subscribers and

the project itself will indemnify the Company against any liabilities relating to the reporting of a

subscriber’s share or a subscriber’s interval usage data – and that ComEd will not have reciprocal

indemnification obligations. The Commission indicated that existing regulations related to billing

and meter usage data would be “more than sufficient to ensure that ComEd complies with its legal

obligations.”

438

The Commission rejected the proposal of certain intervenors that the net metering

credit paid to community renewable generation projects include the volumetric transmission

services charge, in addition to the supply charge (which includes an adjustment factor).

437

220 ILCS 5/16-107.5(l), (l-5).

438

Docket No. 17-0350, Final Order dated September 27, 2017 at 18.

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MidAmerican’s community renewable generation net metering tariff was approved by the

Commission in Docket No. 17-0368 on September 27, 2017. The tariff stipulates that both

subscribers and the project itself will indemnify the Company against any liabilities relating to the

reporting of a subscriber’s share or a subscriber’s interval usage data. MidAmerican’s tariff would

provide community renewable net metering credits at the “supply charge,” plus certain adjustment

factors.

Ameren Illinois proposed revisions to its existing net metering tariff to include provisions for

community renewable generation project net metering. The revisions were approved by the

Commission on September 27, 2017. Ameren Illinois’ revised tariff credits the energy service bills of

subscribers to a community renewable generation project for net production at the “tariffed or

contract rate for electricity supply as appropriate.”

As discussed in Section 7.6.2, the Agency believes that the three approved tariffs will allow portability

and transferability of subscriptions, as required by Section 1-75(c)(1)(N) of the Act.

The Agency understands that there are ongoing discussions between stakeholders and the utilities

regarding these tariffs (in particular, issues related to bill crediting). The Agency will actively monitor

those discussions, and to the extent they result in changes to any or all of these tariffs, the Agency

will update the REC Pricing model to reflect any of those changes.

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8. Illinois Solar for All Program

8.1. Overview

The Illinois Solar for All Program was created through revisions to Section 1-56(b) of the IPA Act

contained in Public Act 99-0906 to “include incentives for low-income distributed generation and

community solar projects” with the following objectives:

“bring photovoltaics to low-income communities in this State in a manner that maximizes

the development of new photovoltaic generating facilities, to create a long-term, low-

income solar marketplace throughout this State, to integrate, through interaction with

stakeholders, with existing energy efficiency initiatives, and to minimize administrative

costs.”

439

The Act creates four sub-programs within Illinois Solar for All, with incentives for each type of

development:

(A) Low-income distributed generation, for on-site solar projects

(B) Low-Income Community Solar, for off-site solar projects

(D) Low-Income Community Solar Pilot Projects, with distinct rules and incentives

The Agency is instructed to “include a description of its proposed approach to the design,

administration, implementation and evaluation of the Illinois Solar for All Program” in this Plan. This

Chapter fulfills that provision of the Act.

While the price of photovoltaics has declined dramatically over recent years, there can be significant

upfront costs for the development of projects. The financial incentives offered through the Adjustable

Block Program may not be sufficient for low-income households and communities to overcome the

substantial barriers to participating in the growing solar energy market. The Illinois Solar for All

Program is an alternative approach and program to help address this challenge.

8.2. Design Considerations

The Agency has identified two key design elements in implementing the Illinois Solar for All Program

necessitating more focused discussion: the relationship to the Adjustable Block Program, and the

creation of economic benefits for participants.

8.2.1. Relationship with the Adjustable Block Program

The goals of the Illinois Solar for All Program overlap with the goals of the Adjustable Block Program

in that both promote distributed photovoltaic generation and community solar. The difference

involves the sectors that the programs serve and the structure of the incentives and program design.

As described in this Chapter, the Agency will administer the Illinois Solar for All Program separate

from the Adjustable Block Program, but building on the program design of the Adjustable Block

Program, with additional considerations specific to Illinois Solar for All. These include a different set

of incentives, additional requirements to be an Illinois Solar for All Approved Vendor, Illinois Solar

439

20 ILCS 3855/1-56(b)(2).

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for All specific contracts, and additional considerations to ensure community involvement, consumer

protections, and eligibility. To the extent not specifically mentioned in this Chapter, the program

design, terms, and conditions of the Adjustable Block Program would also apply to the administration

of, and contracts entered into for, the Illinois Solar for All Program.

The exception to this principle is the Low-Income Community Solar Pilot Projects, which do not

participate in the Adjustable Block Program, and which the Agency proposes to fund solely through

the Renewable Energy Resources Fund and administer through a competitive procurement process.

8.2.2. Economic Benefits

The second consideration is the concept of “economic benefits” and how low-income participants can

capture them. The Act stipulates that for the Illinois Solar for All Program, “[e]ach contract that

provides for the installation of solar facilities shall provide that the solar facilities will produce energy

and economic benefits, at a level determined by the Agency to be reasonable, for the participating

low income customers.”

440

In addition, contracts should “ensure [that] the wholesale market value

of the energy is credited to participating low-income customers or organizations and to ensure

tangible economic benefits flow directly to program participants, except in the case of low-income

multi-family housing where the low-income customer does not directly pay for energy.”

441

A key barrier to low-income participation in renewable energy programs is lack of access to funds

and financing to pay for the up-front costs of photovoltaic systems.

To create “tangible economic benefits” at a “reasonable” level, the Agency has determined that

eligible low-income residential participants in the Illinois Solar for All Program should not have to

pay up-front costs for on-site distributed generation, or pay an up-front fee to subscribe to a

community solar project. Further, participation in the program should result in immediate, reliable

reductions in energy costs for those residents or subscribers. Consistent with the Commission’s

Order in Docket No. 17-0838, this means that for projects that are financed or leased, any ongoing

annual payments must be smaller than 50% of the annual first year estimated production and/or

utility default service net metering value to be received by the customer.

442

The Agency requires that Illinois Solar for All Approved Vendors verify that developers, installers,

landlords, and other intermediaries ensure that the resulting value of the incentives offered by the

program flow through to the people the program is meant to serve. However, the Agency notes that

in order to avoid an overly complex administrative system for this program, incentive levels will not

be customized to each participant’s specific economic circumstances. As part of the evaluation of the

Illinois Solar for All Program (see Section 8.17) the Agency will review the impact of the program on

the energy costs of participants to assess how the benefits created by the program reduces their

energy burden. This evaluation will be used to inform any future modifications to the setting of

incentive levels designed to create tangible economic benefits at a reasonable level for participants.

For public and non-profit facilities that participate in the Illinois Solar for All Program, the Agency

proposes an approach in which the incentive level recognizes that these entities may not be able to

440

20 ILCS 3855/1-56(b)(2).

441

Id.

442

See Docket No. 17-0838, Final Order dated April 3, 2018 at 151. As required by the Commission’s Order, this calculation must be

“disclosed to the customer and reviewed and approved by the Agency.”

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capture the tax benefits that a comparable sized project that participates instead in the Adjustable

Block Program would be able to. This adjusted incentive level can help overcome the financing

barriers that non-profits and public facilities may face compared to private entities.

Ensuring that “the wholesale market value of energy is credited to participating low-income

customers” can be achieved through existing net metering provisions. Therefore, projects will be

required to participate in the applicable utility’s or ARES’s net metering program. This may prevent

projects in the service territory of a municipal utility or rural electric cooperative that does not offer

net metering from participating in the Illinois Solar for All Program. The Agency hopes that such

municipal utilities and rural electric cooperatives strongly consider adopting net metering policies

to bring the full value of solar to their residents and members.

Ensuring that tangible economic benefits flow directly to program participants can also be

accomplished by providing documentation to the Agency that the project has no upfront cost to the

participant, that the value of incentives are used by the project developer/installer to offset costs to

the participant, and that there will not be ongoing costs or fees to the participant that exceed 50% of

the value of energy produced. The resulting economic benefits to program participants will be

accrued through the value they receive through net metering or avoided consumption from the

energy the system produces. As described in Section 8.11, Illinois Solar for All Approved Vendors will

be required to document how they ensure that this goal is met. The case of low-income multi-family

housing can be more complex and is discussed in more detail in Section 8.6.1.

It should be noted that these incentives are tied directly to creating economic benefits through

lowered net energy costs and are calculated in that manner. As a result, there may be additional costs

required to make a specific project viable (e.g., costs associated with roof repairs or wiring upgrades)

that these incentives may not be able to address. Additional incentives to pay for those types of

separate costs will not be available through the Illinois Solar for All Program, and the Agency

encourages participants to explore alternative sources of funding as needed. The Agency and the

Illinois Solar for All Program Administrator will work with Illinois Solar for All Approved Vendors to

facilitate informing and educating program participants about opportunities that may be available to

them through utility-administered energy efficiency programs, weatherization assistance programs,

lead abatement programs, and other forms of support.

8.3. Program Launch

In implementing the various new programs and procurements mandated by Public Act 99-0906, the

Agency has a large and varied set of new tasks to undertake. The Agency appreciates the strong

interest in the Illinois Solar for All Program and desire to make the benefits of the Program available

to low-income households and communities so that they can benefit from lower energy costs. The

Illinois Solar for All Program as proposed mostly builds on the Adjustable Block Program described

in Chapter 6; therefore, it will be necessary first to have the Adjustable Block Program’s design

finalized and put into operation before the Illinois Solar for All Program will be ready to launch. Like

with the Adjustable Block Program, while this Plan details many programmatic considerations, final

program design including contracts, program manuals, etc. will need to be developed and finalized

by the Agency and the Illinois Solar for All Program Administrator(s) prior to program launch. This

may create some delay in the start of the Illinois Solar for All Program, but the Agency will endeavor

to make the Illinois Solar for All Program available as soon as practicable.

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8.4. Funding and Budget

The Illinois Solar for All Program is funded through three sources. First, the Renewable Energy

Resources Fund pursuant to Section 1-56(b)(2) of the IPA Act; second, funds from the renewable

energy resources budgets of the utilities pursuant to Section 1-75(c)(1)(O) of the IPA Act; and third,

potential additional funds from the renewable resources budgets of the utilities pursuant to Section

16-108(k) of the Public Utilities Act.

8.4.1. Renewable Energy Resources Fund Funding Available

While Section 1-56(b)(2) envisions the Illinois Solar for All Program being funded primarily through

the Renewable Energy Resources Fund, as of July 31, 2018, the balance of the Renewable Energy

Resources Fund is $56,571,615.14, while existing commitments from the Fund for contracts from the

Supplemental Photovoltaic Procurements total $20,679,126.74.

443

Prior to the enactment of Public Act 99-0906, the Renewable Energy Resources Fund received

Alternative Compliance Payments each fall from Alternative Retail Electric Suppliers as part of their

RPS compliance obligations. Under the revisions to Section 16-115D of the PUA contained in Public

Act 99-0906, those payments are no longer made to the Fund as of June 1, 2017; rather, they are now

made to the utilities, and will be paid to the utilities through Fall 2019.

444

With those payments no

longer being made into the RERF, there is no new revenue that will be deposited into the Fund.

The RERF’s current low balance is due to the fact that on August 10, 2017, $150 million was

transferred from the Renewable Energy Resources Fund to the General Revenue Fund pursuant to

the recently enacted borrowing provisions contained in new Section 5h.5 of the State Finance Act.

