Plan and Programs Overview

April 4, 2018

Illinois Power Agency’s Final Long-Term Renewable Resources

Procurement Plan (LTRRP)

The Illinois Solar Energy Association (ISEA) is a non-profit organization that promotes the widespread application of

solar and other forms of renewable energy through our mission of education and advocacy.

ISEA is the state resource for renewable energy related policy developments, educational classes, events and access to local

renewable energy businesses.

ISEA Introduction

Presenters

Kevin Borgia is an experienced advocate for clean energy at the state and federal levels. In his current role, Kevin manages Midwest legislative and regulatory affairs for Cypress Creek Renewables, one of the nation’s leading utility-scale solar developers. He has over ten years experience in renewable energy policy. He was a Public Policy Manager for regional trade group Wind on the Wires for nearly six years, and co-founder and Executive Director of the Illinois Wind Energy Association for five years.

Katie Rever advocates on behalf of IGS Solar in states across the country while also helping the IGS team anticipate the challenges and opportunities brought about by the rapidly changing solar policy landscape. Prior to joining IGS, Katie was a Senior Director for State Affairs with the Solar Energy Industries Association where she led SEIA’s regulatory and legislative activity in Massachusetts, New York, New Jersey and other eastern states. Prior to SEIA, Katie was a Presidential Management Fellow at the U.S. Department of Energy’s Solar Energy Technologies Program. She earned her Masters in Public Policy and Environmental Management from Duke University.

Webinar Agenda

1. Disclaimer/Process overview

2. Large-Scale Solar Procurements

3. Adjustable Block Program

4. Next Steps

NOTE: This webinar does not discuss the Solar for All program. That topic will be covered in a future ISEA webinar

• This presentation reviews the Illinois Commerce Commission’s (ICC) Order

adopting and modifying the IL Power Agency’s (IPA) Long-Term Renewable

Resources Procurement Plan (Plan, Long-Term Plan, LTRRPP) that was

approved by the Illinois Commerce Commission (ICC) on April 3, 2018.

• It is intended as an overview and does not cover every section in detail.

• This webinar covers the Large-Scale Solar Procurements and the

Adjustable Block Program.

• The information in this webinar is not legal advice.

• Companies should review the Order and other relevant documents.

• REC prices shown in this webinar and the IPA plan are not final and

subject to change before the launch of programs.

Disclaimers

1. Final Plan approves ambitious and feasible solar programs

2. Many aspects still unclear (i.e. REC Pricing)

3. More implementation work ahead

IPA Long-Term Plan ReviewKey Highlights

• Dec ‘16 – FEJA mandates at least 3GW of solar by 2030, setting high level structure

• May ‘17 – IPA kicked off public process to develop Long-Term Plan

• Dec ‘17 – IPA submitted Long-Term Plan to ICC for approval

• April ‘18 – ICC issued Order approving and modifying Long-Term Plan

• Not the end of the story…

The Future Energy Jobs Act (FEJA) Driving Solar Development

Small DG

Large DG

Community Solar

IPA discretion

Utility-scale

Brownfield

IPA discretion

Categories of new-build solarunder FEJA

Utility-Scale PV Procurements

• Solar projects greater than 2MWac (No Cap)

• Projects in Illinois automatically qualify

• Projects in adjoining states must meet “public interest criteria”

• Competitive bid process

• 15-year REC contracts (no power offtake)

• Price per REC fixed over the term of the contract

• Ability to bank RECs

• Credit requirements and instruments

Utility-Scale PVProcurement Basics

• Standard contracts and credit provisions

• Sealed bids with pay-as-bid settlement

• Bid selection based on price alone

• No post-bid negotiation

• Confidential benchmarks to eliminate unreasonable bids

• Standardized bid forms

• Standardized/harmonized credit requirements

• Procurement Monitor

Utility-Scale PVKey Procurement Terms

Utility-Scale PVProcurement Schedule

Solar Procurement Timeframe DeliveryAnnual

RECsApprox

MWPrice

($/REC)

Initial Forward (1) COMPLETE (8/17) 6/1/19 – 6/1/2021 200,000 117 $4.26*

Initial Forward (2) COMPLETE (3/18) 6/1/19 – 6/1/2021 400,000 235 $6.07

Initial Forward (3) April 28, 2018 6/1/19 – 6/1/2021 400,000 235 TBD

Brownfield Summer 2018 6/1/19 – 6/1/2021 80,000 47 TBD

Subsequent Forward ASAP 2021 2,000,000 1176 TBD

Total MW 1810

Total MW Remaining

1458

Subsequent Forward Procurement doubled from IPA Draft Plan. Spot REC procurements eliminated to create funding availability.*Hybrid wind/solar REC Price

