March 27, 2019
By: Kacie Peters
Director of Business Development
It’s hard to understate the sheer scale and impact of the California Gold Rush. When 300,000 people moved to California in a span of 7 years, it brought some “growing pains.” Entire city governments emerged from dust, often sparking a bloody battleground for control, earning the name, the Wild West.
And, the modern community solar rush in Illinois is (mostly) no different.
As of Q4 2018, Illinois had around 100 MW of solar in the entire state. In the next five years, the amount of solar capacity installed in Illinois is expected to grow by more than 1,700%, to 1,600 MW according to SEIA.
Arguably the most aggressive growth is going to happen in community solar. As I write this, there is one pilot sized community solar project in the state. This winter, over 2 GW were entered into the state lottery, with 200 MW of community solar gardens expected to go online in the next couple of years.
But just like the first rush, there are a lot of uncertainties in the market, and a lot of new players vying for space. So, to strike it right in this Wild (Mid) West, you’ll need to know the players and strategies you need to find gold in them thar… prairies.
Players in the IL Energy Space
The single most important factor that will govern community solar in IL is the state’s history as a deregulated energy market. In 1997, the state separated the Investor Owned Utilities (IOU) from energy suppliers. Basically, ComEd and Ameren are now separate from Alternative Retail Electric Suppliers (ARES) who provide contracts for the electrons that power homes and businesses.
With that in mind, here are the major players in IL:
ComEd: The IOU in the northern half of the state. ComEd owns wires and is responsible for interconnection to the grid.
Ameren: Same as ComEd, but in the south.
Exelon: ComEd is the parent company of ComEd (but legally speaking, they aren’t the same company.). Exelon owns a lot of the energy generation in IL, including the nuclear facilities that were bailed out as part of the FEJA.
ARES: Short for Alternative Retail Electric Supplier. Typically, ARES contracts with individuals directly or through municipal aggregation. Contracts with ARES are typically 2-3 years (this is important later) and because pricing is based on hedges, consumers who exit early owe penalties.
Regulators, including the Illinois Power Agency (IPA), Citizens Utility Board (CUB), and the Attorney General: The IPA sets the rules for community solar, but CUB and the Attorney General’s office are the ones who go after providers who violate them.
How does this impact community solar?
Going from zero to 60 in a matter of months is difficult in any market, but IL has unique challenges that can make things even harder for community solar develops, including:
- Consumers that are used to shopping around
- Traditional contract terms with ARES that don’t meet community solar timelines
- A history of general skepticism for green energy claims and any rate escalators
- All RECs are owned by the IPA, so messaging community solar within regulations can be tricky
- The largest market for consumers (Chicago) is full of renters with small electric loads, meaning more subscribers
- And (most notably), solar in general is pretty new to Illinois- from my experience, customers don’t believe it even physically produces energy in a state with only 189 sunny days a year, and annual snowfall off 37 inches
How can I strike gold?
There is a lot of grit in the wild (Mid)west. Likewise, there are opportunities, if you are positioned in the right place with the right tools and knowledge.
For community solar developers to be truly successful, they need to have a deep understanding of the energy market history, be able to educate consumers on a new product, while simultaneously keeping costs low and managing the expectations and timelines of various project stakeholders and regulators. It’s a lot to tackle simultaneously, but it can be done.
In this blog series, I’ll be covering the trickiest areas of this new market, including market dynamics, marketing language, engagement tools, and the how to gage the real costs of a community solar asset.