445

Those funds are required by law to be paid back to the Renewable Energy Resources Fund within

two years (i.e., by August 10, 2019).

Section 5h.5(b) contains a provision that when the RERF (or for that matter other state funds that

had similar transfers),

ha[s] insufficient cash from which the State Comptroller may make expenditures

properly supported by appropriations from the fund, then the State Treasurer and State

Comptroller shall transfer from general funds to the fund only such amount as is

immediately necessary to satisfy outstanding expenditure obligations on a timely basis.

Likewise, that Section also provides for,

continuing authority for and direction to the State Treasurer and State Comptroller to

reimburse the funds of origin from general funds by transferring to the funds of origin,

at such times and in such amounts as directed by the Comptroller when necessary to

support appropriated expenditures from the funds, an amount equal to that transferred

443

The commitments consist of REC delivery contracts previously entered into and are being paid, or will be paid, over a five-year REC

delivery schedule (invoiced quarterly) depending on when individual systems under contract are completed and begin REC deliveries.

444

See 220 ILCS 5/16-115D(i); after May 31, 2019, the ARES will no longer have any future Alternative Compliance Payment obligations,

although “alternative retail electric suppliers and electric utilities operating outside their service territories shall be obligated to make all

alternative compliance payments that they were obligated to pay for periods through and including May 31, 2019, but were not paid as of

that date.” Those payments are due by September 1, 2019.

445

30 ILCS 105/5h.5(b); see Public Act 100-0023.

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from them plus any interest that would have accrued thereon had the transfer not

occurred…

Were the RERF balance insufficient for payments under any new contractual obligations, these

provisions would allow the Agency to make expenditures from the RERF prior to the repayment of

the transferred amount—i.e., to operate as though the RERF’s balance were at its original amount,

even if transferred funds have not yet been moved back into the RERF. In addition, the Agency

understands that the State Comptroller will coordinate with the Agency to make sure that any

appropriated expenditures that the Agency makes through new contractual commitments are

honored by ensuring that the balance of the RERF is at all times sufficient to make timely payments

on contracts. While the Agency understands that recent transfers from the RERF have caused

consternation, based on the assurances contained in the law, it does not believe that these transfers

necessitate any adjustments to its proposed Solar for All program design, structure, and budget.

Indeed, $37.5 million was transferred back into the RERF in April of 2018.

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The Agency plans to allocate up to $20 million per year from the RERF for use for the Illinois Solar

for All Program. This would ensure that RERF funding for the Low-Income Distributed Generation

Incentive, the Low-Income Community Solar Project Initiative, and the Incentives for non-profits and

public facilities is available for seven to eight years if fully spent each year, while as discussed in

Section 8.6.4, funding for the Low-Income Community Solar Pilot Projects would be distributed over

a ten-year period. RERF funds not spent in a year would be rolled over to the following year. The

funds allocated from the RERF would be allocated according to the percentages specified in Section

1-56(b)(2) of the Act, namely 22.5% for the Low-Income Distributed Generation Incentive, 37.5% to

the Low-Income Community Solar Project Initiative, 15% for Incentives for non-profits and public

facilities, and 25% for Low-Income Community Solar Pilot Projects (with an all-time cap of $50

million).

447

After accounting for all payments under the Supplemental Photovoltaic Procurement process

pursuant to Section 1-56(i) of the IPA Act, as well as all payments under Illinois Solar for All contracts,

whenever the balance of the RERF falls under $5,000, then the RERF shall be inoperative and any

remaining funds shall be transferred to the Supplemental Low-Income Energy Assistance Fund for

use in the Low-Income Home Energy Assistance Program, as authorized by the Energy Assistance

Act.

448

8.4.2. Utilities Annual Funding Available

Section 1-75(c)(1)(O) contains a provision that

The long-term renewable resources procurement plan shall allocate 5% of the funds

available under the plan for the applicable delivery year, or $10,000,000 per delivery

year, whichever is greater, to fund the programs, and the plan shall determine the

amount of funding to be apportioned to the programs identified in subsection (b) of

Section 1-56 of this Act; provided that for the delivery years beginning June 1, 2017, June

446

https://illinoiscomptroller.gov/financial-data/state-revenues/by-

fund/?FundSel=0836&FundGrpSel=&FundCatSel=&FundTypeSel=&GroupBy=Agcy&FY=18&ShowMo=Yes&submitted.

447

Assuming that payments for the Low-Income Community Solar Pilot Projects are made over a ten-year period, that would be up to $5

million per year, which would be consistent with a 25% allocation of the $20 million per year from the Renewable Energy Resources Fund.

448

20 ILCS 3855/1-56(b-10).

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1, 2021, and June 1, 2025, the long-term renewable resources procurement plan shall

allocate 10% of the funds available under the plan for the applicable delivery year, or

$20,000,000 per delivery year, whichever is greater, and $10,000,000 of such funds in

such year shall be used by an electric utility that serves more than 3,000,000 retail

customers in the State to implement a Commission-approved plan under Section 16-

108.12 of the Public Utilities Act.

The Agency expects the Illinois Solar for All Program to begin during the 2018-2019 delivery year.

As discussed in Section 2.2.5.3, the Agency interprets “funds available under the plan” in the above

statutory provision to mean funds collected by utilities through RPS riders under Section 1-75(c)(6)

of the Act and Section 16-108(k) of the PUA. The following table lists for the first three years the

projected amounts of utility funding that would be allocated to Illinois Solar for All based upon the

load and budget forecasts contained in Chapter 3.

Table 8-1: Utility Funding

Delivery Year

Utility Renewable Energy

Maximum Budgets

5% of Funds

Allocation to Illinois

Solar for All

2018-2019

$189,960,757

$9,498,038

$10,000,000

2019-2020

$234,276,011

$11,713,801

2020-2021

$234,003,334

$11,700,167

These funds will be supplied by each utility based on the allocation percentages contained in Section

3.1. These funds are not subject to the percentage allocations specified for the funding from the RERF,

specified in Section 1-56(b)(2). The Agency will use the utility-supplied funding to supplement the

programs that have used up their available funding from the RERF (with the exception of the Low-

Income Community Solar Pilot Projects).

The funding for job training programs provided by ComEd (an electric utility that serves more than

3,000,000 retail customers) under Section 16-108.12 is noted in the budget discussion in Chapter 3.

As those funds are not directly part of the Illinois Solar for All Program as managed by the Agency,

those funds are not included in this budget discussion. (The intersection between the Illinois Solar

for All Program and the job training programs is discussed in Section 8.10.)

8.4.3. Section 16-108(k) Funding

Section 16-108(k) of the Public Utilities Act provides for a situation in which the total amount of

funds appropriated by the General Assembly from

449

the Renewable Energy Resources Fund during

the period between June 1, 2017 and August 1, 2018 is less than $200,000,000, creating a “funding

shortfall.” This period encompasses part or all of three state Fiscal Years (running from July 1 of a

given year to June 30 of the following year). If there is a funding shortfall, additional funding from the

449

The sixth paragraph of the newly enacted Section 16-108(k) of the Public Utilities Act defines the “funding shortfall” based on amounts

appropriated by the General Assembly to the Renewable Energy Resources Fund. However, the General Assembly has, in fact, never made

an appropriation to the RERF. The General Assembly does, though, regularly make appropriations from the RERF. (See, e.g., Public Act

99-0524, enacted June 30, 2016, at Art. 24, § 10; Public Act 100-0021, enacted July 6, 2017, at Art. 45, § 10.) Thus, the IPA interprets the

word “to” as a scrivener’s error, intended to mean “from.”

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utilities could be available, as discussed below, and “may be used to fund the programs under

subsection (b) of Section 1-56 of the Illinois Power Agency Act in the same proportion the programs

are funded under that subsection (b)” to provide additional support to Illinois Solar for All as part of

a supplemental plan developed by the Agency.

450

If this provision is interpreted to be based on the amounts appropriated for the whole of all three

Fiscal Years covered (rather than a prorated amount of the appropriations for the first and last years,

Fiscal Year 2017 and Fiscal Year 2019), then for each of the three fiscal years, the appropriation made

totals $150 million for the relevant period.

451

The Agency notes that an appropriation is merely authority to spend funds up to the appropriated

amount for the purposes contained in an applicable Fiscal Year’s appropriation bill. It may not

correspond to the actual Fund balance or match actual expenditures made in that fiscal year.

In addition, this funding is only available if the funds collected from ratepayers by the utilities

through their RPS riders exceed their expenditure to fund their purchases of RECs under the RPS

during each of the 2017-2018, 2018-2019, and 2019-2020 delivery years, and half of each year’s

difference, if any, would be available to offset the shortfall. The amount collected and expended by

the utilities will also not be known until a later date, although based upon the scope of procurements

proposed for the 2017-2018 and 2018-2019 delivery years, the Agency would expect that the amount

collected from customers will significantly exceed actual expenditures by the utilities on Renewable

Energy Credits. The Agency will ask each utility to provide an accounting of RPS collections and

expenditures following the end of each delivery year.

If there is a funding shortfall and there are utility RPS rider overcollections during the 2017-2018,

2018-2019, and/or 2019-2020 delivery years that, in aggregate, do not exceed the funding shortfall,

then Section 1-56(b)(7) provides that,

If additional funding for the programs described in this subsection (b) is available under

subsection (k) of Section 16-108 of the Public Utilities Act, then the Agency shall submit

a procurement plan to the Commission no later than September 1, 2018, that proposes

how the Agency will procure programs on behalf of the applicable utility. After notice

and hearing, the Commission shall approve, or approve with modification, the plan no

later than November 1, 2018.

The Agency will develop and submit a Plan to the Commission by September 1, 2018 to reflect

whether and/or how any such funds would be proposed to be used beginning in the 2018-2019

delivery year.

8.4.4. Setting Budgets

The Agency is developing the Illinois Solar for All Program under the assumption that the funds

available for the 2018-2019 delivery year will be funds from the RERF and the utility-supplied funds

identified in Section 8.4.2. Table 8-2 provides a summary of the Illinois Solar for All funding.

450

220 ILCS 5/16-108(k).

451

See id.

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Table 8-2: Illinois Solar for All Budgets

Program

Year

Renewable Energy

Resources Fund

Utility Funding

Funding Shortfall

Total Funding

2018-2019

$20,000,000

$10,000,000

To be Determined

$30,000,000

2019-2020

$20,000,000

$11,708,367

To be Determined

$31,708,367

2020-2021

$20,000,000

$11,694,637

To be Determined

$31,694,637

8.4.5. Payment Structure

The Illinois Solar for All Program is structured so that the Agency “may pay for such renewable

energy credits through an upfront payment per installed kilowatt of nameplate capacity paid once

the device is interconnected at the distribution system level of the utility and is energized.”

452

Section

6.14.5 describes the options for the capacity factor used in the Adjustable Block Program to convert

kilowatt size of a project to the number of RECs the system would be expected to generate over 15

years. Those same options will be used for Illinois Solar for All, the price paid will be expressed on a

dollar per REC basis, and payments will be based upon the 15-year expected REC production of the

system. For example, as described in that section, using the standard capacity factor would mean that

for each kW of capacity for a fixed-mount system, approximately 21 RECs would be generated over

15 years.

