Indexed REC-31: Is the RFP for bundled energy and RECs from the Project?

Renewable Energy Credits (“RECs”) are the sole product being procured in the Indexed REC RFP.  Upon the effective date of Public Act 102-0662, as described in Section 1-75(c)(1)(G)(v), “for all competitive procurements and any procurements of renewable energy credit from new utility-scale wind and new utility-scale photovoltaic projects, the Agency shall procure indexed renewable energy credits and direct respondents to offer a strike price.”

The 2024 Long-Term Renewable Resources Procurement Plan (“2024 Long-Term Plan”), issued on April 19, 2024 in accordance with the Illinois Commerce Commission order, discusses the indexed REC model enacted through Public Act 102-0662. In particular in Section 5.4.4, the IPA states that “from a bidder’s standpoint, this Indexed REC approach offers clear advantages. Given the limited market for energy-alone off-take agreements in Illinois and the inability for the IPA to offer bundled Power Purchase Agreements, an Indexed REC price structure offers bidders the revenue certainty of a bundled contract without exposing default supply rates to potentially uneconomic hedges. From the standpoint of developing the most possible renewable energy at the lowest possible cost, this approach offers advantages back to the state of Illinois as well; if bidders receive full revenue certainty at the Strike Price amount, then risk premiums built into bids should be reduced relative to a fixed-price REC delivery contract, allowing for the development of more renewable energy generation at a lower RPS budget impact”

For more information, please refer to the 2024 Long-Term Plan, available on the IPA’s website here and the Final Materials for the Indexed REC RFP here.