Rate-based returns on distributed resources could allow utilities to displace traditional investments and drive a community solar boom.
Coommonwealth Edison, the power provider for Chicago, has long talked about becoming the utility of the future. How it and Illinois power players implement last year’s sweeping energy reform could go a long way to realizing that goal.
ComEd helped design the Future Energy Jobs Act (FEJA), which includes supports for in-state nuclear plants and renewable energy. The law’s backers say it could boost Illinois solar capacity from 74 MW to 3,000 MW by 2030 and add 1,350 MW of wind to the state's 2016 total of 4,026 MW.
“The three pillars for ComEd were renewables, energy efficiency, and zero emissions credits for nuclear plants because we know customers want something different from their utilities,” said Scott Vogt, ComEd vice president for energy acquisition.
Resource supports aside, ComEd and other stakeholders say the most significant changes in the law involve utility revenues — particularly how they can make money from solar and energy efficiency investments.
“With this bill, we can invest in community solar or energy efficiency or poles and wires and have the same value stream,” Vogt said. “That changes our business model to a poles and wires company that offers services and facilitates solar and energy efficiency.”
The FEJA allocates $140 million per year for the purchase of renewable energy credits (RECs) to support new solar and wind projects, according to to a recent report from the Smart Electric Power Alliance (SEPA) and ScottMadden, “DERs Are Coming and Illinois Is Ready for Them.”
More importantly, the law allows utilities to treat rebates to rooftop and community solar owners and for energy efficiency expenditures as “virtual regulatory assets,” SEPA reported. The expenditures can be rate-based and earn guaranteed return, potentially allowing them to displace traditional utility investments in grid and generation infrastructure.
The act’s comprehensive community solar framework also provides front-loaded REC contracts for subscribers that, along with the rate based rebates, could drive a community solar boom in Illinois.
Bradley Klein, a senior attorney at the Environmental Law and Policy Center (ELPC), participated in the FEJA proceedings and negotiations. After stakeholders negotiated a net energy metering (NEM) successor tariff, ComEd “worked closely with the community solar industry to prepare the law for implementation.”
Vogt said the Illinois law will make community solar “different than it has been in other places,” but “there is nothing that will prevent our program from being a success.”
Just how successful the programs will be, stakeholders say, will depend on decisions coming in the next few weeks from the Illinois Power Agency (IPA).
View all SMART GRID Bulletins click here