Payments for Illinois Solar for All incentives will be upfront payments on energization of systems,

with the same condition as the Adjustable Block Program that a system must also be registered in

GATS or M-RETS so as to be able to verify that it will produce RECs. However, as discussed in Section

8.6.4, the Agency proposes a different payment structure for Low-Income Community Solar Pilot

Projects, which do not participate in the Adjustable Block Program.

Contracts will be either with the Agency or a utility, depending on the funding source,

453

and will

include the assignment of RECs from each system for 15 years. RECs from these contracts will be

applied to the annual RPS goals of the utility to which the project is interconnected, but will not count

toward each utility’s new photovoltaic targets.

454

Projects that receive a contract through Illinois

Solar for All will not be eligible also to receive a contract through the Adjustable Block Program.

455

Contracts with the Agency (that utilize funds from the RERF) will be standard contracts that include

all required state contract provisions including that they are subject to appropriation. Contracts with

452

20 ILCS 3855/1-56(b)(3).

453

See 20 ILCS 3855/1-56(b)(2) (“Contracts that will be paid with funds in the Illinois Power Agency Renewable Energy Resources Fund

shall be executed by the Agency. Contracts that will be paid with funds collected by an electric utility shall be executed by the electric

utility.”)

454

See id.

455

Section 1-56(b)(3) requires that for Illinois Solar for All contracts, “[t]he payment shall be in exchange for an assignment of all renewable

energy credits generated by the system during the first 15 years of operation.” Sections 1-75(c)(1)(L)(ii) and (iii) both contain provisions

related to the various components of the Adjustable Block Program that, “[t]he electric utility shall receive and retire all renewable energy

credits generated by the project for the first 15 years of operation.” These two provisions from Section 1-56(b)(3) and Section 1-

75(c)(1)(L) are mutually exclusive as only one REC can be produced, transferred, and retired for each MWh of generation.

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the utilities may have some similarities but will vary given the different sets of regulations to which

the Agency and utilities must abide.

456

The Act is silent on how to allocate RECs from projects located in the service territories of municipal

utilities, rural electric cooperatives, or Mt. Carmel Public Utility. The Agency suggests that RECs from

those projects procured through contracts with the Agency using the RERF would not be applied to

the utility RPS goals, while any RECs procured through contracts with a utility would be applied to

the RPS goals of the contracting utility.

8.5. Programs

Section 1-56(b)(2) outlines four sub-programs of the Illinois Solar for All Program:

1. Low-Income Distributed Generation Incentive

2. Low-Income Community Solar Project Initiative

3. Incentives for Non-Profits and Public Facilities

4. Low-Income Community Solar Pilot Projects

The first three of these will provide an incentive based on the price per REC from the Adjustable Block

Program with adjustments to that price as described below to account for the specific needs of the

Illinois Solar for All Program. The fourth sub-program will be competitively procured based on the

competitive procurement approach discussed in Chapter 5, and further below in Section 8.6.4.

In addition to those four components, a provision of the Act allows stakeholders to propose

alternative programs,

“In the course of the Commission proceeding initiated to review and approve the plan,

including the Illinois Solar for All Program proposed by the Agency, a party may propose

an additional low-income solar or solar incentive program, or modifications to the

programs proposed by the Agency, and the Commission may approve an additional

program, or modifications to the Agency's proposed program, if the additional or

modified program more effectively maximizes the benefits to low-income customers

after taking into account all relevant factors, including, but not limited to, the extent to

which a competitive market for low-income solar has developed.”

457

Based on experience and best practices in other states and jurisdictions, the Agency is proposing

program elements in Section 8.7 intended to increase the success of low-income solar deployment in

Illinois. Those elements are intended to go beyond providing financial incentives to include

providing guidance on project development for low-income customers, non-profits, and public sector

customers. Additionally, the Agency will monitor the treatment of multi-family buildings under the

Low-Income Distributed Generation Incentive sub-program (and will include the results of that

monitoring for the Commission as part of its 2019 Plan update) and reserves the right to propose

new sub-programs when the Plan is revised in 2019.

458

456

See Docket No. 17-0838, Final Order dated April 3, 2018 at 151-152.

457

20 ILCS 3855/1-56(b)(4).

458

See Docket No. 17-0838, Final Order dated April 3, 2018 at 153.

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165

As listed in Table 8-3, at least $30 million is expected to be available for the 2018-2019 delivery year.

The $10 million of utility-supplied funding will not be available for the Low-Income Community Solar

Pilot Projects

459

, and the percentage funding allocations only apply to the funds from the Renewable

Energy Resources Fund. The Agency proposes that the utility-supplied funding will be evenly

allocated to the other three programs at the same relative weightings, but will monitor activity and

may shift the use of the utility funding as needed.

Table 8-3: Delivery Year 2018-2019 Illinois Solar for All Funding Allocations

Funding

Source

Low-Income

Distributed

Generation

Incentive

Low-Income

Community Solar

Project Initiative

Incentives for

Non-Profits and

Public Facilities

Low-Income

Community Solar

Pilot Projects

22.5%

37.5%

15%

25%

RERF

$4,500,000

$7,500,000

$3,000,000

$5,000,000

Utility

$3,000,000

$5,000,000

$2,000,000

Total

$7,500,000

$12,500,000

$5,000,000

Note that these funding allocations include program administration expenses, grassroots education

funding (up to 5% of available funds), as well as payments for RECs.

8.6. Setting Incentive Levels

The incentive levels described in the following Sections were derived by taking the REC prices for the

Adjustable Block Program as described in Section 6.4 and making adjustments to meet the objectives

of the Illinois Solar for All Program. These incentives and will be offered through a 15-year REC

delivery contract, either with the Agency for projects funded with the Renewable Energy Resources

Fund, or a utility for projects funded through utility-supplied funds.

Incentive levels are expressed as REC prices, and will be set according to the same groups and

categories as the Adjustable Block Program (Group A for projects located in Ameren Illinois, Mt.

Carmel, MidAmerican, and rural electric cooperatives and municipal utilities located in MISO; Group

B for projects located in ComEd, and rural electric cooperatives and municipal utilities located in

PJM). Unlike the Adjustable Block Program, these incentives will initially not be changed based upon

blocks of capacity filling up. Rather, the Agency proposes to review and update the incentive levels

on an annual basis. That update will include an adjustment to account for how the comparable

Adjustable Block Program REC price for each Group and category has changed since the previous

update (or original REC prices as determined in this Plan), allowing for the prices offered through

Illinois Solar for All to track overall market conditions while continuing to be offered at a higher level

than for the Adjustable Block Program.

For the Low-Income Distributed Generation Incentive, the REC prices are adjusted in the model by

setting the assumed debt financing of the project to 0%, and increasing the net metering benefit from

20% to (i) 100% for residential participants in 1-4 unit buildings, and (ii) 50% for residential

459

See Section 8.6.4 for a discussion of funding sources for the Low-Income Community Solar Pilot Projects.

Long-Term Renewable Resources Procurement Plan August 6, 2018

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participants in larger buildings.

460

For Low-Income Community Solar, the REC prices are adjusted by

shortening the financing term to five years and lowering the debt financing to 35%. For the non-profit

and public facilities incentive, the REC prices are adjusted by considering the project as a non-taxable

entity. The Agency believes these approaches represent reasonable proxies for the higher incentive

level needed for Illinois Solar for All projects to overcome the financing barriers and other hurdles

these project face.

8.6.1. Low-Income Distributed Generation Incentive

The Low-Income Distributed Generation Incentive is intended to provide funding for photovoltaic

projects located on individual homes and multi-family buildings. In addition to the requirements of

the Adjustable Block Program, qualifying projects will be subject to the additional low-income

consumer protections outlined in Section 8.14. As described in Section 8.15.4, 25% of available

funding will be targeted to environmental justice communities.

8.6.1.1. Eligibility

The Agency proposes to treat buildings with one to four units differently than buildings with five

units or more. For single-family homes, households will have to verify that they are low-income; for

two-to-four unit buildings, at least two of the households will have to be verified as low-income. For

five-unit and larger buildings, either at least 50% of the tenants must be verified as low-income, or

the building must be demonstrated to meet the definition of “affordable housing” contained in the

Illinois Affordable Housing Act. See Section 8.13.1 for more information on income verification and

Section 8.13.2 for more information on income eligibility. In addition to projects being eligible based

on household income, projects developed on homes or buildings that qualify for US Department of

Housing and Urban Development (“HUD”) Project-Based Vouchers or Project-Based Rental

Assistance (which are programs for housing units dedicated to low-income tenants) would also

qualify. The income qualification levels required for participation in these programs is lower than

income requirements for the Illinois Solar for All program.

8.6.1.2. Demonstrating Tangible Economic Benefits for Residents of

Multifamily Buildings

Section 1-56(b)(2) requires that the Illinois Solar For All incentives deliver tangible economic

benefits for eligible low-income customers, including those that live in multifamily buildings.

Multifamily buildings can be either master metered or individually metered. For master-metered

buildings, the economic benefits of installing a photovoltaic system will not directly impact the

occupants of the building because they do not individually pay an electric bill to their electric utility;

but instead the benefits accrue to the building owner/manager. Therefore, for master-metered

building owners to be eligible for Low-Income Distributed Generation incentives, the building

owner/manager will need to commit to passing along at least 50% of the energy savings from net

metering to the tenants through reduced (or not raised) rents, or by other means. The commitment

should also include a description of how this will be accomplished.

For multifamily buildings that are not master metered, one challenge is that the photovoltaic system

will most likely be connected to the main building account that serves common areas and building-

460

See Docket No. 17-0838, Final Order dated April 3, 2018 at 155; see also Appendices E-3-a and E-3-b.

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wide load rather than to any individual unit’s account. For these buildings, the owner/manager must

either provide the same demonstration of passing along benefits to tenants as for master-metered

buildings, or in the alternative, must commit to offering tenants the opportunity (at no additional

upfront cost levied by the landlord) to participate in net metering pursuant to the provisions of

Section 16-107.5(l)(1)(B) of the PUA, which allows for net metering of “individual units, apartments,

or properties located in a single building that are owned or leased by multiple customers and

collectively served by a common eligible renewable electrical generating facility.”

8.6.1.3. Incentive Level

Table 8-4: Incentives for the Low-Income Distributed Generation Program,

1-4 unit buildings ($/REC)

System Size

Group A

Group B

≤10 kW

$143.09

>10 - 25 kW

$127.55

>25 - 100 kW

$103.28

>100 - 200 kW

$90.40

>200 - 500 kW

$84.41

>500 - 2000 kW

$80.69

Table 8-5: Incentives for the Low-Income Distributed Generation Program,

5+ unit buildings ($/REC)

System Size

Group A

Group B

≤10 kW

$117.62

$118.20

>10 - 25 kW

$107.08

$107.65

>25 - 100 kW

$87.70

$88.28

>100 - 200 kW

$74.67

$75.26

>200 - 500 kW

$68.59

$69.19

>500 - 2000 kW

$65.32

$65.92

These incentive payments are intended to be sufficient to provide tangible economic benefits to

participants through enabling project developers to eliminate upfront costs to the participants for

the installation of photovoltaic projects. The incentive will be a standard incentive expressed as a

payment for the contractually obligated delivery of a renewable energy credit and not customized

for each project.

