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Illinois

Illinois

Incentives/Policies for Renewables & Efficiency

Printable Version
Renewable Portfolio Standard   

Last DSIRE Review: 08/27/2014
Program Overview:
State: Illinois
Incentive Type: Renewables Portfolio Standard
Eligible Renewable/Other Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Anaerobic Digestion, Biodiesel
Applicable Sectors: Investor-Owned Utility, Retail Supplier
Standard:25% by compliance year 2025 - 2026
Technology Minimum:Wind (IOUs): 75% of annual requirement (18.75% of sales in compliance year 2025-2026)
Wind (ARES): 60% of annual requirement (15% of sales in compliance year 2025-2026)
PV (All): 6% of annual requirement in compliance year 2015-2016 and thereafter (1.5% of total sales in compliance year 2025-2026)
Distributed Generation (IOUs): 1% of annual requirement in compliance year 2015-2016 and thereafter (0.25% of sales in compliance year 2025-2026)
Credit Trading:Yes (M-RETS, PJM-GATS)
Credit Transfers Accepted From:MIRECS into PJM-GATS
(Refers to tracking system compatibility only, not RPS eligibility. Please see statutes and regulations for information on facility eligibility)
Credit Transfers Accepted To:PJM-GATS into MIRECS
M-RETS into MIRECS, NC-RETS, NAR
(Refers to tracking system compatibility only, not RPS eligibility. Please see statutes and regulations for information on facility eligibility)
Web Site: http://www.icc.illinois.gov/electricity/procurementprocess2013.as...
Authority 1:
Date Enacted:
Date Effective:
HB 1458
08/22/2011
08/22/2011
Authority 2:
Date Enacted:
Date Effective:
§ 20 ILCS 3855/1-75
08/28/2007
08/28/2007
Authority 3:
Date Enacted:
Date Effective:
Public Act 96-0159
08/10/2009
08/10/2009
Authority 4:
Date Enacted:
Date Effective:
ICC Order 09-0342
07/29/2009
07/29/2009
Authority 5:
Date Effective:
83 Ill. Adm. Code, Part 455
07/19/2010
Authority 6:
Date Effective:
§ 220 ILCS 5/16-115D
06/01/2009
Authority 7:
Date Enacted:
Date Effective:
SB 1652
10/26/2011
10/26/2011
Authority 8:
Date Enacted:
Date Effective:
H.B. 2427
06/28/2014
06/28/2014
Summary:

Note: In June 2014, Illinois’s governor signed H.B. 2427, which released $30 million of roughly $54 million in the Renewable Energy Resources Fund to the Illinois Power Agency for the purchase of photovoltaic (PV) power. Of the released funds, half are set aside for PV systems less than 25 kilowatts in nameplate capacity, such as residential rooftop systems.

In August 2007, Illinois enacted legislation (Public Act 095-0481) that created the Illinois Power Agency (IPA). The agency’s purpose is to develop electricity procurement plans for investor-owned electric utilities (EUs) supplying over 100,000 Illinois customers to ensure “adequate, reliable, affordable, efficient, and environmentally sustainable electric service at the lowest total cost.” The only EUs that meet these criteria and are therefore subject to the IPA procurement process are Commonwealth Edison (ComEd) and the Ameren Corporation companies (AmerenCILCO, AmerenIPL, and AmerenCIPCO).

Eligible Technologies

For EUs: a minimum of 75% of the renewable energy must come from wind power, and the remaining amount (25%) can come from other eligible renewables. For EUs, the solar requirement begins EY 2013 and ramps up to 6% of the standard by EY 2016, as summarized in the table. EUs must meet interim solar requirement percentages, but ARES are not subject to this requirement. Lastly, SB 1652 implemented a distributed generation requirement for EUs beginning in EY 2014. The requirement increases to 1% by EY 2016 and thereafter. To the extent possible, at least half of the resources procured from renewable energy generation must come from systems less than 25 kW in capacity.

For requiring alternative retail electric suppliers (ARES): a minimum of 60% of the renewable energy must come from wind power, and the remaining amounts (40%) can come from other eligible renewables. These resources include solar thermal (electricity), photovoltaics (PV), dedicated crops grown for energy production, untreated and unadulterated organic waste biomass, trees and tree waste, in-state landfill gas, biodiesel, hydropower that does not involve the construction of new dams or significant expansion of existing dams,"other such alternative sources of environmentally preferable energy," which may include (among other resources) waste heat from industrial processes and anaerobic digestion. Several means of energy production are specifically excluded from standard eligibility: the incineration of tires; garbage; general household, institutional and commercial waste; industrial or office waste; railroad ties; utility poles; landscape waste other than trees and tree waste; and construction or demolition debris other than untreated and unadulterated waste wood. 

