Solar Market Benefits From Illinois ‘Nuclear Bailout’ Bill
On the final day of its veto session, the Illinois General Assembly approved the Future Energy Jobs Bill (S.B.2814), controversial energy legislation that ultimately received support from environmental and solar advocates. Gov. Bruce Rauner, R-Ill., signed the bill on Dec. 7.
The final legislation is the result of months of negotiations and compromise between Illinois-based utility Commonwealth Edison (ComEd), parent company Exelon, energy and environmental groups, and the governor’s office, among other stakeholders.
Although the comprehensive bill includes myriad energy-related provisions, it contains what has commonly been deemed a “bailout” for two of Exelon’s struggling nuclear power plants in Illinois. Without subsidies provided in the bill, Exelon had warned that it would need to close down the Clinton and Quad Cities nuclear facilities, cutting over 4,200 jobs.
Before backing the legislation, which is expected to help keep the nuclear plants open for another 10 years, Rauner reached an eleventh-hour agreement with ComEd and Exelon to ensure the bill included cost caps.
“When this legislation was originally drafted, it was a Christmas tree loaded with special-interest goodies that would have skyrocketed energy costs on families and businesses across the state,” says Rauner in a statement. “So, we needed to find a balance, because I was unwilling to gamble with these communities, gamble with thousands of good-paying jobs and gamble with our energy diversity. While this legislation isn’t perfect, it allows us to protect jobs, ratepayers and taxpayers.”
Despite its nuclear provisions, the energy bill still garnered support from a range of renewable energy and environmental organizations. According to the groups, the legislation is poised to “fix” Illinois’ renewable portfolio standard (RPS) and boost clean energy in the state. The bill includes some solar-specific provisions and leaves out proposed plans that could have hurt the state’s solar market. It also expands energy-efficiency programs.
The legislation maintains Illinois’ current 25% by 2025 RPS goal, but it modifies how the mandate should be met. For example, Illinois energy providers will no longer be able to meet certain RPS requirements with existing or out-of-state projects – setting the stage for a boom in Illinois renewable energy development and, thus, clean energy jobs.
Andrew Barbeau, senior clean energy consultant for the Environmental Defense Fund (EDF), says the bill preserves the existing “cost cap on rates that customers have been paying for renewable energy for years, but redirects that money to go to actually building new projects, rather than buying cheap credits from projects already paid for by customers in other states.”
Barbeau says the RPS changes could lead to thousands of megawatts of new solar and wind development in Illinois – a state that currently has only 66 MW of installed solar capacity, according to the Solar Energy Industries Association. He also notes that the bill will require 50% of the revamped RPS’ solar carve-out to be met with rooftop and community solar projects.
In a statement from EDF, Barbeau says, “Illinois passed the most significant clean energy economic development package in the state’s history, bringing Illinois one step closer to a cleaner, more reliable energy system. Illinois now stands at the forefront of a smarter, healthier energy future.”
The bill also establishes the Illinois Solar for All program, which will offer “meaningful incentives” to low-income communities and job training, according to Vote Solar’s Melanie Santiago-Mosier.
In an online article, Santiago-Mosier writes, “While the fate of Exelon’s aging nuclear power plants got a lot of the attention, there are positive elements to the legislation.”
She notes, “[W]e think the Illinois Solar for All program, with a sustainable source of funding, the inclusion of job training and community engagement, promises to deliver the benefits of solar to the customers in Illinois who stand to gain the most.”
“With this legislation, Illinois will now be able to compete head-to-head with any other state in the nation in the race to build a renewable energy economy – and win,” says Lesley McCain, director of the Illinois Solar Energy Association. “This bill will mean more jobs for solar installers, more savings for solar customers and environmental benefits for all of us who gain when cleaner sources of energy are used.”
What isn’t included in the Future Energy Jobs Bill, though, is almost as important as what is.
For example, environmental advocates celebrated a victory after ComEd and Exelon agreed to remove proposed subsidies for coal-fired plants from the bill. Furthermore, the energy companies agreed to drop plans for mandatory residential demand charges, which Rauner’s administration called “insane,” and changes to net energy metering (NEM), which The Alliance for Solar Choice (TASC) warned would have hindered Illinois’ distributed solar market.
Instead of lowering residential NEM rates to wholesale ones, TASC says, the bill maintains the current retail rates for residential solar customers until an existing 5% cap is reached. After that, the energy companies plan to move to wholesale rates for residential NEM but provide a new rebate based on a locational value. Commercial solar projects, which already receive wholesale NEM rates, will get an additional rebate under the legislation.
“We are encouraged to see S.B.2814 pass without anti-consumer, anti-solar proposals,” says Amy Heart, director of public policy for Sunrun and spokesperson for TASC. “Legislators and utilities listened to the public and to consumer advocates – like Illinois Attorney General Lisa Madigan and AARP – and made it clear that job growth, the environment and energy choice are important.”
