News Flash: Governor Quinn Signs Major Solar Legislation into Law

On Wednesday, Governor Quinn signed into law two pieces of major solar legislation. HB6202 and HB5429 create what’s commonly referred to as a renewable portfolio standard (RPS) in the state of Illinois. RPS legislation has to-date been the most effective form of solar legislation and has been the driving force behind solar adoption in the US. Here is the official press release and video.

Governor Quinn said, “Solar energy is the wave of the future, and it is important that our public utilities and homeowners are able to more easily increase their use of solar energy.” “We must do everything we can to increase our use of solar energy, which will help us protect natural resources and reduce our reliance on traditional energy sources, such as foreign oil.”

I couldn’t be more excited now that we finally have RPS legislation in Illinois. Let’s look at how that impacts home and business owners. I haven’t reviewed all of the details of the newly signed legislation but this is a basic guide to understanding RPS:

Summary
RPS legislation requires a percentage of grid electricity to come from
renewable sources. If power companies don’t develop enough solar capacity to meet the requirements of the standard, they will be required to purchase renewable energy credits from owners of solar systems or face alternative compliance fines. Each year, the percentage of power that must be renewable increases culminating in a 6% renewable standard by 2015.

Renewable Energy Credits
Renewable Energy Credits will be produced by every solar system in Illinois and can be sold to and purchased by power companies. The value of a solar REC varies from state to state but they are typically much more valuable than the electricity being created by the system. In New Jersey,
RECs are worth approximately five times the value of the electricity a solar system offsets. One REC is the equivalent of one megawatt hour of produced energy. These are incredibly valuable! How do you sell them? There are auction marketplaces for RECs like SRECTrade.com that help consumers navigate
the complex REC market and monetize their credits.

Alternative Compliance Penalty
So what happens if the power companies don’t buy credits or meet their renewable requirements? They are charged an “alternative compliance penalty.” For this reason, the price ceiling for RECs is set by the size of the penalty.

In State vs. Out of State
There are typically quotas for the RECs that power companies need to buy. A portion of the RECs must come from Illinois and the remainder can be purchased from solar systems outside of the state. The higher the in-state quota, the more growth we can expect in Illinois solar.

All in all, the new legislation is going to reduce payback on systems in Illinois and should be a major catalyst for solar market growth. I’m looking forward to watching the adoption and implementation of the new legislation.

If you’re interested in going solar, give us a call at 866-274-0642 and we can help you get started.