In order for a system to qualify under the distributed generation requirement, systems must be 2 MW or less and powered by wind, solar thermal, PV, biodiesel, biomass, tree waste, or hydropower.

Requirements

The IPA plans and administers the competitive procurement processes that result in bilateral agreements between the utilities and wholesale electric suppliers. The procurement plans must include procurement of cost-effective renewable energy resources—per the RPS schedule outlined below. Originally, the RPS applied only to electricity sold retail under the bundled, fixed-price tariff for the above mentioned utilities.* However, amendments within Public Act 095-1027 that were later replaced with Public Act 096-0159 extended the scope of the RPS by requiring ARES and EUs that sell outside their service territories to comply with the RPS starting June 1, 2009. (These entities are hereafter referred to collectively as ARES.) Municipal and cooperative utilities are exempt from the RPS. H.B. 1865, enacted in August 2011, allows multi-jurisdictional utilities with less than 100,000 Illinois customers to request a procurement plan from the IPA. Such utilities will be subject to the renewable portfolio standard (RPS) requirements.

The required percentages of each category and the total renewables percentage required (the overall standard) are listed in the tables below. The term EY refers to compliance period or “energy year” for the standard, which runs from June - May and is defined by the year in which an energy year ends.

Table 1: RPS schedule for EUs**

Energy Year Overall Standard (% of Retail Electric Sales to Come from Renewables) Solar Requirement (% of the Standard) % of Retails Electric Sales from Solar Wind Requirement (% of the Standard) % of Retail Electric Sales from Wind Distributed Generation Requirement (% of the Standard) % of Retail Electric Sales from Distributed Generation
EY 2009 2% -- -- 75% 1.50% - -
EY 2010 4% -- -- 75% 3.00% - -
EY  2011 5% -- -- 75% 3.75% - -
EY 2012 6% -- -- 75% 4.50% - -
EY 2013 7% 0.5% 0.0035% 75% 5.25% - -
EY 2014 8% 1.50% 0.120% 75% 6.00% 0.5% 0.04%
EY 2015 9% 3% 0.270% 75% 6.75% 0.75% 0.0675%
EY 2016 10% 6% 0.600% 75% 7.50% 1% 0.1%
EY 2017 11.5% 6% 0.690% 75% 8.625% 1% 0.115%
EY 2018 13% 6% 0.780% 75% 9.75% 1% 0.13%
EY 2019 14.5% 6% 0.870% 75% 10.875% 1% 0.145%
EY 2020 16% 6% 0.960% 75% 12.00% 1% 0.16%
EY 2021 17.5% 6% 1.05% 75% 13.125% 1% 0.175%
EY 2022 19% 6% 1.14% 75% 14.25% 1% 0.19%
EY 2023 20.5% 6% 1.23% 75% 15.375% 1% 0.205%
EY 2024 22% 6% 1.32% 75% 16.50% 1% 0.22%
EY 2025 23.5% 6% 1.41% 75% 17.625% 1% 0.235%
EY 2026 25% 6% 1.50% 75% 18.75% 1% 0.25%


Table 2: RPS schedule for ARES

Energy Year Overall Standard (% of Retail Electric Sales to Come from Renewables) Solar Requirement (% of the Standard) % of Retails Electric Sales from Solar Wind Requirement (% of the Standard) % of Retail Electric Sales from Wind
EY 2009 -- -- -- -- --
EY 2010 4% -- -- 60% 2.40%
EY 2011 5% -- -- 60% 3.00%
EY 2012 6% -- -- 60% 3.60%
EY 2013 7% -- -- 60% 4.20%
EY 2014 8% -- -- 60% 4.80 %
EY 2015 9% -- -- 60% 5.40%
EY 2016 10% 6% 0.60% 60% 6.00%
EY 2017 11.5% 6% 0.690% 60% 6.90%
EY 2018 13% 6% 0.780% 60% 7.80%
EY 2019 14.5% 6% 0.870% 60% 8.70%
EY 2020 16% 6% 0.960% 60% 9.60%
EY 2021 17.5% 6% 1.05% 60% 10.50%
EY 2022 19% 6% 1.14% 60% 11.40%
EY 2023 20.5% 6% 1.23% 60% 12.30%
EY 2024 22% 6% 1.32% 60% 13.20%
EY 2025 23.5% 6% 1.41% 60% 14.10%
EY 2026 25% 6% 1.50% 60% 15.00%


Per the statute, an EU’s renewable obligation "shall be measured as a percentage of the actual amount of electricity (megawatt-hours) supplied by the electric utility to eligible retail customers in the planning year ending immediately prior to the procurement." The IPA's first procurement plan, for the June 1, 2009, to May 31, 2010, period, is available in ICC Docket 08-0519. The IPA's procurement plan for June 1, 2010 to May 31, 2015 is available in ICC Docket 09-0373 (see the Order issued December 28, 2009).*** The 2013 draft procurement plan, covering EY 2014-EY 2018, is available on the program web site above.