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Projects that participate in this incentive will also be subject to the provisions related to job training

discussed in Section 8.9.

8.6.2. Low-Income Community Solar Project Initiative

This initiative is intended to support participation in community solar by low-income subscribers. In

order to qualify for this initiative, a set of conditions for a community solar project are required that

go beyond the requirements outlined in the Act for community renewable generation projects and

for community solar projects that participate in the Adjustable Block Program. These include:

• “Each project shall identify its partnership with community stakeholders regarding the location,

development, and participation in the project, provided that nothing shall preclude a project

from including an anchor tenant that does not qualify as low-income.”

• “Incentives should also be offered to community solar projects that are 100% low-income

subscriber owned, which includes low-income households, not-for-profit organizations, and

affordable housing owners.”

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For the first provision, Illinois Solar for All Approved Vendors submitting a Low-Income Community

Solar Project will need to include in the application for that project a description of a partnership

with community stakeholders in the community where the project will be located. While the Act does

not define the term “community stakeholders,” the National Community–Based Organization

Network (NCBON) defines a community-based organization as one in which:

• The majority of the governing body and staff consists of local residents,

• The main operating offices are in the community,

• Priority issue areas are identified and defined by residents,

• Solutions to address priority issues are developed with residents, and

• Program design, implementation, and evaluation components have residents intimately

involved, in leadership positions.

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The Agency will consider entities that demonstrate how they meet this definition as being able to

represent community stakeholders in a partnership. Furthermore, the Agency believes the intent of

the Act was to create substantial partnerships, going beyond just holding a few community meetings.

In addition to information regarding location, development and participation, these partnerships

should include a description of how the partnership shows that it is responsive to the priorities and

concerns of low-income members of the community.

If the proposed project has an anchor tenant that does not qualify as low-income, the application

should describe that tenant in detail; the Illinois Solar for All incentive will be reduced to account for

the share of the system subscribed by that tenant not receiving a low-income incentive. For the

purposes of this adjustment, if the anchor tenant is a not-for-profit organization or a public sector

entity, then the incentive will not be reduced to account for the share subscribed by the anchor

tenant. This is intended to encourage projects to have not-for-profit or public sector anchor tenants

rather than for-profit entities.

461

20 ILCS 3855/1-56(b)(2)(B).

462

National Community–Based Organization Network (NCBON), “What is a Community–Based Organization (CBO)?”

https://sph.umich.edu/ncbon/whatis.html

. Accessed September 2017.

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For the second provision, regarding projects “that are 100% low-income subscriber owned,” the

Agency assumes the Act intended the plain meaning of the word “ownership,” and not that projects

be merely 100% “subscribed” by low-income customers. For projects that can demonstrate that they

are 100% owned by low-income subscribers (including not-for-profit organizations, and affordable

housing owners), the incentive level will be increased by $5/REC. To be eligible for this additional

incentive, the Illinois Solar for All Approved Vendor will need to certify the intent for the project to

be 100% low-income subscriber owned at the time of application, and if the project is not initially

structured this way, will have up to six years after energization to complete the full transfer of

ownership to the low-income subscribers. The price of the transfer must be provided at the time of

application, and will be subject to approval by the Agency. It must also contain a commitment that

the project remain 100% low-income subscriber owned after the transfer. The additional incentive

will be paid only upon the Illinois Solar for All Approved Vendor providing documentation to the

Agency that the project is 100% low-income subscriber owned.

As described in Section 8.15.4, 25% of available funding will be targeted to environmental justice

communities.

8.6.2.1. Incentive Level

Table 8-6: Incentives for Low-Income Community Solar Projects ($/REC)

System Size

Group A

Group B

≤10 kW

$121.99

$119.55

>10 - 25 kW

$111.98

$109.52

>25 - 100 kW

$93.32

$90.82

>100 - 200 kW

$80.72

$78.20

>200 - 500 kW

$74.78

$72.23

>500 - 2000 kW

$71.29

$68.74

Co-located systems exceeding 2 MW in aggregate size

$64.88

$62.30

These incentives for Low-Income Community Solar Projects are for the portion of the project that is

subscribed by low-income subscribers. In order to receive the incentive at the time of energization,

the Approved Vendor will have to verify the level of low-income subscribers to the Project as outlined

in Section 8.13.1. The Agency notes that the Adjustable Block Program only requires 50% of

subscribers (in kW volume) to be identified at the time of energization, and that residential adders

are granted only if the project meets the residential subscriber level after one year of operation. This

principle will apply to Low-Income Community Solar as well. Only 50% of the low-income

subscribers will need to be identified by the time the project is energized to receive the incentive.

However, the amount of incentive payment will be prorated to the low-income subscription level.

After one year, the remaining incentive will be paid based upon the low-income subscription level

achieved by that time.

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In order to ensure ongoing subscription levels by low-income subscribers, the Approved Vendor will

have to provide ongoing collateral for ten years equal to 5% of the remaining REC value and report

annually on low-income subscription levels. If those levels are not maintained, then the collateral

may be called upon to claw back the incentives to the level of low-income subscription.

Additionally, the “adders” for small subscriber participation, as defined and described in Section 6.5.3

above relating to community solar projects in the Adjustable Block Program, will also apply to the

REC prices for participating projects in the Low-Income Community Solar Project Initiative.

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8.6.3. Incentives for Non-Profits and Public Facilities

Section 1-56(b)(2)(C) of the Act specifies that “non-profits and public facilities” are eligible to receive

incentives for on-site photovoltaic generation. These incentives are designed to “support on-site

photovoltaic distributed renewable energy generation devices to serve the load associated with not-

for-profit customers and to support photovoltaic distributed renewable energy generation that uses

photovoltaic technology to serve the load associated with public sector customers taking service at

public buildings.”

464

The Act does not specify what non-profit organizations or public sector

customers may be eligible.

Given that the objective of the Illinois Solar for All Program is in part, “to bring photovoltaics to low-

income communities,”

465

it could be reasonable to infer that the non-profits and public sector

customers that in some manner serve low-income communities should be given specific

consideration. However, the Act could also be interpreted such that all non-profits and public

facilities would be eligible to participate. This interpretation would be consistent with the General

Assembly’s findings that “the State should encourage the adoption and deployment of cost-effective

distributed energy resource technologies and devices, such as photovoltaics, which can encourage

private investment in renewable energy resources, stimulate economic growth, enhance the

continued diversification of Illinois’ energy resource mix, and protect the Illinois environment”

466

—

which could involve a wider range of photovoltaic facilities that would be eligible for these incentives.

In order to balance these objectives, initially Illinois Solar for All Approved Vendors will have to

demonstrate that the project meets one of the following criteria:

• Document that the project meets the standards described in Section 8.11 related to projects

having sufficient connection to, and input from, low-income community members; or

• Demonstrate that the project is located at a facility owned by an organization that is a critical

service provider for the community (e.g., youth centers, hospitals, schools, homeless shelters,

senior centers, community centers, places of worship, affordable housing providers including

public housing sites).

After one year of operation, the Agency will assess participation in the program, and if participation

in the program is not meeting its budgeted goals, then eligibility will be expanded to other non-profits

and public facilities.

463

See Docket No. 17-0838, Final Order dated April 3, 2018 at 155.

464

20 ILCS 3855/1-56(b)(2)(C).

465

20 ILCS 3855/1-56(b)(2).

466

Public Act 99-0906, Section 1(a)(1) (“Findings”).

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As described in Section 8.15.4, 25% of available funding will be targeted to environmental justice

communities.

8.6.3.1. Incentive Level

Table 8-7: Incentives for Non-Profits and Public Facilities ($/REC)

System Size

Group A

Group B

≤10 kW

$155.87

$156.57

>10 - 25 kW

$142.55

$143.26

>25 - 100 kW

$118.57

$119.28

>100 - 200 kW

$102.83

$103.55

>200 - 500 kW

$95.61

$96.34

>500 - 2000 kW

$91.31

$92.04

8.6.4. Low-Income Community Solar Pilot Projects

Low-Income Community Solar Pilot Projects will participate in the Illinois Solar for All Program in a

manner that is different from projects that participate in the other portions of the Program.

Unlike those other programs, the Low-Income Community Solar Pilot Projects “shall be competitively

bid by the Agency, subject to fair and equitable guidelines developed by the Agency.”

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This means

that rather than applying to the Illinois Solar for All Program and receiving an administratively

determined REC price, the incentive will be determined through a competitive bidding process as

outlined in Chapter 5. The Agency has a well-established process for competitive procurements and

for this process, the Agency will leverage that experience.

In addition to the general provisions that the Agency uses for competitive procurements (e.g. sealed,

pay-as-bid request for proposal process), the Agency also recommends that certain provisions

related to other community solar projects also apply to the pilot projects including the eighteen-

month window of time for project development, and project and customer information requirements.

The procurement for Low-Income Community Solar Pilot Projects will be bid on a $/REC basis, for

contracts that will be for 15 years of delivery of all RECs from the project to the Agency once the

project is energized. The price paid will be based solely on the bid price and will not include any

payment based on the Adjustable Block Program REC prices (or adders/adjustments). Payments will

be made over the first 10 years of the contract. To ensure that the procurement follows “fair and

equitable guidelines,” the Agency proposes that bids be evaluated only on the basis of price, as this is

the most objective way to consider bid evaluation. While the Low-Income Community Solar Pilot

Project procurement process requires additional considerations (described below), the Agency

believes that those considerations are better applied as minimum criteria for determining eligibility

467

20 ILCS 3855/1-56(b)(2)(D).

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to participate in the procurement rather than applied to the evaluation of competing bids (with the

limited example provided below for why bids could be considered out of price order).

There are several considerations under Section 1-56(b)(2)(D) of the Act for how the competitive

procurement is conducted that must be specifically considered and adapted for the Low-Income

Community Solar Pilot Projects competitive procurement.

First, the Agency notes that the total funding over time for Low-Income Community Solar Pilot

Projects cannot exceed $50,000,000, and that it cannot exceed $20,000,000 per project.

Furthermore, projects are allowed to be larger than the 2,000 kW limit that otherwise applies for

community renewable generation projects under net metering laws and tariffs. This means that as

few as three projects could be selected to participate (e.g., two $20,000,000 projects and one

$10,000,000 project), although depending on the winning bids, the number of projects could be

greater.

Second, projects “must result in economic benefits for the members of the community in which the

project will be located.” The Agency believes that this provision can be met by requiring projects that

wish to bid in the procurement adhere to the same provisions as the Low-Income Community Solar

Projects in terms of partnerships with community stakeholders. Projects must also provide

information about how they will comply with this provision through options such as providing a

commitment to local hiring, describing impact on payments to community residents or organizations

as part of the project development process, and offering of subscriptions to community residents and

organizations. Failure to meet commitments made during the bidder/project registration phase of

the procurement will be considered actions that would result in a default and cancellation of the

contract.

Third, projects “must include a partnership with at least one community-based organization.”

Information on the partnership will be required to register during the initial bidder registration

phase and projects that cannot demonstrate such a partnership will not be eligible to bid. As

described in Section 8.6.2, the community-based organization(s) should be an existing non-profit

organization that provides programs and services within the community where the proposed project

will be located.

