10 Nov 2017
November 10, 2017

The Sun is Shining on Illinois

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One might say that the Midwestern region of the USA has been slow to adopt solar and other renewable energy sources… not because of a lack of sun, but due to the inherently low price of electricity in this region. This is largely a result of the natural gas fracking boom starting in the early 2000’s. A multitude of factors, namely the cost effectiveness of solar & customer preference, have led to legislative changes that promote the growth of renewables. No Midwestern state has positioned itself to achieve a lofty energy paradigm shift more so than Illinois, when the Commerce Commission passed the Energy Infrastructure Modernization Act (EIMA) in 2011.

EIMA has provided $3.2 billion for grid modernization, in addition to a significant investment into smart meters with a goal of installing more than two million new meters by the end of 2018. Smart meters provide much more accurate data, reducing the need to estimate usage for utility bills. In addition, service activation and efficiency improvements are all made easier through the use of smart meters, versus traditional metering devices.

Through the grid modernization process, EIMA established the framework and the data acquisition tools needed for future programs to be successful, particularly the Future Energy Jobs Act (FEJA), established in 2016.

FEJA is perhaps the most critical piece of legislation pertaining to energy & grid modernization to ever come out of the Midwest. There were 3 major focuses that FEJA attempted to address:

  • Stimulating job creation within renewables, energy efficiency, & grid modernization
  • Statewide energy efficiency improvements:
    •  Illinois’ current goal is to reduce demand by 13%-17% across the two major utilities (ComEd & Ameren) by 2025
    • Loftier goals have been set for 2030 (in the range of 16-21.5%)
  • Significant improvement to the state’s Renewable Portfolio Standards (RPS):
    •  RPS Goal is to have 25% of electricity generated by renewable sources by 2025
    • Shift in REC program to encourage solar deployment (previously wind-centric)
    •  4 million Renewable Energy Credits (RECs) for 1.3 GW of wind projects
    • 4 million RECS for 3 GW of solar projects
      •  Specific carve-outs for utility scale, brownfield development, as well as residential solar projects

Delving further into the RPS program, FEJA helped establish the Adjustable Block (AB) Program. State RECs have traditionally been able to fluctuate in value due to market trends and policy changes. However, through learned experience of other REC markets, the Illinois IPA adopted a modern approach, guaranteeing 15-year fixed-price contracts under the AB program. From a financing perspective, this is a huge win due to the strengthened bankability of these RECs. Now locked into long-term contracts, these RECs can be effectively utilized to drive down the cost of solar to make it much more competitive with traditional energy sources.

New projects energized on or after June 1st 2017 by pre-approved developers, are eligible to participate in the AB program with each block anticipated to be 22 MW in size. Between each block there will be a 4% decline in the value of RECs, so for those looking to maximize the REC values, it is important to be ready to apply once the program opens.

The Timeline:
The AB program is still being finalized and is open to comment until November 13th 2017. It is anticipated that the Illinois Commerce Commission will issue an order confirming or modifying the AB program by April 3rd 2018. The first block of the AB program will have a soft closing, meaning that every project that applies for the program in the first 60 days of commencement will be locked in to the Block 1 prices, regardless if the block’s assigned capacity is filled.

If you’re a solar developer, installer, or are just looking to learn more about the Illinois solar market and how SCF plans on participating in the AB program, please don’t hesitate to reach out to Joel Binstock of SCF, @ jbinstock@scf.com.


About Sustainable Capital Finance:  Sustainable Capital Finance (SCF) is a third party financier & owner/operator of commercial & industrial (C&I) solar assets and is comprised of experts that specialize in structured finance and solar development. SCF has a vast network of EPCs and Developers across the US that submit project development opportunities through SCF’s cloud-based platform, the “SCF Suite”. This allows SCF to acquire and develop early to mid-stage C&I solar projects, while aggregating them into large portfolios.

SCF has standardized the diligence and transaction process, thus creating cost-efficiencies and risk mitigation, in order to solidify the C&I marketplace as an investment-worthy asset class. For more information, visit http://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!

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