Indexed REC-58: Where can I find more information about participating in an upcoming Indexed REC RFP? Is the Indexed REC Contract for both energy and RECs?

The IPA filed its 2024 Long-Term Renewable Resources Procurement Plan (“2024 Long-Term Plan”) with the Illinois Commerce Commission (“ICC”) on October 20, 2023 related to procurement activities, including future Indexed REC RFPs, for 2024 and 2025. The 2024 Long-Term Plan remains subject to approval by the ICC. Please see Section 5.6 of the 2024 Long-Term Plan, Table 5-6 in particular, for the proposed schedule for competitive procurements. If approved, the next Indexed REC RFP is expected to be held in Summer 2024.

The timeline and requirements for the Summer 2024 procurement event is expected to be in line with the timeline and requirements for procurement events held in 2023 for utility-scale solar projects. To review the Indexed REC Rules and Indexed REC Contract used in the Fall 2023 Indexed REC Procurement please visit the Final Materials page of the Indexed Wind, Solar, and Brownfield section of the website. A term sheet with procurement elements is also available. Please note that elements of the Summer 2024 RFP Rules and contract are subject to change.

Under the Indexed REC RFP, renewable energy credits (“RECs”) are the sole product being procured, but the contract is based on an indexed price structure. Bidders in the RFP submit a Strike Price ($/MWh), which as defined in the IPA Act, means a contract price for both energy and renewable energy credits from a project. As discussed in Section of the 2022 Long-Term Plan, in regard to the indexed price structure, “Under the Indexed REC pricing structure, a resulting REC price constitutes “the difference resulting from subtracting the strike price from the index price for that settlement period,” with the index price representing “the real-time energy settlement price at the applicable Illinois trading hub.” Under the law, “[i]f this difference results in a negative number, the [buyer] shall owe the seller the absolute value multiplied by the quantity of energy produced in the relevant settlement period.” But [i]f this difference results in a positive number, the seller shall owe the [buyer] this amount multiplied by the quantity of energy produced in the relevant settlement period.”

In Section, the IPA explains, “The Agency understands this new Indexed REC pricing approach to offer revenue certainty back to renewable energy project developers in a manner that functions similarly to a bundled fixed price REC + energy off-take agreement. In times when energy revenues are low, REC prices are high; in times when energy revenues are high, REC prices adjust downward accordingly. The end result is revenue certainty regardless of wholesale energy market conditions, hopefully solving financing and development barriers for entities seeking to develop new utility-scale wind and utility-scale solar projects under the Illinois RPS.”