Fourth, funds “may not be distributed solely to a utility;” and fifth, “at least some funds under this

subparagraph (D) must include a project partnership that includes community ownership by the

project subscribers.” These two provisions create interesting challenges in the evaluation of bids. For

example, if bids are received and only the highest priced bid includes “a project partnership that

includes community ownership,” (a distinct requirement around ownership that goes beyond the

requirement that applies to all projects that they have a partnership with a community-based

organization) but constitutes the only project able to be supported under the available budget, it

would have to be selected. Similarly, in order to ensure that funds are not distributed solely to

utilities, bids may need to be selected out of price order, otherwise, only a utility project would win.

Because utilities are potentially bidders in this procurement, the Agency recommends that the

contracts resulting from this procurement only be entered into by the Agency and only use the

Renewable Energy Resources Fund as a source of contract funding. While generally the Illinois Solar

for All Program allows for contracts to be entered into either with the Agency (using the RERF) or

with one of the utilities, it would be inappropriate for utilities potentially to enter into contracts with

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themselves, and furthermore, the procurement process could allow for them as the Buyer to receive

confidential information from competing bidders (e.g., potential Sellers).

The Agency recommends that the procurement for Low-Income Community Solar Pilot Projects be

conducted in late 2018 or early 2019. Prior to accepting bids for the Low-Income Community Solar

Pilot Project procurement, the Agency and its Illinois Solar for All Program Administrator will work

with stakeholders to refine and finalize requirements for bidder participation.

468

8.7. Providing Guidance and Education

The Illinois Solar For All Program provides substantial financial incentives intended to enable low-

income, non-profit, and public sector customers to share in the benefits of solar power. These

customers are specifically identified in the legislation partly because they face additional hurdles in

deploying solar, such as a lack of taxable income needed to monetize tax-based incentives, a lack of

access to capital, or institutional barriers that limit deployment.

At the same time, such customers have access to a wide variety of non-energy programs and policies

intended to promote economic development, provide affordable housing, and reduce the burdens of

poverty. Programs from the U.S. Department of Housing and Urban Development, for example,

provide financial assistance for housing and utility bills. Such programs are supporting solar

deployment to reduce utility expenses for both residents and taxpayers.

Experience in other states has shown that there are many finance-related and other policies and

programs at the federal, state, and local level that can be applied to low-income solar development.

The Agency believes that the Illinois Solar For All Program would benefit from guidance and

education provided to Illinois Solar for All Approved Vendors, community groups, public-sector

customers, and others, in addition to the financial incentives described in other sections of the Plan.

One vehicle for providing such guidance will be the Program Administrator(s) selected to manage

the Illinois Solar For All Program. Therefore, related tasks will be included in the requirements for

program administration, described below.

8.8. Illinois Solar for All Program Administrator

The Program Administrator(s) will be selected on the basis of evaluating their ability to implement

the program described here, and specifically the selection criteria will include consideration of

applicant’s “experience in administering low-income energy programs and overseeing statewide

clean energy or energy efficiency services.”

469

The selection of one or more Program Administrators

may depend on the ability of applicants to adequately serve the entire State, and/or to serve specific

sub-programs (in particular the ability to differentiate the needs of single-family and multifamily

housing and provide the appropriate support and technical assistance to each sector). Program

Administrator(s) may not also be an Illinois Solar for All Approved Vendor. The Request for Proposals

for Illinois Solar for All Program Administrator(s) and for the Adjustable Block Program

Administrator were conducted separately, with no prohibition against an entity serving in both

roles.

470

468

See Docket No. 17-0838, Final Order dated April 3, 2018 at 161.

469

20 ILCS 3855/1-56(b)(5).

470

See Docket No. 17-0838, Final Order dated April 3, 2018 at 163-164.

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The Agency will review and score the Request for Proposals submitted by qualified bidders and will

submit the contracts for its selected bid(s) to the Commission for Approval. The Agency will also

provide the Commission with information about all bids received. The approval of the contract(s) for

the Illinois Solar for All Program Administrator will be subject to approval by the Commission. The

selection process is expressly exempted from the Illinois Procurement Code.

471

The Illinois Solar for All Program Administrator(s) will at minimum:

• Verify project eligibility in Illinois Solar for All and coordinate this information with the

Adjustable Block Program Administrator (who will process the actual application materials).

This will include, but is not limited to, income verification, review of community involvement

in projects, review of job training coordination, and review of Illinois Solar for All consumer

protections such as verification of ensuring tangible economic benefits flow to low income

participants.

• Act as the centralized source for income verification and maintain database of program

participants.

• Assist in the development of contracts, disclosure forms, and brochures for use by Illinois

Solar for All Approved Vendors and their partner community-based organizations.

• Coordinate the distribution of funding for grass-roots education efforts by community-based

organizations. A priority for this funding will be to promote the availability of the Illinois

Solar for All Program in Environmental Justice Communities to achieve the goal of 25% of the

incentives being allocated to those communities.

• Facilitate Illinois Solar for All Approved Vendors meeting the additional requirements of the

Illinois Solar for All Program. In particular, the Program Administrator will act as a liaison

between Illinois Solar for All Approved Vendors participating in the programs and

organizations providing job training. The Program Administrator will also work to inform

Illinois Solar for All Approved Vendors of energy efficiency, weatherization, lead abatement,

and other program opportunities that could provide additional benefits to participants.

• Provide guidance and education to Illinois Solar for All Approved Vendors, community

groups, local government agencies, and others on how to leverage other governmental

policies to facilitate low-income solar projects and energy efficiency programs. Other

relevant policies include affordable housing, economic development, public finance, and tax

policies, at the federal, state, and local level. The Administrator will act as liaison with other

governmental agencies that administer such programs to facilitate their use on solar

development.

• Develop Program Manual and related materials for use by Illinois Solar for All Approved

Vendors.

• Provide reports to the Agency and the Commission on a quarterly basis on the status of the

Program including, but not limited to, number of applications received, number of

applications approved, number of projects completed, REC payments, payments for and

471

20 ILCS 3855/1-56(f).

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status of grassroots education efforts (if applicable), and a summary of technical assistance

provided.

The Agency issued a Request for Qualifications on January 18, 2018 and then a Request for Proposals

on March 30, 2018 for one or more Illinois Solar for All Program Administrator(s).

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Responses to

the Request for Proposals were received on May 7, 2018, and in-person interviews were held

between the Agency and qualified entities that had submitted RFP responses from June 18-21. At the

time this Plan was finalized and filed with the Commission, a Program Administrator for the Illinois

Solar for All Program had not yet been selected.

8.9. Quality Assurance

Due to the higher level of total incentives that Illinois Solar for All projects will receive compared to

those that participate solely in the Adjustable Block Program, as well as the additional vulnerabilities

that program participants may face, it is especially important for the Agency to ensure that projects

are properly installed and produce their expected amounts of energy. In conjunction with the

Program Evaluator (as described in Section 8.17), the Illinois Solar for All Program Administrator

will develop and implement a process for quality assurance, including thorough photo

documentation of all projects while under construction, and on-site inspection of a random sample

of installations. If installations are found to have deficiencies, the Illinois Solar for All Approved

Vendor, at its own expense, will be responsible for any repairs, alterations, or additions to remedy

the deficiencies. Illinois Solar for All Approved Vendors who have a disproportionately high number

of deficient systems may lose their eligibility to continue to participate in the Illinois Solar for All

Program.

8.10. Coordination with Job Training Programs

The Illinois Solar for All Program’s organizing statute contains two provisions that are designed to

ensure that the job trainees supported by the ComEd job training programs

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established under

Section 16-108.12 of the Public Utilities Act participate in the installation of photovoltaic projects

supported by the program. The first of these requirements is aspirational in nature, while the second

is more specific.

The first provision is that “[p]rojects must include job training opportunities if available, and shall

endeavor to coordinate with the job training programs described in paragraph (1) of subsection (a)

of Section 16-108.12 of the Public Utilities Act.”

474

This program is known as the “solar training

pipeline program.” Under this provision, ComEd is to spend $3,000,000 in each of 2017, 2021, and

2025 to train installers for the solar projects authorized and contemplated under the Solar for All

program and other RPS programs. The job training program is to be “designed to ensure that entities

that offer training are located in, and trainees are recruited from, the same communities that the

program aims to serve and that the program provides trainees with the opportunity to obtain real-

world experience.”

475

472

https://www2.illinois.gov/sites/ipa/Documents/IPA%20-%20IlSfA%20-%20Program-Administrator%20-%2018-RFQ-

02%20%28Released%2001182018%29.pdf ; https://www2.illinois.gov/sites/ipa/Documents/2018ProcurementPlan/IPA-ILSfA-

Program-Administrator-18-RFP-02-20180330.pdf.

473

ComEd’s job training implementation plan was approved by the Commission on September 27, 2017 in Docket No. 17-0332.

474

20 ILCS 3855/1-56(b)(2).

475

220 ILCS 5/16-108.12(a)(1).

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The availability of job training opportunities for Solar for All projects depends, in part, on the

availability of graduates of the solar training pipeline program. ComEd’s Request for Proposals from

potential training providers was issued August 1, 2017 and remained open until September 30, 2017.

The RFP emphasizes the need for training providers to include trainee recruitment, substantive solar

industry training, and post-training opportunities.

476

Moreover, ComEd has committed “to

coordinate with the Illinois Power Agency or its administrator of Illinois Solar for All.”

477

The second relevant provision governing the Solar for All Program is that for the Low-income

Distributed Generation Incentive, “[c]ompanies participating in this program that install solar panels

shall commit to hiring job trainees for a portion of their low-income installations” and further that,

“an administrator shall facilitate partnering the companies that install solar panels with entities that

provide solar panel installation job training.”

478

The Act does not specify what is meant by “a portion” and also does not define who would qualify as

a “job trainee” in contrast with the prior provision that specifically ties it to the solar training pipeline

program. The Agency notes that Section 16-108.12 of the Public Utilities Act not only creates the solar

training pipeline program described above but also creates a “craft apprenticeship program” and a

set of six “multi-cultural jobs programs.” The Agency infers that graduates of those programs could

reasonably be considered “job trainees” for the purposes of the Low-income Distributed Generation

Incentive within Solar for All.

ComEd has stated in the recent ICC proceeding reviewing its Section 16-108.12 jobs training program

that it intends to implement the Solar Craft Apprenticeship Program in coordination with the

International Brotherhood of Electrical Workers (“IBEW”) Local 134, which will integrate solar

training curricula into its existing electrical craft/trade/skill apprenticeship programs at 18 IBEW

sites as well as certain community colleges and high schools.

479

According to the Plan submitted by

ComEd in that proceeding, the Solar Craft Apprenticeship Program appears to include training

locations located across the entire State, and not just in ComEd’s service territory.

480

This program

may be essential for ensuring the availability of job trainees across the State.