Adjustable Block Program

Category System Size Location Energy RECs Rebate*

Small DG Up to 10kW Onsite, sized to customer’s load

Net metering**

15 yr contract, paid at PTO

None**

Large DG Over 10kW to 2MW

Onsite, sized to customer’s load

Net metering 15yr REC contract, paid 20% at PTO, balance paid quarterly

Non-NEM*** C&I – SmartInverter Tariff ($250/kW upfront)

Community Solar

Up to 2MW (limited co-location)

Generallyoffsite; one entity can take no more than 40% of system output

Energy-only credits applied

15yr REC contract, paid 20% at PTO, balance paid quarterly

Smart Inverter Tariff ($250/kW upfront)

Adjustable Block ProgramOverview of Categories

Small DG

Large DG

Community Solar

IPA discretion

ABP categories

*This value will change for new systems after NEM penetration reaches 5% of peak demand**Upon reaching NEM penetration of 5%, net metering energy only for new customers; new smart inverter tariff applicable to these customers***Non-NEM C&I Customers – ComEd >100kW peak demand; Ameren >150kW peak demand

• Order directed IPA to hold its 25% discretionary capacity in reserve.

• As the market moves forward, it is not clear if discretionary capacity will be used to make Block 3 larger and/or to create additional blocks.

• NOTE: Exact block sizes not specifically stated in ICC Order

Adjustable Block ProgramBlock Structure

Block Group Block Category Block 1 Block 2 Block 3

Group AAmeren Illinois, Mt Carmel, Rural Electric Coops)

Small 22 22 5.5

Large 22 22 5.5

Community Solar 22 22 5.5

Group BComEd, Mid-American, Municipal Utilities

Small 52 52 12

Large 52 52 12

Community Solar 52 52 12

IPA discretion – 166.5 MW – placement TBD

• Order adopted IPA’s proposal for managing Block 1 demand:

• If, within 14 days of program opening, if any one block receives complete applications for over 200% of available capacity, then a lottery to select projects. For community solar, the following applies:

• First lottery for 50% of available funding for projects with at least 50% small subscribers

• Second lottery for remaining 50% of funding for projects not awarded in first lottery plus those without at least 50% small subscribers

• Any project that do not meet 50% small subscriber within one year of energization forfeits ability to claim adder and loses 20% of total REC value

• Unknowns:

• In the case of any Block 1 is significantly oversubscribed, IPA needs to clarify what happens to unselected projects vis-à-vis Block 2 and future block capacity

• ‘Soft’ closing concept is unclear

Adjustable Block ProgramTransition between Blocks

Distributed Generation

Community Solar

REC Prices by Pricing Bin

Ameren Illinois

($/REC)

ComEd($/REC)

Ameren Illinois ($/REC)

ComEd($/REC)

<= 10 kW $80.23 $77.25 $96.12 $91.89

> 10 to 25 kW $77.02 $75.65 $87.07 $82.82

> 25 to 100 kW $65.63 $65.88 $70.95 $66.65

> 100 to 200 kW $53.48 $53.73 $60.47 $56.12

> 200 to 500 kW $47.80 $48.04 $55.46 $51.09

> 500 to 2,000 kW $44.37 $44.62 $52.28 $47.88

Adjustable Block ProgramPricing Update

% Small Subscriber Participation

Ameren ComEd

Less than 25% $0.00 $0.00

≥ 25 - 50% $11.17 $10.88

≥ 50 - 75% $22.34 $21.77

≥ 75% $33.51 $32.65

• Order approved IPA’s Feb 27th changes where IPA adopted several changes to the REC model

• IPA will publish updated, final numbers within 60 days of Order

• Declines by 4% each block, but IPA to monitor the program and can implement any adjustment less than 25% of REC price without formal approval by the ICC

Find IPA’s Feb 27th update here: https://www2.illinois.gov/sites/ipa/Pages/2018-Long-Term-Renewable-Appendices.aspx

Community Solar Adders

Note: REC pricing is not final.

