By: Michael Strong
September 15, 2021
On September 15, 2021, Governor Pritzker signed Senate Bill 2408 into law. This bill is known as the “energy omnibus” for its comprehensive changes to the Illinois energy landscape.
As with all major legislative changes, there are both new costs and new opportunities. It is difficult to overstate the potential impact of this legislation, especially the breadth and depth of new and expanded opportunities within the renewable energy industry in Illinois. The opportunities look quite different, however, depending on whether they are viewed from the perspective of an existing developer or owner of renewable generation, an aspiring developer or contractor, or a business looking to take advantage of the clean energy revolution for its facilities or fleet.
From a developer perspective, the energy omnibus frees up an estimated $290 million already collected and held by utilities for the purpose of funding contracts with new solar and wind projects that would (absent the legislation) have been used for other purposes. The legislation also puts safeguards in place so that these funds are less likely to be held up in the future. Absent this fix, the Illinois Power Agency projected that some utility contracts with renewable systems were at risk for delayed payment. This change solves what industry advocates have referred to as the “solar cliff.”
In addition to addressing the solar cliff, the legislation also directs new procurements designed to bring online enough systems to generate 10 million renewable energy credits (RECs) per year. By 2030, the goal is to incentivize enough renewable energy systems in Illinois to generate another 35 million RECs per year. Those goals will be met by a combination of wind and solar generation (55% solar, 45% wind), with solar split between utility-scale (47%), solar on brownfields (3%), and smaller “distributed” systems (50%). While certain of these systems will be procured through competitive procurements (for utility-scale and brownfield systems), smaller solar systems will be procured through the Adjustable Block Program. This program was modified to improve contracts, add strong new equity standards, and (for many systems) include a prevailing wage requirement. The first of the new procurements and new “blocks” within the Adjustable Block Program will begin starting 90 days after the effective date of the energy omnibus.
In a “restructured” state like Illinois—where all customers use the delivery network of their incumbent electric utility but may choose from many entities to provide energy supply options—customer opportunities are tied closely to industry opportunities. The renewable space is no different. Enhancements to a retail energy benefit known as “net metering” should provide customers with additional financial benefits from distributed systems, both from those on the customer’s premises (“behind the meter”) and from those systems where the output is shared with others, whether or not it is on the customer’s site (“community generation”). In addition, customers or system owners will be eligible for an expanded “smart inverter rebate” not only for distributed systems themselves, but also for battery storage that is combined with a renewable generation device.
Historically, most retail opportunities were restricted to distributed generation. The energy omnibus, however, introduces a new self-direct program that allows either very large energy customers (e.g., a data center or a factory) or a number of smaller customers aggregated together (e.g., a retail chain) to see a direct benefit on their energy bill if they enter into an agreement with a new utility-scale system and qualify for the self-direct program. Details for the program will be determined by the Illinois Power Agency.
While electric vehicles have been receiving increased regulatory attention in Illinois, the energy omnibus is designed to substantially expand the use of electric vehicles as part of a beneficial electrification program. Incentives include a per-vehicle rebate that begins at $4,000 per vehicle. Incentives are expected for charging infrastructure buildout as well.
The omnibus legislation addresses a wide range of other topics, including how utilities recover costs, workforce development programs, emission limits for fossil fuel generators, and modifications to utility-led energy efficiency programs. Substantial, but time-limited, opportunities may be available to your company, your vendors, or your investors. For instance, where company owners live or other company owner personal history may qualify companies as “equity eligible contractors” that will have expanded opportunities to support renewable energy, electric vehicle, and other development.
Whether your primary line of business is in the energy space or you simply want to optimize your company’s energy usage, you may want to reach out to your attorney to learn more about the opportunities the energy omnibus creates.