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More Utility-Scale and/or Brownfield Solar RECs Are Sought Under Illinois’ Future Energy Jobs Act

March 22, 2018

On March 21, the Illinois Commerce Commission (“ICC”) publicly approved certain results from the Illinois Power Agency’s (“IPA”) Spring 2018 First Procurement of solar Renewable Energy Credits (“RECs”) from utility-scale solar and brownfields photovoltaic projects under the Illinois Future Energy Jobs Act (“FEJA”).  The 2018 First Procurement sought up to 400,000 solar RECs.  The public announcements confirmed that the winning bidders are Big River Solar, LLC and Dressor Plains Solar, LLC, and that the average of the winning bids was $6.07 per REC.  In addition, the public announcements confirmed the percentage allocations of RECs among the three Illinois investor-owned utilities that will contract to purchase the RECs. The IPA will soon commence its 2018 Second Procurement seeking up to 400,000 solar RECs from utility-scale and brownfields photovoltaic projects.  This Second Procurement is scheduled to commence on March 29.  The IPA completed its first purchase of RECs under FEJA in September 2017 with an Initial Forward Procurement  of wind and solar RECs.

FEJA and the IPA’s Procurement of Solar RECs

FEJA requires the IPA to implement an Initial Forward Procurement to acquire  one million RECs from new utility-scale solar and brownfield site solar photovoltaic (“Brownfields”) projects by May 31, 2018.  Utility-scale solar projects must have a capacity greater than 2 MW (AC rating).  There is no maximum capacity for such projects. There is neither a minimum nor a maximum capacity for Brownfields projects, but they must be solar photovoltaic projects. In September 2017, the IPA completed procurement of up to 200,000 utility scale solar project RECs, as well as RECs from wind projects. On February 7, 2018, the IPA commenced a second forward procurement of solar RECs, which it denominated “First Procurement.” This procurement sought up to 400,000 RECs from new utility scale solar and Brownfields projects.  That First Procurement is scheduled for completion on March 26 with the execution of standard REC contracts between the winning bidders and the Illinois investor-owned electric utilities who will purchase the RECs that the projects will produce.  The IPA is scheduled to commence a Second Procurement on March, 29, 2018 for another 400,000 RECs from utility-scale solar and Brownfields projects.  Illinois utility-scale solar and Brownfields project developers should be prepared to take advantage of what may well be the final opportunity under the Initial Forward Procurement to propose qualifying types of solar projects to the IPA and to bid a REC sales price for the output of their proposed projects, the revenues from which can be used to fund the project. Sales of energy from winning projects are subject to separate contracts to be negotiated by developers with power purchasers. The IPA’s New Solar Procurement webpage can be found here.

First 2018 REC Procurement

Before it commenced the First Procurement, the IPA posted on February 6, 2018 the Standard Contract that winning bidders would be required to execute with the three REC purchasing investor-owned Illinois electric utilities.  The IPA then issued on February 7, 2018, its Request for Project Proposals (“RFP”).  The First Procurement began on February 8, 2018, with the IPA’s webcast on the final standard contract form and the RFP requirements.  Thereafter the IPA used essentially the same procedures, albeit with higher bid assurance collateral requirements, that it employed for the September 2017 solar and wind procurement; and it intends to employ these same procedures again for the Second 2018  Procurement (discussed in more detail below).  Upon successful completion of these procedures, bids for a specific amount of RECs to be produced by each proposed project, as well as a proposed price per REC, were submitted on March 15, 2018.  The IPA’s Procurement Administrator then submitted on March 19, 2018, a confidential report on the bid results to the ICC, the state utility regulatory commission. Based on this report, the ICC publicly confirmed the results of the First Procurement on March 21, 2018. The winning bidders confirmed by the ICC are required to execute by March 26, 2018 a standard contract with each of the three investor-owned electric utilities to which REC purchases have been allocated. Qualified projects that did not submit winning bids for the First Procurement may participate in the Second Procurement.  Any such projects may roll over to the Second Procurement the bid collateral submitted for the First Procurement.

Second 2018 REC Procurement

According to the IPA’s published schedule, the Second Procurement of up to 400,000 utility-scale solar and/or Brownfields project RECs will commence on March 29, 2018 with an IPA webcast on RFP requirements.  The IPA is scheduled to open the window for Part I proposed project submissions on March 30.  Part I project proposals are currently due for submission by April 5, 2018.  The required bid participation fees are currently due on the same date.  The IPA is scheduled to issue its notification as to the sufficiency of Part I submissions on April 12, and to open the Part II proposed project submissions window on April 13.  Part II project proposals (except for REC price bids) are currently due on April 19.  The IPA is scheduled to conduct bidder training on April 23.  REC price bids are currently due on April 26.  The Procurement Administrator’s confidential report on the results of the Second Procurement is scheduled to be submitted to the ICC on April 30.  The ICC’s confirmation of the results of the bidding is currently due on May 2.  Each winning bidder is currently expected to enter into the standard REC contract with the investor-owned electric utilities to whom REC purchases are allocated by May 7, 2018.

Bryan Cave attorneys have extensive experience with the IPA’s REC procurement procedures from the inception of the IPA’s program. If you have questions about the IPA’s procedures for participation in the REC procurement, or about any of the matters discussed in this alert, please contact the authors.