TASC warns that work still lies ahead in order to ensure Illinois regulators provide “a fair valuation of the benefits of rooftop solar” when the 5% NEM cap is reached in the future.
– Joseph Bebon
SunShot Establishes 2030 Solar Cost Targets
The U.S. Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy (EERE) has announced a new commitment for its SunShot Initiative to cut the cost of solar-generated electricity by 50% between 2020 and 2030. The DOE says this new target builds on the SunShot Initiative’s progress in helping the solar industry reach more than 90% of the initiative’s established 2020 goal in just five years.
Additionally, the DOE has announced up to $65 million for three new funding opportunities, subject to congressional appropriations, that will further drive down the cost of solar energy and accelerate widespread deployment.
“Both SunShot and the solar industry have made major strides to reduce costs for innovative technologies, which resulted in dramatic market growth and the creation of hundreds of thousands of American jobs,” says EERE Acting Assistant Secretary David Friedman in a press release. “These new goals and funding will further push down costs, save American consumers and businesses money, and create even more jobs.”
The DOE’s SunShot Initiative was launched in 2011, with the goal of making solar electricity cost-competitive with traditional energy sources without subsidies by 2020. In just five years, the DOE says, the initiative and the U.S. solar industry have achieved more than 90% of the established 2020 goal to reduce the cost of utility-scale solar PV electricity to $0.06/kWh; utility-scale solar electricity costs now average $0.07/kWh.
The new SunShot 2030 targets are $0.03/kWh for utility-scale PV, $0.04/kWh for commercial PV, and $0.05/kWh for residential PV. These targets are for areas with an average U.S. climate and without subsidies. In the sunnier regions of the country, achieving the SunShot 2030 targets would mean costs of $0.02/kWh for utility-scale solar, according to the DOE.
The agency says the program has also surpassed 70% of its commercial and residential cost targets in just five years, showing that the market is on track to achieve these goals by 2020. Recent modeling suggests that achieving the new 2030 targets could more than double the projected amount of nationwide electricity demand that could be met by solar in 2030 and beyond.
LADWP Launches Low-Income Solar Program
The Los Angeles Department of Water and Power (LADWP) has launched the Solar Rooftops Program (SRP), which the municipal utility says is designed for customers who may not have been able to benefit from solar in the past because of the high cost of installing panels.
The SRP is a pilot program open to qualifying residential homeowners on a limited basis in LADWP’s service territory, with areas of low solar penetration receiving priority enrollment. Part of LADWP’s overall Community Solar Program, the SRP is another step toward providing clean, efficient and sustainable sources of energy to customers, including those in underserved communities.
Under the SRP, LADWP will own and build photovoltaic systems between 2 kW and 4 kW on customers’ rooftops, as long as the rooftops meet eligibility criteria. The customers’ rooftop space will be leased for use by LADWP, and the solar systems will then be connected to the utility’s electric grid.
“The Solar Rooftops Program is another step in LADWP’s efforts to meet the goals of reaching 400 MW of solar power by 2017 outlined by Mayor Garcetti in the Sustainable City pLAn and doing so in a way that involves more Angelenos across the entire city,” says LADWP Commission Vice President William Funderburk. “By increasing the amount of rooftop solar, we also get closer to LADWP achieving the state-mandated goal of 33 percent renewable energy by 2020.”
The pilot aims to install solar panels on approximately 400 Los Angeles rooftops over a three-year period and will create local jobs through LADWP’s Utility Pre-Craft Trainee Program, which gives trainees valuable experience in solar installation. There are no upfront costs to customers, no credit checks are required, and LADWP would be responsible for operations and maintenance of the solar panels.
Customers participating in the SRP will receive a fixed monthly lease credit of $30 per month, or $360 per year, which pays for the use of a customer’s property. This credit will be fixed for 20 years, bringing the total cost of the pilot effort to $12.9 million, including construction, 20-year lease payments, administrative, operations and maintenance costs. To qualify, homes have to be owner occupied, meet all LADWP and Los Angeles Department of Building and Safety criteria, and have suitable rooftops. LADWP is expected to begin accepting applications for the SRP in early 2017.
A companion program called Shared Solar, designed to provide access to clean solar energy for Angelenos who reside in apartment buildings rather than single-family residences, is expected to be available in 2018. Shared Solar is another effort to expand solar power to more customers in LADWP’s service area by making it available to renters without rooftop availability on a one-year pilot basis.
Solar Groups Welcome Final NARUC Rate Manual
The National Association of Regulatory Utility Commissioners (NARUC) has released the final publication of its “Distributed Energy Resources Rate Design and Compensation” manual, and solar advocates have praised NARUC for its hard work and suggested the manual will help pave the way for solar-friendly policies.
Work on the manual began at the November 2015 NARUC Annual Meeting, with direction to a subcommittee to draft a distributed energy resources (DERs) manual to help states manage the myriad challenges associated with current rate design. A town hall meeting to discuss the draft version of the manual was held in Nashville, Tenn., at NARUC’s summer meeting in July. After that meeting, NARUC says, more than 70 comments from stakeholder groups were submitted to the subcommittee to consider for the final manual.
