Indexed REC-33: Why is an Indexed REC price structure being used for this 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 2022 Long-Term Renewable Resources Procurement Plan (“2022 Long-Term Plan”), filed on March 21, 2022 for Illinois Commerce Commission approval, discusses the changes to the IPA Act enacted through Public Act 102-0662. In particular in Section, the IPA states that “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.”

The RECs procured in this Indexed REC RFP must meet the definition of “Renewable Energy Credit” and “Indexed Renewable Energy Credit” as defined in the IPA Act. As described in Section V.5.4 of the RFP Rules, a Bidder must select an “Index Hub”, either the MISO Illinois Hub (“MISO-IL Hub”) or the PJM N Illinois Hub (“PJM-NIHUB”), for each Project for which a Bid is submitted in the bid form. If the Bid for a Project is selected by the evaluation and approved by the Commission, the Index Price, as defined in the Indexed REC Contract, that corresponds to the Index Hub selected in the bid form will be used for purposes of calculating the REC Monthly Price under the Indexed REC Contract.

For more information, please refer to the 2022 Long-Term Plan, available on the IPA’s website here and the Final Materials for the Indexed REC RFP here.