To ensure that “a portion” of projects use job trainees, Illinois Solar for All Approved Vendors who

participate in the Illinois Solar for All program should demonstrate that at least 33% of projects (on

a rolling average basis) include the use of one or more job trainees from the solar training pipeline

program, the craft apprenticeship program, or the multi-cultural jobs program. Furthermore, each

Illinois Solar for All Approved Vendor will have to demonstrate that for their first year of

participation, 10% of the hours worked on projects will be by job trainees, and that amount would

increase to 20% in their second year of participation, and 33% in the third year.

Illinois Solar for All Approved Vendors will be required to document the use of job trainees, and to

provide a summary of their work to the Program Administrator. Illinois Solar for All Approved

Vendors may also request to use job trainees from other job training programs so long as they can

476

Docket No. 17-0332, ComEd Ex. 1.0 (http://www.icc.illinois.gov/downloads/public/edocket/451215.pdf) at 8. As described further at

the site linked below, recipients of Solar Training Pipeline Program grants were announced in December 2017:

https://www.comed.com/News/Pages/NewsReleases/2017_12_07.aspx.

477

Docket No. 17-0332, ComEd/EDF/ELPC/LVEJO Joint Initial Comments at 5.

478

20 ILCS 3855/1-56(b)(2)(A).

479

ICC Docket No. 17-0332, ComEd Ex. 1.0 at 12.

480

Id. at 13.

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demonstrate that completion of the job training program would lead to the trainee becoming a

“Qualified Person” under the Part 461 Rule related to the certification of installers of photovoltaic

systems (see Section 2.3.2.4 for additional discussion of these requirements). The Agency will

consider requests for waivers of this requirement on a case by case basis if an Illinois Solar for All

Approved Vendor can demonstrate that job trainees are not available in the area where projects are

being installed and this would prevent the project from being completed.

The Illinois Solar for All Program Administrator will coordinate with the entities providing job

training to maintain a clearinghouse of information that Illinois Solar for All Approved Vendors can

use to identify potential job training program graduates to hire.

The Agency and its Program Administrator(s) will not run the job training programs, and therefore,

the Agency has limited ability to ensure the success of those programs in effectively training new

workers. Rather, the Agency will seek to ensure that the Illinois Solar for All Program creates

employment opportunities for those new workers.

8.11. Additional Requirements for Approved Vendors

The Illinois Solar for All Program (other than the Low-income Community Solar Pilot Projects) works

similarly to the Adjustable Block Program, and therefore participation in the Illinois Solar for All

Program will be coordinated through Illinois Solar for All Approved Vendors who are approved

through the process outlined in Section 6.9. Approved Vendors who have projects that they wish to

have participate in Illinois Solar for All will additionally have to register with the Illinois Solar for All

Program and agree to additional terms and conditions in order to become an Illinois Solar for All

Approved Vendor.

481

An Approved Vendor that does not do so will not be eligible to have projects

participate in, and receive incentives from, the Illinois Solar for All Program. The Agency will

maintain on its website lists of Approved Vendors that will indicate which Approved Vendors are

also registered to participate in the Illinois Solar for All Program.

The additional requirements for registering to be an Illinois Solar for All Approved Vendor include:

• Description of plans for community involvement in projects (where applicable)

• Plan for inclusion of job training opportunities

• For projects that receive the Low-income distributed generation incentive, a commitment to

hire job trainees for a portion of the projects as described in Section 8.10

• Coordination with the Program Administrator on income verification

• Agreement to allow the Agency to review and approve marketing materials geared towards

the Illinois Solar for All Program

• Agreement to ensure additional consumer protections as described in Section 8.14

• Demonstration that for low-income distributed generation and community solar projects

that participants do not have any up-front payments.

The Act provides that “[p]riority shall be given to projects that demonstrate meaningful involvement

of low-income community members in designing the initial proposals” and that “[a]cceptable

proposals to implement projects must demonstrate the applicant's ability to conduct initial

481

This includes the option to be an Illinois Solar for All Single Project Approved Vendor similar to the Adjustable Block Program Single

Project Approved Vendor option. The minimum project size would be 50 kW.

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community outreach, education, and recruitment of low-income participants in the community.”

482

The Agency understands how these provisions may apply to community solar projects through the

requirement to identify partnerships with community stakeholders, but it is less clear how those

provisions would apply directly to projects that participate in either the Low-Income Distributed

Generation Incentive or the Incentives for Non-profits and Public Facilities.

To meet the intent of these provisions, the registration process for the Illinois Solar for All Program

will require Illinois Solar for All Approved Vendors to demonstrate their capacities in this area. An

Illinois Solar for All Approved Vendor will be able to do so by:

• Providing narrative summary of efforts taken prior to the application to conduct community

outreach, education, and recruitment

• Listing community-based organizations the applicant has partnered with, including letters

from those organizations to verify the partnerships

• Describing in detail ongoing plans for community outreach, education, and recruitment

• Describing staffing for dedicated outreach, education, and recruitment

• Describing plans for ensuring that tangible economic benefits flow to program participants

• Participate in training offered by the Program Administrator on guidelines for marketing,

contracting, and standard disclosures for program participants

Failure to maintain a demonstrated commitment to these requirements will result in an Illinois Solar

for All Approved Vendor being removed from participating in the Illinois Solar for All Program.

8.12. Application Process

Except for Low-Income Community Solar Pilot Projects, the process for a project to be submitted to

the Illinois Solar for All Program will mirror that for the Adjustable Block Program described in

Section 6.14. Projects will be submitted by Illinois Solar for All Approved Vendors through the same

batch process as the Adjustable Block Program but the minimum batch size will be 50 kW. There will

not be an application fee for Illinois Solar for All projects.

The application will indicate that the batch of projects is for Illinois Solar for All and will provide the

supplemental information required for those projects in addition to all the information that would

be required for an Adjustable Block Program project. If the supplemental information does not

demonstrate that the project qualifies for participation in the Illinois Solar for All Program, the

project may still be eligible to participate in the Adjustable Block Program through a separate

application (including the payment of an application fee).

Like for the Adjustable Block Program, Illinois Solar for All projects will be bundled into one contract

or confirmation for each approved batch. The Agency will request Commission approval for contracts

that include additional Illinois Solar For All provisions. Those contracts will be executed first by the

Agency if funds are available from the Renewable Energy Resources Fund. Should those funds not be

available (either due to the annual budget being expended, or the lack of an annual approved

appropriation), then contracts will be allocated to one of the utilities. For those contracts allocated

to a utility, the Program Administrator will strive to allocate contracts to each utility for projects in

482

20 ILCS 3855/1-56(b)(2).

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their service territory, and also in a manner that will obligate funds at a level consistent with each

utility’s share of funds committed to Illinois Solar for All.

For Low-Income Community Solar Pilot Projects, the application process will take place through

registering for, then bidding in, the competitive procurement for those projects. Prior to accepting

bids for the Low-Income Community Solar Pilot Project competitive procurement process, the

Agency and its Illinois Solar for All Program Administrator will work with stakeholders to refine and

finalize requirements for bidder participation.

483

The approval of contracts by the Commission will

take the form of the Commission approving the results of the competitive procurement.

8.13. Customer Eligibility

Customer eligibility for the Illinois Solar for All Program is partly defined in the Act. Further

refinements are proposed in this section.

8.13.1. Income Guidelines

The Act states that for the Illinois Solar for All Program, “’low-income households’ means persons

and families whose income does not exceed 80% of area median income, adjusted for family size and

revised every 5 years.”

484

The Agency proposes to use income eligibility guidelines from HUD. HUD bases its housing assistance

programs, such as the Section 8 Housing Choice Voucher program on 80% of area median income,

adjusted for family size.

485

Because the Act does not define “area,” the Agency is proposing to use HUD’s definition of an area as

a Metropolitan Statistical Area (MSA), a Fair Market Rate (FMR) Area, or a county not in an MSA or

FMR. There are 20 MSAs and FMRs, and 62 other counties in Illinois.

Eligibility levels for Illinois Solar For All, based on 2017 HUD guidelines for every area and adjusted

for family size, are presented in Appendix F.

For Fiscal Year 2017, the HUD eligibility income limits for Illinois as a whole are shown in the table

below. For example, a family of four would be considered “low-income” if their household income

were less than $59,300. (Actual eligibility depends on income for an area, rather than for the state as

a whole.) HUD has other programs that use “very low” and “extremely low” income measures, at

50% and 30% of AMI that are provided here for reference.

486

483

See Docket No. 17-0838, Final Order dated April 3, 2018 at 161.

484

20 ILCS 3855/1-56(b).

485

HUD, FY 2017 Income Limits Documentation System at https://www.huduser.gov/portal/datasets/il.html.

486

https://www.huduser.gov/portal/datasets/il/il17/State-Incomelimits-Report-FY17.pdf. For metropolitan area and county level

income limits, see: https://www.hudexchange.info/resource/reportmanagement/published/HOME_IncomeLmts_State_IL_2017.pdf.

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Table 8-8: HUD Income Limits

HUD State Income Limits: Illinois FY 2017

Median family income (MFI) = $74,100

Persons in

household

30% of median

(“extremely low

income”)

$15,550

$17,800

$20,000

$22,250

$24,000

$25,800

$27,550

$29,350

50% of median

("very low income")

$25,950

$29,650

$33,350

$37,050

$40,000

$43,000

$45,950

$48,900

80% of median

("low income")

$41,500 $47,400 $53,350 $59,300 $64,000 $68,750 $73,500 $78,250

It should be noted that other low-income energy programs, such as the Illinois Home Weatherization

Assistance Program (“IHWAP”) and the Low-Income Home Energy Assistance Program (“LIHEAP”)

are based on the federal poverty level, not area income, with state-wide values. Eligible guidelines

are set for households with income below 200% and 150% of the federal poverty level, depending

on the program. Eligibility guidelines for Illinois are set by the Department of Commerce and

Economic Opportunity, and are shown in Table 8-9.

487

Table 8-9: Eligibility Guidelines for LIHEAP and WAP in Illinois

2017 Illinois LIHEAP eligibility

2018 IHWAP Income Eligibility Guidelines

Household

Size

30 Day

Income

Annual income

(150% of FPL)

State Funds

(150% of FPL)

Federal Funds

(200% of FPL)

$1,508

$18,090

$24,120

$2,030

$24,360

$32,480

$2,553

$30,630

$40,840

$3,075

$36,900

$49,200

$3,598

$43,170

$57,560

$4,120

$49,440

$65,920

$4,643

$55,710

$74,280

$5,165

$61,980

$82,640

In all regions of Illinois, 150% of the federal poverty level is lower than 80% of AMI for all household

sizes. Thus, all households eligible for LIHEAP are also eligible for Illinois Solar For All. Households

participating in IHWAP using state funds are also eligible, while those using Federally funded IHWAP

(200% of FPL) may be eligible in some areas of the state and some household sizes, but not others.

487

Illinois Department of Commerce and Economic Opportunity, “Community Assistance, Energy Efficiency and Infrastructure,”

https://www.illinois.gov/dceo/CommunityServices/Pages/default.aspx

. Accessed September 2017.

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The tables in Appendix F compare HUD eligibility levels to LIHEAP and IHWAP income eligibility

levels.

Another approach to identifying low-income customers, by geographic area rather than by individual

household income, is to use HUD’s “Qualified Census Tracts” which are used to define eligibility for

the Low-Income Housing Tax Credit (LIHTC).