“This publication was a major undertaking by the staff subcommittee, and we appreciate their hard work and the many valuable comments we received from commissions and stakeholder groups,” says NARUC President Travis Kavulla of Montana in a press release. “Although the manual is not the final word on the subject, it will be a useful practical resource for regulators.”
As noted in the manual’s executive summary, “The reason for this manual is that the nature of electricity delivery, consumption, generation, and grid itself are changing, and changing rapidly.” Among other things, it discusses how DERs – including solar and other resources, such as energy storage – affect existing regulatory and utility models, as well as offers rate design and compensation options.
In a statement, Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association (SEIA), says NARUC “adopted a manual that was significantly improved due to their willingness to be open to input from stakeholders.”
“Time and again, state public utility commissions and independent researchers have found that distributed solar provides a net benefit to all consumers, and we’re happy to see this more adequately and accurately represented in the final version of this manual,” comments Gallagher. “Rate design is not a simple task, and it has far-reaching impacts. The manual recognizes that hard data and evidence is needed before imposing new rate structures on customers and that imposing class-wide rate design changes when DER penetration rates are low ‘would most likely be a disproportional response.’”
Rick Gilliam, director of Vote Solar’s DG Regulatory Policy Program, adds in a statement, “The manual contains a helpful balance between long- and short-term views, an open and more collaborative regulatory process, and a more expansive view of distributed energy resources, which actually include a broad and exciting range of clean technologies that can be deployed to add stability, control and reliability to the electric grid.”
In an article on Vote Solar’s website, Gilliam points out some key conclusions made in the NARUC manual, including the following:
Since all electric systems are affected by DER increases differently, before a jurisdiction embarks on the journey to implement substantive reforms due to the growth of DER adoption, it should look closely at data, analyses, and studies from its particular service area before any such actions are taken.
For the jurisdictions with low DER adoption and growth, there is time to plan and take the appropriate steps and avoid unnecessary policy reforms simply to follow suit with actions other jurisdictions have taken. Reforms that are rushed and not well thought out could set policies and implement rate design mechanisms that have unintended consequences such as potentially discouraging customers from investing in DER or making inefficient investments in DER.
In a statement, Julia Hamm, president and CEO of the Smart Electric Power Alliance (SEPA), says, “Perhaps one of the most critical and, certainly, most contentious issues now facing electricity utility regulators, utilities and the customers they both serve is the need to redesign rates to reflect the technological and financial realities of the 21st-century energy system now emerging across the country.
“This manual is an important step toward addressing the disconnect between traditional regulatory rate-making time frames and the speed of change triggered by new distributed technologies, such as solar, storage, demand response and electric vehicles,” she continues.
SEIA, Vote Solar and SEPA indicate they look forward to working with NARUC and state commissions across the U.S. to, as Gallagher says, help “unlock the full value of DERs.”
PG&E Officially Enters Solar NEM 2.0
Shortly after Pacific Gas and Electric (PG&E) indicated it would do so by the end of December, the California investor-owned utility (IOU) has reached its 2,409 MW cap for offering the original net energy metering (NEM) tariff to customers. PG&E solar customers are now being interconnected under the state’s successor program, known as NEM 2.0.
“The lead-up to the transition has been smooth. There was not a big surge in interconnections as PG&E approached the cap, so the transition did not come suddenly and catch customers off guard,” notes Brad Heavner, policy director of the California Solar Energy Industries Association (CALSEIA), which led the fight to protect NEM against utility opposition in early 2016. Despite the IOUs’ efforts to dismantle NEM, which they claim subsidizes solar customers and is an unfair burden on non-solar ratepayers, the power companies have said they ultimately support solar in the state.
CALSEIA explains that the NEM successor tariff requires new solar customers to pay a one-time application fee, which is $145 for PG&E, and increases the assessment of charges for public purpose programs. The latter is the equivalent of reducing the value of NEM credits by approximately $0.02/kWh. In addition, residential customers will need to be on one of three available time-of-use rate plans.
The solar organization estimates the combined impact for a typical residential solar customer will be in the neighborhood of $10.00 per month compared to NEM 1.0. Notably, existing solar customers were not subject to the new charges and will continue to have the original NEM tariff for the first 20 years of operation of their solar systems.
“The industry should be prepared for some hesitation in the market as the new tariff sinks in, but I expect it to be short-lived because NEM 2.0 continues to offer substantial value to most customers,” adds Heavner.
PG&E is now the second of the state’s three IOUs to enter NEM 2.0, following San Diego Gas & Electric’s switch to the successor program in June. According to CALSEIA, Southern California Edison (SCE) still has more than 500 MW of capacity available under NEM 1.0, and the organization does not expect that utility’s allotted cap to be reached before the deadline for the transition to NEM 2.0; therefore, SCE customers can expect to take service under the NEM 1.0 tariff if they interconnect by June 30, 2017.