Compliance
The renewable obligation for ARES is measured as a percentage of the actual amount of metered electricity (megawatt-hours) supplied by the ARES in the compliance year, as reported for that year to the Commission. ARES must meet at least 50% of their renewable quota through alternative compliance payments (ACPs). The remaining 50% of the obligation may be met with ACP payments, or by procuring renewable energy or renewable energy credits (RECs). They must utilize the PJM Environmental System Generation Attribute Tracking System (PJM-GATS) or the Midwest Renewable Energy Tracking System (M-RETS) to independently verify the quantity and source of renewable energy resources procured. The ICC has dedicated a web page to the Renewable Portfolio Standards For ARES.

The money derived from ACPs submitted by ARES is remitted directly to ICC. The ICC forwards that money to the IPA's Renewable Energy Resources Fund to be used for the purchase of RECs at a price not to exceed the winning bid prices for like resources under the IPA's procurements for electric utilities. Thus the IPA central procurement model used for bundled sales from electric utilities effectively extends to at least 50% (and possibly more) of the load served by ARES. The ACP rate fluctuates from year to year based on the results of IPA procurement events. Additional information on the ACP rate is found on the ICC web site.

Interconnection

The systems must be interconnected on the customer side of the electric meter at the distribution system level of an EU, an ARES, a municipal utility, or a rural electric cooperative. The IPA will contract with third-party aggregators that will purchase the resources from individual distributed generators through contracts of at least 5 years and in groups of no less than 1 MW of capacity.

Credit Multipliers

Resources that are counted toward the distributed generation requirement may also count toward the wind and solar requirements.Renewable energy may be procured either through energy bundled with RECs, or through the purchase of tradable RECs on their own. However, the IPA procurements for the distributed generation requirement will involve only RECs and not the associated energy. Utilities must retire credits that they use for compliance.

Cost Mitigation Measures

Renewable energy procurement is limited to “cost-effective” resources. The increase in cost to retail customers from the RPS in 2008 cannot exceed 0.5% of the amount paid per kilowatt-hour (kWh) during the year ending May 31, 2007. The cost cap changes each year through 2011, when it is the greater of an additional 0.5% of the amount paid per kWh during the year ending in 2010, or 2% of the amount paid per kWh during the year ending May, 2007. Thereafter, the cost is limited to the greater of 2.015% of the amount per kWh paid in 2007, or the incremental amount paid in 2011. The Illinois Commerce Commission (ICC) is to review the cap in 2011 and report to the General Assembly if it “unduly constrains the procurement of cost-effective renewable energy resources.” Secondly, the cost of procuring renewable resources must not exceed benchmarks based on market prices for renewable energy resources in the region, where the IPA procurement administrator will determine the benchmarks.

Carve-Outs

For EUs, through 2011, eligible resources must be located in-state. If there are insufficient cost-effective in-state resources, resources can be procured from adjoining states. If these also fail the cost-effectiveness tests, resources can be procured from other regions of the country. After 2011, equal preference is given to resources within IL and adjoining states. If neither is cost-effective, resources from other regions can be considered eligible.

Program Administrator Types
The IPA has contracted two "Procurement Administrators" that support procurement of electricity supply and renewable energy, and these administrators maintain web sites for ComEd and Ameren with additional information about requests for proposals. Compliance reports are due by September 1 to the ICC.The Illinois Power Agency Act also requires utilities to establish annual energy-savings goals, through which utilities must meet 0.2% of energy delivered through cost-effective energy efficiency in 2008, rising to 2% of energy delivered in 2015 and thereafter. In February 2008, the ICC approved utility implementation plans for these requirements, available in Dockets 07-0539 (Ameren) and 07-0540 (ComEd).

* According to the June 2009 - May 2010 procurement plan (ICC Docket 08-0519), eligible retail sales comprised roughly 47% of total electricity usage by ComEd customers and 45% of Ameren customers' total electricity usage in June 2008.

**With regard to distributed generation requirements, the table below presents one possible interpretation of the language in SB 1652. An alternative interpretation could be that each of the individual resource tiers (solar, wind, and other renewables) are required to have a 1% distributed generation component.

*** The June 2010 - May 2015 procurement plan includes provisions for long-term contracts for 1,400,000 MWh per year (ComEd) and 600,000 MWh per year (Ameren), which represent approximately 3.5% of each utility's eligible retail load.

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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.