• Project maturity requirements to reserve capacity:• Proof of site control and/or host acknowledgement

• Signed Interconnection Agreement ( > 25 kW)

• Evidence of having obtained all applicable non-ministerial permits (> 25 kW)

• Project Development Timelines• Energization from time of contract approval: DG – one year;

Community Solar – 18 months

• Ability for certain extensions including mechanical completion; legal delays; 6-mo extension for $25/kW deposit (refunded upon completion); additional 6-mo extension with additional deposit for Community Solar subscription levels

Adjustable Block ProgramProject Maturity Requirements & Development Timelines

• REC payment and annual delivery obligation included in contract. • Option of using a standard capacity factor or proposing their own• Annual contract delivery requirements will be reduced by 0.5% each

year to account for degradation of systems

• 100% annual delivery requirement each year of the 15-year term with production determined by a rolling three year average

• Any over-production in a given year rolls forward for the life of the contract

• In event of underproduction, collateral is drawn down and Approved Vendor must replenish

• Project not entitled to additional compensation if carryforward remains when project-specific contract expires

• Collateral required to ensure delivery of RECs for full term • 5% of full contract value• Approved Vendors may choose to have utility withhold collateral

amount from the REC payment rather than maintaining ongoing collateral levels

Adjustable Block ProgramREC Delivery and Collateral

• Single subscriber cannot have over 40% of a project’s capacity• No small subscriber requirements – adder and Block 1 lottery preference

• Customer and project must be within the same utility territory

• Community solar credit value = subscriber’s energy rate• Default customers = Supply portion of bill (i.e. ComEd – fixed resi and

hourly C&I under 100kW receive energy plus capacity)

• Competitive supply customers = determined by ARES

• At least 50% of subscribership at time of energization.

• Initial REC payment based on subscriber levels at energization• 12 months to fill subscribership

• True-up of REC payment for final subscribership levels

Adjustable Block ProgramCommunity Solar Requirements

• Co-location for on-site NEM systems: allowed for up to 2 MW• Total solar capacity at customer’s location will be considered single

system for purposes of applying REC price (i.e. 2 200 kW arrays will count as a 400 kW system for Adjustable Block Program)

• NEM systems and community solar systems will be considered separately and not impact each other

• For Community Solar systems• Approved Vendors may apply for up to 4MW of Community Solar

projects on same or contiguous property, if:

1. Two 2MW projects on one parcel; or

2. One 2MW project or each of two contiguous parcels

Adjustable Block ProgramCo-location

• Solar companies must apply to become Approved Vendor

• Projects ‘batched’ into portfolios between 100kW and 2MW

• Application fee of $10/kW, capped at $5,000 per project to offset administrative costs

• Contract for REC payment and obligation for delivery between utility and Approved Vendor

• Each contract must be approved by the Commission• IPA to develop standards for the Commission to use in its review process

• Approved Vendor criteria and process as well as contract and criteria to be developed during implementation phase

Adjustable Block ProgramApproved Vendor, Batching, Contracting

• IPA to develop consumer protection requirements prior to opening of the ABP

• Requirements limited to subscriptions and projects under 25kW

• Pathway for systems/subscriptions energized or contracted before consumer protections are finalized:• When submit application, must provide Program Administrator with

signed contract amendment that brings contract into full compliance, signed disclosure form, and proof that IPA-developed brochure was provided to customer.

• Declaration forms a developer can use if customers not responsive.

• IPA retains right to deny projects they determine to be using deceptive marketing or bad faith business practices.

Adjustable Block ProgramConsumer Protections

• Implementation of the Long-Term Plan• Development of consumer protections, REC prices finalization,

REC contract, REC marketing rules, Approved Vendor roll-out

• Implementation nuances to be ironed out

• Smart Inverter Tariffs

• Interconnection queue management/deposits

• Value of DG process

• NEM cap calculation and transition

Adjustable Block ProgramThe work continues…

Timeline & Next StepsThe work continues…

• Mid-April/mid-May: IPA seeks approval form Commission for selection of Program Administrator

• Early June: Finalized REC Prices

• Development of contracts, Program Manual, online portal, consumer protections, etc

• Smart Inverter Tariffs – Final decision required within 240 days from filing

• ABP Opening• IPA: ‘Due to scope and complexity (…), it is reasonable to assume that it will

take several months for the Program to launch.’• ICC: ‘The Plan states that the ABP will launch at the earliest in late 2018.’

NOTE: All dates somewhat speculative and subject to change.

Questions?Lesley McCain, ISEA Executive Director

lesley.mccain@illinoissolar.org