On September 29, the Illinois Power Agency released its draft 2015 Procurement Plan regarding renewable portfolio standard (RPS) compliance for the state’s two regulated utilities, ComEd and Ameren — and then, on the very same day, decided to release a second “Supplemental” Procurement Plan for solar PV. The two plans both share great intentions for the best of interventions — and could bring projects with the right entrepreneurial conditions to glory.

Both plans call for the Illinois Power Authority to procure solar renewable energy credits (SRECs), but that’s where the similarities end. They differ with regard to funding, project eligibility, contract lengths, system requirements, and other factors. Sound confusing? It’s OK. We’re here to clear up the confusion.

The First Illinois Plan: Of the Four Procurements, Only Three Matter 

The first, “regular” plan sets out the IPA’s 2015 plan for procuring power from renewables for those customers of the state’s two main utilities who have not “shopped” for electricity (most of Illinois’ residents actually have shopped for energy on their own, thanks to electricity market deregulation, and rely on their retail electricity suppliers for compliance). In addition, the IPA has set up a procedure for spending the hourly “alternative compliance payments” (ACPs) the agency has collected from retail suppliers. This is because unlike in many states, some amount of these ACPs are collected each year whether or not the suppliers are otherwise in compliance. It proposes to use ~$13 million of this funding to procure ~80,000 SRECs in one-year contracts.

A one-year procurement of 80,000 SRECs is significant to the REC markets, but as the IPA itself acknowledges, almost certainly too high a risk to support any real, new projects.  Not only does filling in a long row of question marks after the first year not do much to improve a solar project pro forma, the timing of the procurement means solar developers would need to fully develop any such projects and produce their REC requirements in the portion of 2015 remaining to them. Moreover, the IPA does not have to solicit bids from new projects; if enacted, the regular procurement plan will likely “siphon up” SRECs from existing projects in and around Illinois (and IPA may need to go far afield indeed to find the 60MW of installed, uncommitted capacity required to do so).

The Second Illinois Solar Plan: Strength Training Through Supplements 

The second “supplemental” plan, despite the name, is the real driving force of the procurement, and the one adequate to support real solar development in the Land of Lincoln. It represents the one-year version of what we hope will be a longer-term fix to the IL RPS distributed generation scheme (a “glitch” in the Illinois law’s wording means that the IPA cannot currently spend some $50 million of solar-dedicated funds it collects annually). The Supplemental Plan schedules three procurement events, each for an auction of five-year fixed price REC purchases.

In this supplemental plan, the IPA will enter into five-year SREC contracts for new projects, with “new” meaning any projects that go operational after the date of the procurement event.

Not all systems are created equal — IPA has been instructed by law to get at least 50 percent of all RECs from systems with less than 25 kW in nameplate capacity, but curiously, this is a “target” and NOT a binding minimum requirement. As such, IPA has proposed a different set of rules for the two categories of solar arrays: those under 25 kW, and those from 25 kW to 2 MW. Bids from systems larger than 2 MW won’t be considered. The “target” of 50 percent sub-25-kW will come into play if the pace of new small-scale installations is slower than expected; in this case it might be possible for a sub-25-kW bid to be selected over a system with more than 25 kW, even if an owner of the larger system submits a more competitive (i.e. cheaper) bid, to meet the fifty percent target.

Another difference lies in the detail that each category will have a different “benchmark” price – in effect, a price ceiling. This (secret) benchmark is ultimately up to the discretion of the “procurement administrator” and will based on factors such as “observed market prices adjusted for expected local costs to develop and operate systems, available incentives, market returns on capital, and term of contract.”