488

Qualified Census Tracts must have 50 percent of

households with incomes below 60 percent of the Area Median Gross Income (AMGI) or have a

poverty rate of 25 percent or more.

HUD has identified and mapped Qualified Census Tracts (“QCT”) nationwide. Overall, there are 657

QCTs in metropolitan areas in Illinois and 49 in non-metropolitan areas (out of 3,123 total census

tracts in Illinois). Cook County has the largest portion with 441. Springfield, which has 15 QCTs, is

shown in Figure 8-1 as an example.

The Agency will use QCTs as a streamlined method for determining eligibility for low-income

community solar customers, as discussed in the next section.

Figure 8-1: Springfield Qualified Census Tracts

Source: HUD, https://www.huduser.gov/portal/sadda/sadda_qct.html

488

HUD, “Qualified Census Tracts and Difficult Development Areas,” web site accessed July 19, 2017.

https://www.huduser.gov/portal/datasets/qct.html

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8.13.2. Determining Income Eligibility

The Agency proposes several approaches to determining income eligibility for the Illinois Solar for

All Program.

For projects that participate in the Low-income Distributed Generation Incentive Program,

verification of income should be done at the household level. This can be done in a number of ways.

For buildings with between one and four units, household income can be verified by one of the

following means:

• Review of the most recent federal income tax returns

• Income verification through a third-party income verification system

• Verification of participation in another low-income energy program (such as LIHEAP or

IHWAP), in HUD’s housing assistance programs where the income eligibility standard is

lower than 80% of AMI for that participant, or in other benefits programs where the income

eligibility is lower than 80% of AMI.

For two to four unit buildings, at least two of the households in the building must qualify. For a multi-

family building (five or more units), either at least 50% of the households must qualify, or the

building owner may demonstrate that the building meets the definition of “affordable housing”

contained in the Illinois Affordable Housing Act, namely:

“Affordable housing’ means residential housing that, so long as the same is occupied by

low-income households or very low-income households, requires payment of monthly

housing costs, including utilities other than telephone, of no more than 30% of the

maximum allowable income as stated for such households as defined in this Section.

489

In addition, participation in energy efficiency programs that also have an income eligibility

requirement that is equal to or less than 80% of AMI may also be considered a means of qualifying a

multifamily building.

For community solar projects, the Agency recognizes that transaction costs of proving income

eligibility compared to the value of the incentive may be higher than for an installation of a project

on-site, and therefore proposes a streamlined income verification approach.

• A subscriber can be verified as low-income via the same provisions used for the Low-Income

Distributed Generation Incentive.

• A subscriber can be verified as low-income if they reside in a HUD Qualified Census Tract and

provide a signed affidavit that they meet the income qualification level.

490

It will be the responsibility of the Illinois Solar for All Approved Vendor to track subscribers and

document income eligibility for community solar projects. Approved Vendors will be required to

report to the Agency on subscription rates once a year. Illinois Solar for All Approved Vendors will

489

See 310 ILCS 65/3(e). Note that the definition of low-income household contained in that Act mirrors the definition used for Illinois-

Solar for All, and that very low-income households have an income standard that is even lower.

490

The Agency will monitor the use of this provision and may consider modifying the consideration of eligible census tracts (for example

to census tracts where at least 50% of households are below 80% of AMI) if the proposed use of the QCT approach appears to be a barrier

to facilitating subscription verification.

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not be required to verify that existing subscribers continue to meet the low-income eligibility

requirements, but new subscribers over time will be required to meet those requirements.

8.14. Consumer Protections

The Agency believes that it has proposed a strong set of consumer protections as part of the

Adjustable Block Program for both distributed generation and for community solar (see Sections 6.13

and 7.6.2). These protections will also apply to the Illinois Solar for All Program. But several factors

lead the Agency to require additional consumer protections for the Illinois Solar for All Program. In

order to be an Illinois Solar for All Approved Vendor for the Solar For All program, Illinois Solar for

All Approved Vendors must agree to the following additional provisions for low-income customers.

• In order to “ensure tangible economic benefits flow directly to program participants,” Illinois

Solar for All Approved Vendors must also verify that for residential program participants

there are no up-front payments for distributed generation projects, or up-front subscription

fees for community solar projects. Illinois Solar for All Approved Vendors must also provide

documentation to both the program participant(s), and to the Program Administrator

explaining how the project or community solar subscription will result in a cash-flow positive

experience for the participant(s) (including an estimate of the monthly savings) – and

specifically, ensuring that the savings accruing to each participant, net of any ongoing

participation fees, are at least 50% of the value produced by the solar system through avoided

usage or net metering credits.

491

• For distributed generation projects, a roof inspection report is required to ensure that

projects are being installed on roofs that will not need substantial repairs. If repairs are

needed, the Illinois Solar for All Approved Vendor must identify the plan for the repairs and

how they will be paid for, ensuring that such costs do not place an unsustainable financial

burden on the participant.

• Contracts between Illinois Solar for All Approved Vendors (or their sub-contracted installers)

and program participants for Low-Income Distributed Generation projects will be required

to offer clear disclosure of the costs seven days before consummation of the transaction, and

the right to cancel the transaction within seven business days after consummation.

• Financing amounts, terms, and conditions must be based on an assessment of the program

participant’s ability to repay the debt, as defined by Regulation Z, which is a federal rule that

implements aspects of the Truth in Lending Act and the Dodd-Frank Act.

492

• For low-income customers, loans should not be secured by the program participant’s home

or home equity. While such unsecured loans may entail a higher interest rate, especially for

491

See Docket No. 17-0838, Final Order dated April 3, 2018 at 151.

492

See Consumer Financial Protection Bureau, April 10, 2013. Ability-to-Repay and Qualified Mortgage Rule, Small Entity Compliance Guide,

http://files.consumerfinance.gov/f/201304_cfpb_compliance-guide_atr-qm-rule.pdf

. Under the regulation (12 C.F.R. § 1026.43, issued

under authority of 15 U.S.C. § 1639c), creditors generally must consider eight underwriting factors: (1) current or reasonably expected

income or assets; (2) current employment status; (3) the monthly payment on the covered transaction; (4) the monthly payment on any

simultaneous loan; (5) the monthly payment for mortgage-related obligations; (6) current debt obligations, alimony, and child support;

(7) the monthly debt-to-income ratio or residual income; and (8) credit history.

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customers with low credit scores or little credit history, they avoid the risk of liens and

foreclosures for customers who default on their loans.

493

• Contracts for financial products must offer terms that include forbearance. If a program

participant can show good cause in a request for forbearance, financers must offer a)

suspension of total payments for up to three months, b) a suspension of interest payments

for up to six months, or c) a reduction in interest rates for up to twelve months. Missed

revenues may be recovered later in the stage of the contract, but no interest may be applied.

• Contracts may not include prepayment penalties.

• Marketing and contractual materials must be in the language requested by the customer.

8.15. Environmental Justice Communities

The Act directs the Agency to define and provide special consideration to Environmental Justice

Communities in implementing the Illinois Solar For All program. The Act sets as a goal that at least

25% of funds for the Low-Income Distributed Generation Incentive, the incentives for non-profit and

public facilities, and Low-Income Community Solar projects “be allocated to projects located in

environmental justice communities.”

494

(The provision does not apply to the Low-Income

Community Solar Pilot Projects, which are competitively bid.)

The following sections include definitions of terms, a methodology for determining which Illinois

communities should be considered Environmental Justice Communities, and how the Agency will

implement the relevant provisions of the Act. In developing the Illinois Solar for All program

participation requirements, the Agency will consult with stakeholders and relevant state agencies,

including the Illinois Commission on Environmental Justice and the Illinois Environmental Protection

Agency (“IEPA”), to establish specific values and designate specific communities as Environmental

Justice Communities.

8.15.1. Definitions

The Act states that “the Agency shall define ‘environmental justice community’ as part of long-term

renewable resources procurement plan development, to ensure, to the extent practicable,

compatibility with other agencies’ definitions and may, for guidance, look to the definitions used by

federal, state, or local governments.” The term “environmental justice” is not defined in the Act or in

other Illinois statutes, but it is helpful to define “environmental justice” in order to define

“environmental justice communities.”

The Environmental Justice Act, the 1997 legislation that created the Illinois Commission on

Environmental Justice (415 ILCS 155), found that:

(i) the principle of environmental justice requires that no segment of the population,

regardless of race, national origin, age, or income, should bear disproportionately high

or adverse effects of environmental pollution;

493

For example, the Illinois Energy Efficiency Loan Program offers unsecured loans at moderate interest rates through on-bill financing,

but is only available for certain energy efficiency measures. See: http://programs.dsireusa.org/system/program/detail/5152

494

20 ILCS 3855/1-56(b)(2)(A), (B), (C).

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(ii) certain communities in the State may suffer disproportionately from environmental

hazards related to facilities with permits approved by the State; and

(iii) these environmental hazards can cause long-term health effects.

495

The Illinois EPA defines the term "environmental justice " as follows:

"Environmental Justice" is based on the principle that all people should be protected

from environmental pollution and have the right to a clean and healthy environment.

Environmental justice is the protection of the health of the people of Illinois and its

environment, equity in the administration of the State's environmental programs, and

the provision of adequate opportunities for meaningful involvement of all people with

respect to the development, implementation, and enforcement of environmental laws,

regulations, and policies.

496

The Illinois EPA has also defined a “potential environmental justice community” based on

demographic factors, but not environmental factors:

A “potential” EJ community is a community with a low-income and/or minority

population greater than twice the statewide average. In addition, a community may be

considered a potential EJ community if the low-income and/or minority population is

less than twice the statewide average but greater than the statewide average and that

has identified itself as an EJ community. If the low-income and/or minority population

percentage is equal to or less than the statewide average, the community should not be

considered a potential EJ community.

497

The United States Environmental Protection Agency defines an “overburdened community” under

both social and environmental terms as:

Minority, low-income, tribal, or indigenous populations or geographic locations in the

United States that potentially experience disproportionate environmental harms and

risks. This disproportionality can be as a result of greater vulnerability to environmental

hazards, lack of opportunity for public participation, or other factors. Increased

vulnerability may be attributable to an accumulation of negative or lack of positive

environmental, health, economic, or social conditions within these populations or

places. The term describes situations where multiple factors, including both

environmental and socio-economic stressors, may act cumulatively to affect health and

the environment and contribute to persistent environmental health disparities.

498

Both the IEPA and US EPA have developed analytical tools based on their definitions of EJ

communities. The IEPA’s EJ START is a Geographic Information Systems demographic screening tool

developed by IEPA staff that identifies regions with high minority population and/or low-income

population. IEPA also adds a one-mile buffer around each regulated facility as a simplified way to

495

415 ILCS 155/5.

496

Illinois EPA web site, “Environmental Justice Policy,” http://www.epa.illinois.gov/topics/environmental-justice/ej-policy/index.

Accessed July 19, 2017.

497

Id.

498

US EPA, “EJ 2020 Glossary,” https://www.epa.gov/environmentaljustice/ej-2020-glossary. Accessed July 19, 2017.

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identify potential local environmental impacts. It draws from the Census Bureau’s American

Community Survey 5-year estimates (2011-2015) and is updated annually.

