Gov. Pat Quinn said he will sign legislation Saturday to free up $30 million for the purchase of solar energy for Illinois electricity customers, a move expected to help the state catch up on its lagging renewable energy goals.
“Thousands of average residents will soon get cheaper, cleaner energy, and we will create good paying jobs for working families in the process,” Quinn said in a statement.
The law, which is effective immediately, establishes a competitive procurement process to purchase energy from existing solar installations and new solar projects, particularly rooftop solar, which allows consumers to sell excess electricity back to the grid and receive “solar credits” if purchased as part of the state solar program.
“Increasing our investment in clean energy creates jobs, protects the environment and reduces our dependence on fossil fuels,” said state Senator Don Harmon (D-Oak Park), who sponsored the bill along with state Rep. Robyn Gabel (D-Evanston). “Over the past few years, we’ve seen wind energy take off in Illinois. I hope that this investment starts a similar revolution in solar energy.”
A glitch in the wording of state law has prevented solar power from being bought for Illinois electric customers over the last two years even though they have paid $53 million into a fund set aside for that purpose. An additional $80 million is expected by fall, according to Illinois Power Agency Director Anthony Star.
The problem is that the law allows the money only to be spent when power is purchased for Commonwealth Edison and Ameren Illinois customers. But those utilities have more power than they need because most of their customers fled for alternative suppliers. ComEd is a unit of Chicago-based Exelon Corp.
Several legislative attempts to fix the law have failed in Springfield. As a result, the state is failing to meet its goals for renewable energy purchases. Under the Renewable Portfolio Standard, the state is aiming to have 25 percent of the state's energy come from renewable sources like wind and solar by 2025.
Even though the state hasn’t been buying solar energy for Illinois consumers, some companies and homeowners are still generating solar power on their own. A billing mechanism called "net metering" allows those solar producers to run their meters backward when they produce more electricity than they consume.
But now solar owners could offset the cost of installing the solar panels by selling their renewable energy credits to Illinois electricity customers, as was intended under a 2007 law, adding an extra source of revenue.
The credits, whose values vary by state, are based on power production. Renewable energy producers receive one "credit" for each megawatt-hour produced in addition to offsetting electricity costs.
In May, lawmakers offered the solar bill as a temporary fix to the problem. A broader energy bill is expected to be hashed out as early as this fall – one which policy analysts say is expected to also incorporate reforms that would benefit the state’s nuclear plants which have been struggling financially against competing forms of energy, including renewables such as electricity generated by wind and solar.
The support of Exelon, which owns six nuclear plants in the state, is a key to any broader deal. Since wind and solar power compete with Exelon’s nuclear plants, the company has no reason to support a legislative fix for renewable energy unless there’s something in the mix for its nuclear plants.
In a note to investors Friday, Julien Dumoulin-Smith, executive director of equity research for electric utilities at UBS Securities in New York, said “ultimately any deal will focus on providing a quasi ‘market solution’ to compensate Exelon’s nuclear units” and that he expects that could include some adding nuclear power to the state’s definition of “clean energy,” a deal that would ultimately mean subsidizing those plants in some way.
Lawmakers signaled their support for Exelon in the last session by signing on to a resolution the company pushed that calls on state lawmakers to aid in pro-nuclear lobbying of the U.S. Environmental Protection Agency, the Federal Energy Regulatory Commission, electric grid operators and Congress.