By Steve Daniels July 16, 2012
Chicago’s recent move to join more than 100 suburbs in allowing residents to buy cheaper power than that offered by Commonwealth Edison Co. could kill the construction of any more wind farms or other large-scale renewable-energy facilities in Illinois, clean-energy companies say.
Two major state energy laws have combined in an unanticipated fashion to make new wind farms and large-scale solar facilities impossible to finance. One requires an increasing percentage of the power consumed here to come from clean sources. The other allows municipalities to buy cheap electricity in bulk on behalf of their constituents.
Last year, developers in Illinois built more wind-power generators than any other state but California. Much of that activity was thanks to 20-year power-purchase contracts negotiated in late 2010 by the Illinois Power Agency, which buys power on behalf of ComEd.
But, with abnormally high utility rates prompting municipalities to contract with alternative power suppliers, the IPA’s customer base is expected to shrink by as much as two-thirds next year. It will bar more long-term deals with renewable-energy developers. That’s because the higher-than-market prices that wind and solar developments require would raise rates for the remaining utility customers by more than the 2 percent limit imposed by state law.
Ironically, many of the suburbs that secured cheaper pricing than ComEd’s have touted how they purchased 100 percent green power. But the suppliers they chose do that by purchasing certificates from existing renewable projects, often in far-away places like Texas.
“Development going forward is severely put at risk if we don’t do something,” says Joe Condo, general counsel at Chicago-based Invenergy LLC, the nation’s largest independent renewable-power firm, owned by wealthy local entrepreneur Michael Polsky.
Invenergy has developed more than 500 megawatts of clean power in Illinois—two wind farms and the state’s largest solar farm, near Streator, about 80 miles southwest of Chicago. It has 20-year contracts with the state to purchase power from the solar development, as well as parts of the two wind farms.
Mr. Polsky and other developers would like to build more in Illinois but say they can’t obtain financing without long-term purchase contracts.
Their solution: Change the 2007 state law that requires an increasing percentage of the electricity consumed here to come from clean energy. An electric bill includes two charges—one for energy and one for delivery. Currently the cost of renewable power is embedded in the volatile energy portion of a ComEd bill and is partly responsible for ComEd’s higher-than-market price. Advocates want to ensure that all customers, whether of ComEd or competing suppliers, pay equally for clean power by adding a surcharge to the delivery side of the bill.
The renewable-energy lobby is laying the groundwork for a Springfield lobbying campaign in the fall or spring.
They will get opposition from the state’s largest power generator, politically influential Exelon Corp., which owns six nuclear plants in Illinois.
“Right now, you have an excess of supply to meet the demand that’s out there,” says David Fein, Chicago-based Exelon’s vice president of state government affairs. “The market has spoken. It’s obviously not economic to build. A 20-year contract . . . doesn’t make sense.”
Further complicating matters is that House Speaker Michael Madigan, arguably the state’s most powerful politician, isn’t a fan of long-term energy contracts, particularly with renewable-power sources.
Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center and an advocate for more clean-energy construction in Illinois, says the political hurdles are surmountable.
“Renewable energy is strongly supported by the Illinois public,” he says. “This is a problem for people of good will to solve.”