The Illinois Power Agency (“IPA”) today released a draft of the standard form contract to be entered into with developers of new, utility-scale wind and solar projects pursuant to Illinois Public Act 99-0906 (the “Future Energy Bill”), which became effective today, June 1, 2017. In addition, the IPA will soon release its draft Request for Proposal (“RFP”) rules for such projects. The Future Energy Bill provides a novel legal framework under which the IPA is effectively required to promote a significant expansion of renewable energy resources to serve the overall demand for electricity in Illinois. These additional renewable resources are necessary to satisfy Illinois’ aggressive goal of assuring that 25% of total retail sales of electricity in the state, including all sales by utilities and their retail competitors, originate from renewable energy generation sources by 2025. The Future Energy Bill establishes specific targets for different types of new renewable energy projects, including utility-scale, brownfield site photovoltaic, and distributed energy projects, that will produce renewable energy credits (“RECs”). The IPA will procure, through a competitive bidding process, substantially more RECs from qualified bidders than it has procured in the past. Winning bidders will receive payments for the RECs they provide through the IPA program, in addition to payments they will receive for sales of project capacity and energy to their customers.

The IPA plans to purchase 1 million RECs each from solar and wind utility-scale solar projects between June 1, 2017 and May 31, 2018 as its initial REC procurement under the new law. Within that time period the IPA has indicated that it will likely employ a three-stage procurement process for utility-scale solar and brownfield site photovoltaic projects, with the first stage commencing on or about August 10, 2017. However, the IPA plans to obtain the entire 1 million RECs from utility-scale wind projects in a single procurement on or about the same date. As noted above, today the IPA issued for public comment the draft standard form REC contract developers will be required to enter into with Ameren Illinois Company, Commonwealth Edison Company, or MidAmerican Company if their competitive price bids are selected. The draft standard form REC contract can be found at the following website: https://www.ipa-energyrfp.com/wind-and-solar/draft-documents/. In early June, the IPA is expected to issue for public comment the draft RFP rules containing the proposed RFP and procurement process description. Parties interested in becoming REC suppliers should carefully review and analyze the IPA’s draft standard REC contract and the soon to be issued draft RFP rules and file comments to propose any needed revisions.

In May 2017, a number of interested parties responded to a request from the IPA for comments on specific issues associated with becoming qualified to submit bids for the initial REC procurement from brownfield site photovoltaic, utility-scale solar and wind projects. These comments focused on several key issues: (1) the extent of project site control that should be required; (2) the degree of financial assurance necessary to construct a proposed project; and (3) whether REC contracts should provide flexibility for REC delivery (e.g., banking of RECs) to address situations where a project is unable to deliver the contracted annual quantity due to circumstances beyond the developer’s control (e.g., curtailment, weather conditions). Interested parties may need to consider these and other issues as they review both the draft RFP rules the IPA will soon publish and the draft standard REC contract the IPA just issued for public comment.

With a planned August 10, 2017 due date for REC procurement bids on the immediate horizon, interested parties will have a relatively short period of time to comment on the standard REC contract form and to gain an understanding of the RFP rules. The IPA has announced that it will host a webcast on June 6 to provide guidance for public comments on the draft standard REC contract form which will be due on June 14. The IPA has also announced a subsequent webcast on June 28 to present the terms of the final standard contract as well as the final RFP rules applicable to bidding. The IPA currently expects to receive initial Part I bidder proposals on July 17, and Part 2 proposals by August 2, before actual bids are submitted on August 10. Bidder training is tentatively scheduled for August 7.

This Alert focuses mainly on the earliest phase of implementation of the Future Energy Bill because it requires immediate attention. As the IPA proceeds to implement other aspects of the new law relevant to renewable energy project development, including the Long-Term Renewable Resources Plan required by the new law, we will issue further alerts. Also, Bryan Cave is sponsoring and presenting at a Solar Energy on Brownfields conference for landowners and developers to be held in Chicago on June 12 and 13, 2017.