The US EPA tool is called EJ SCREEN.

499

It uses standard and nationally-consistent data to identify

communities with greater risk of exposure to pollution based on 11 environmental indicators that

measure potential exposure, hazard/risk and proximity, including traffic proximity, particulate

matter, and proximity to superfund sites. These indicators are combined with demographic data from

the Census Bureau, enabling users to identify areas with minority or low- income populations who

also face potential pollution issues.

While these tools are useful, they do not holistically address all aspects of environmental justice. For

example, EJ SCREEN evaluates individual environmental indicators but does not look at cumulative

impacts.

The most rigorous tool for analyzing impacted communities is the California Communities

Environmental Health Screening Tool (CalEnviroScreen) from the California Office of Environmental

Health Hazard Assessment (OEHHA).

500

CalEnviroScreen compiles data on 12 indicators of pollution

burden and 8 population characteristics collected at the Census tract level. It then weights certain

factors to develop a score for each area. High scoring areas are then considered eligible for a number

of state policies, including disposition of some of the revenues from the state cap-and-trade program

created under Assembly Bill 32.

Table 8-10: Summary of CalEnviroScreen 3.0 Identification Methodology

Pollution Burden

Population Characteristics

Exposures

Sensitive populations

Ozone Concentrations

PM2.5 Concentrations

Diesel PM Emissions

Drinking Water Contaminants

Pesticide Use

Toxic Releases from Facilities

Traffic Density

Asthma Emergency Department Visits

Low Birth Weight Infants

Cardiovascular disease (emergency

department visits for heart attacks)

Environmental effects

Socio-economic indicators*

Cleanup Sites

Groundwater Threats

Hazardous Waste

Impaired Water Bodies

Solid Waste Sites and Facilities

Educational Attainment

Housing burdened low income households

Linguistic Isolation

Poverty

Unemployment

Source: OEHHA. * California law prohibits the use of race as a factor in CalEnviroScreen.

The CalEnviroScreen approach is an attractive way to consider defining environmental justice

communities but the Agency notes that the development of it was a multi-year, multi-million dollar

499

See: https://ejscreen.epa.gov/.

500

California Office of Environmental Health Hazard Assessment (“OEHHA”), California Communities Environmental Health Screening Tool

(CalEnviroScreen), https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-version-20

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undertaking. Therefore, the Agency will utilize a streamlined approach that takes the concept of

CalEnviroScreen and simplifies it for use in Illinois through the use of readily available data from the

U.S EPA’s EJ SCREEN tool. CalEnviroScreen does not account for race in its calculations, but by using

data from EJ SCREEN the Agency will be able to do so.

8.15.2. Proposed Approach for Defining Environmental Justice

Communities

The Agency will determine Environmental Justice Communities by analyzing data from Illinois

census block groups for the following environmental and demographic indicators, as described by

the EJ SCREEN Tool:

501

• National-Scale Air Toxics Assessment (NATA) air toxics cancer risk

• NATA respiratory hazard index

• NATA diesel PM

• Particulate matter

• Ozone

• Traffic proximity and volume

• Lead paint indicator

• Proximity to Risk Management Plan sites

• Proximity to Hazardous Waste Treatment, Storage and Disposal Facilities

• Proximity to National Priorities List sites

• Wastewater Dischargers Indicator

The following demographic indicators are also used by EJ SCREEN:

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• Percent Low-Income

• Percent Minority

• Less than high school education

• Linguistic isolation

• Individuals under age 5

• Individuals over age 64

In addition, the Agency will consider including the following indicators that use data not contained

in EJ SCREEN. These are not available at the same level of detail as the indicators using data from EJ

SCREEN (more typically they have data at the zip code or county level), and as these would need to

be translated to the block group level, the Agency will assess in the final methodology if these

indicators provide meaningful impact on the evaluation criteria.

The following demographic indicators for Sensitive Population Characteristics from the Illinois

Department of Public Health.

• Asthma Emergency Department Visits

• Low Birth Weight Infants

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See https://www.epa.gov/ejscreen/overview-environmental-indicators-ejscreen.

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See https://www.epa.gov/ejscreen/overview-demographic-indicators-ejscreen.

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The following environmental indicators from the Illinois Environmental Protection Agency.

• Drinking Water Watch

• Site remediation program

• Leaking Underground Storage Tank Incident Tracking

• State Response Action Program

• Solid Waste Facilities

The Agency will then weight each factor using an approach adapted from CalEnviroScreen: Census

block groups will be ranked for each environmental and demographic indicator, a resulting

percentile score will be determined for each census block group, and the percentile scores wwill be

averaged, resulting in an environmental and demographic score for each block group. The two

averages would be multiplied together to determine a score.

Figure 8-2: CalEnviroScreen Formula

Source: OEHHA

Communities with scores in the top 25% will be defined as Environmental Justice Communities for

the purpose of the Illinois Solar for All Program. This definition will be used to target grass-roots

education funding and incentives for non-profits and public facilities.

A community that is not in the top 25% of scores and thus is not initially defined as being an

Environmental Justice Community may request consideration from the Agency to be included. The

Agency will consider requests for self-designation as an environmental justice community based on

a consideration of demonstrated quantitative environmental and/or socioeconomic factors that

were not adequately captured in the screening defined above.

The Agency notes that this approach focuses on analysis of census block group-level data, and that

communities are typically understood by their residents to be defined through geographic, cultural,

and other factors that may, or may not, correspond to census block group boundaries. In addition,

the US EPA cautions that data in the EJSCREEN tool is not always reliable at the block group level,

and recommends that it may be necessary to aggregate up to larger geographic areas in a “buffer

report.”

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EJSCREEN Technical Documentation, at https://www.epa.gov/ejscreen/technical-documentation-ejscreen.

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The Agency will therefore also consider reasonable adjustments to the borders of environmental

justice communities from what is calculated through the census block group analysis, provided this

does not create an unacceptable analytical burden.

8.15.3. Environmental Justice Community Designations

The Agency will work with the Illinois Solar for All Program Administrator to undertake the analysis

described in Section 8.15.2 prior to the program launch. The Agency will consult with the Illinois

Commission on Environmental Justice and interested stakeholders on finalizing the methodology and

will publish on its website draft maps and data and invite stakeholders to review and comment on

the results. This will also provide an initial opportunity for communities to request self-designation

as an environmental justice community. The Agency will review the feedback received and then

publish final maps and lists of the designated environmental justice communities. The maps will be

updated on a semiannual basis to reflect any additional requests for self-designation.

8.15.4. Environmental Justice Communities 25% Goal

The Act states that “It is a goal of this program that a minimum of 25% of the incentives for this

program be allocated to projects located within environmental justice communities.”

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For the Low-income Distributed Generation Incentive, the Low-Income Community Solar Project

Initiative, and the Incentives for Non-profits and Public Facilities, the Agency will reserve 25% of

each category’s annual budget to support projects in environmental justice communities. If the funds

are fully allocated to projects in environmental justice communities, then subsequent projects in

environmental justice communities would still be eligible using the general available budgets. The

25% reservation of funds for environmental justice communities will reset at the beginning of each

fiscal year.

The Act also directs the Agency to “allocate up to 5% of the funds available under the Illinois Solar

for All Program to community-based groups to assist in grassroots education.”

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As noted in Section

8.8, that funding will be prioritized towards Environmental Justice Communities to help meet this

goal. Up to 60% of the funding (or 3 percentage points of the 5%) will be used for this purpose.

The Agency will review progress toward meeting the 25% goal during the Plan Update to be

developed in 2019, and will recommend changes to this approach, if necessary.

8.16. Program Changes

Several provisions in the Act anticipate the ability to revise and change program provisions. In

addition to the provision described in Section 1-56(b)(4) of the Act that allows stakeholders to

propose additional programs, an additional provision allows the Agency to reallocate funds between

programs:

“The allocation of funds among subparagraphs (A), (B), or (C) of this paragraph (2) may

be changed if the Agency or administrator, through delegated authority, determines

incentives in subparagraphs (A), (B), or (C) of this paragraph (2) have not been

adequately subscribed to fully utilize the Illinois Power Agency Renewable Energy

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20 ILCS 3855/1-56(b)(2).

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20 ILCS 3855/1-56(b)(3).

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Resources Fund. The determination shall include input through a stakeholder

process.”

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As part of the Plan Update scheduled to occur in 2019, the Agency will review preliminary program

results and the evaluation report outlined in Section 8.17 before proposing any changes in allocation

of funds.

Likewise, the Agency has not proposed any adjustments to the programs pursuant to the following

provision:

“Following the Commission's approval of the Illinois Solar for All Program, the Agency

or a party may propose adjustments to the program terms, conditions, and

requirements, including the price offered to new systems, to ensure the long-term

viability and success of the program. The Commission shall review and approve any

modifications to the program through the plan revision process described in Section 16-

111.5 of the Public Utilities Act.”

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The Agency would expect that any such proposals will also be part of the Plan Update scheduled to

be developed in 2019.

8.17. Evaluation

Section 1-56(b)(6) requires that this Plan include an approach for independent evaluation of the

Illinois Solar for All Program. Specifically, it calls for:

“At least every 2 years, the Agency shall select an independent evaluator to review and

report on the Illinois Solar for All Program and the performance of the third-party

program administrator of the Illinois Solar for All Program. The evaluation shall be

based on objective criteria developed through a public stakeholder process. The process

shall include feedback and participation from Illinois Solar for All Program

stakeholders, including participants and organizations in environmental justice and

historically underserved communities. The report shall include a summary of the

evaluation of the Illinois Solar for All Program based on the stakeholder developed

objective criteria. The report shall include the number of projects installed; the total

installed capacity in kilowatts; the average cost per kilowatt of installed capacity to the

extent reasonably obtainable by the Agency; the number of jobs or job opportunities

created; economic, social, and environmental benefits created; and the total

administrative costs expended by the Agency and program administrator to implement

and evaluate the program.”

The Agency will work with stakeholders to develop the scope and process for the evaluation.

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The

Agency will then issue a Request for Qualifications/Request for Proposals to select an independent

evaluator to conduct the evaluation. This selection process is expressly exempted from the Illinois

Procurement Code.

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The Agency expects to select the evaluator prior to the launch of the Illinois

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20 ILCS 3855/1-56(b)(2).

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20 ILCS 3855/1-56(b)(4).

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See Docket No. 17-0838, Final Order dated April 3, 2018 at 165-166. Participation in this stakeholder process would preclude a party

from responding to the subsequent Request for Qualifications.

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20 ILCS 3855/1-56(f).

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Solar for All Program. Like other contracts to implement this Plan, the selection of the evaluator will

be subject to Commission approval. The Agency observes that having an evaluator in place prior to

program launch helps to ensure proper data collection by the evaluator.

The Act calls for an evaluation “at least every 2 years,” but the Agency notes that Illinois Solar For All

is expected to launch in 2018 or early 2019, and the Agency is planning to develop the first update to

the Plan in 2019, with implementation thereof starting in 2020. Due to this timing, the first

evaluation will be done on an accelerated schedule, in 2019, to inform the update process. The

Agency cautions that due to potential start up complications, early results may not be indicative of

ongoing impacts of the programs, and the first evaluation may have a stronger emphasis on process

than on outcomes.