Pursuant to Section 16-111.5 (e) of the Illinois Public Utilities Act, the Illinois Commerce Commission (“ICC”) convened a special meeting on September 7, 2017, to vote on whether to approve the recommendations of the Illinois Power Agency (“IPA”) to award Renewable Energy Credit (“REC”) Contract offers to specific new wind and utility-scale and brownfield photovoltaic project owners. The IPA solicited bids for the annual delivery of 1 million RECs from wind projects, and 200,000 RECs from utility-scale and brownfield photovoltaic projects to be sold via 15 year contracts to the three investor-owned electric utilities in Illinois pursuant to the Illinois Future Energy Jobs Act.
Immediately upon conclusion of the September 7, 2017 meeting, the ICC issued an announcement that the following project owners submitted the low price bids for RECs. For the 1 million wind project RECs, the winning bids were submitted by: Alta Farms Wind Project II, LLC; Broadlands Wind Farm, LLC; and Cardinal Point, LLC. The ICC did not announce the specific amount of wind project RECs awarded to each of the three projects. The winning bidder for the RECs from utility-scale and brownfield photovoltaic projects was Prairie State Solar, LLC, though the ICC did not disclose the number of RECs awarded or whether the winning bid was for delivery of the entire 200,000 utility scale solar and brownfield solar photovoltaic project RECs. The ICC further disclosed only that the average winning bid was $4.26 per REC across the entire wind and solar REC procurement. It did not disclose the winning bid prices above or below that average price. Although the winning bid prices were not disclosed, experienced parties should be able to analyze the available information to estimate likely ranges for the winning wind and solar REC price bids.
Each winning project owner whose bid has been approved by the ICC is expected to enter into the standard Renewable Energy Credit Agreement (“REC Contract”) for sale to the three utilities of the number of RECs awarded to the project, although it is not certain that all of the successful bidders will actually execute such contracts. For example, if the ICC approved an amount of RECs for a project that is less than the number of RECs included in the original bid, the winning project owner may decline to enter into a contract and receive a full refund of the bid collateral it paid to the IPA. The IPA had already determined how the amount of RECs approved by the ICC for each winning project would be allocated among the three Illinois investor-owned utilities. Each owner of a REC bid-winning project approved by the ICC will be asked to enter into separate standardized REC Contracts with Commonwealth Edison for 70.34 percent of its total awarded RECs, with Ameren Illinois Company for 29.33 percent of its total awarded RECs, and with MidAmerican Energy Company for 0.33 percent of its total awarded RECs.
Over the next nine months the IPA is expected to conduct two or more procurements for additional RECs from utility-scale or brownfield photovoltaic solar projects as part of its on-going Initial Forward Procurement under the Illinois Future Energy Jobs Act. Assuming that all three of the successful bidders selling wind RECs execute contracts with the investor-owned utilities, the IPA is not expected to conduct any additional bid solicitations to obtain RECs from wind projects under the Initial Forward Procurement, mainly because the procurement results announced by the ICC on September 7 will allow the utilities to acquire the full 1,000,000 wind RECs authorized by the Illinois Future Energy Jobs Bill.
On a separate but related note, the IPA is expected to issue for public comment its draft Long Term Renewable Resource Plan later this month, which is expected to cover procurement of RECs from distributed generation and community solar projects. Please stay tuned for future client alerts on that plan.
For more information, contact Bryan Keyt or Charles Zielinski, the authors of this Client Alert, or your regular Bryan Cave contact. You may also contact us through the direct link to our Website, Bryan Cave’s Energy and Natural Resources team.