Repowering chicago: accelerating the cleaner, more resilient and more affordable electricity market transformation
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- Utility Rate Design Structures
- Brownfields to Brightfields (B2B): Transforming Underutilized Former Industrial Sites into Solar Energy Development Brightfields
- Step 1 – Identify and Prioritize the Best Sites for Solar Brightfields in Chicago.
- Step 2 – Improve Financing Options for Brownfields to Solar Brightfields Developments.
- Step 3 – Remove or Reduce Other Barriers to Solar Brightfields Developments.
- The Quiet Revolution in Energy Efficiency: Seismic Shifts of Declining Electricity Use While the Overall Economy Grows
- Electricity Use and Sales Are Declining in the Chicago Region Because of Higher Energy Efficiency Driven by Both Technology Improvements and Public Policies
Net Metering is an important ratemaking approach that enables consumers with solar energy PV arrays to receive a credit for providing surplus generation back into the electricity grid at the same price that they purchase electricity from Commonwealth Edison. In essence, the utility meter “runs in both directions” as utility customers can offset (“net”) their purchases of electricity from the utility grid by providing solar-generated electricity back to the grid at the same rate. Net metering corrects the obvious unfairness of utility customers paying 12 cents for electricity purchased from Commonwealth Edison, but receiving only 4 cents when they sell surplus solar generation back into the grid. Moreover, the solar generation supplied to the grid is often made available at peak power use times – hot, sunny weekday afternoons – when the power is needed most for reliability and electricity market prices are highest. Studies from around the country suggest that net metering provides “rough justice” for solar energy producers that are supplying high-value peak electricity to the grid at times when it is needed the most. Net metering provides important financial support for distributed solar generation in Chicago as well as incenting decentralized grid support and reliability that benefits all. Chicago consumers and the City have strong policy and financial interests to support net metering for solar energy generators in Chicago. What will be Exelon’s and Commonwealth Edison’s positions as the current statewide caps on net metering are approached and solar energy generation increases?
The Illinois General Assembly approved Commonwealth Edison’s “formula rates” plan through 2019, over the Attorney General’s, consumer groups’ and the Illinois Commerce Commission’s objections. That insulates Commonwealth Edison’s profit margin and locks in higher rates that can be designed to either encourage or discourage customer-side solar energy and energy efficiency depending on how the utility’s charges are allocated between the front-end customer charge part of the bill (the base charge paid no matter how much or how little electricity the consumer actually uses) and the energy charge component of the utility bill, which is based on the amount of electricity used, respectively. As with the Wisconsin utilities’ higher fixed charges discussed above, if the Illinois Commerce Commission were to allow Commonwealth Edison to implement much higher monthly customer charges, that would discourage and disincent rooftop solar energy installations and energy efficiency improvements because consumers would pay the same monthly fixed charge even if they purchase much less electricity. The high fixed customer charges also discriminate against “lower-use” senior citizens and lower-income consumers who tend to use less electricity, thereby leading to opposition by AARP and low-income consumer organizations. By contrast, that rate structure rewards heavy air conditioner users with large homes and lots of electricity-using appliances and devices – namely, people who tend to be higher-income and “higher-use” electric utility customers. Thus far, the Illinois Commerce Commission has mostly resisted steeply raising fixed monthly customer charges. Commonwealth Edison has recently sought permission from the Illinois Commerce Commission to raise fixed charges for delivering their customers’ electricity. Following strong opposition from ELPC, the City of Chicago and others, Commonwealth Edison agreed to withdraw its request for now. In a recent Peoples Gas rate case, the Commission rejected the utility’s proposed increases to its fixed customer charge because: “It is patent that high customer charges mean the Companies’ lowest users bear the brunt of rate increases, and subsidize the highest energy users. Steadily increasing customer charges diminish the incentives to engage in conservation and energy efficiency because a smaller portion of the bill is subject to variable usage charges and customer efforts to reduce usage…” 28 This higher fixed, front-end customer charge issue, however, is likely to soon come up, again, before the Commission.
Converting Brownfields to Brightfields (B2B) is an innovative strategy to create sustainable and compact community economic development, increase direct access to clean energy, and reduce carbon pollution. Transforming underutilized industrial sites into solar brightfields can strengthen cities’ climate and energy resilience by reducing the load on the electrical distribution and transmission systems, which rely on vulnerable, long transmission lines that connect large and polluting centralized coal and nuclear power generating plants sited away from population centers.29 There are sweet spots for transformative solar energy development on underutilized industrial brownfield sites with easy grid access in Chicago and other Midwest cities. Vacant sites with good transmission access that aren’t good for other industrial and commercial redevelopment can be converted to energy generating “brightfields” by installing arrays of solar panels connecting to the electricity grid, enhancing reliability and resilience while creating jobs, generating clean energy and boosting local tax revenues. These sites can be developed into 1 MW – 20 MW solar energy projects, which are large enough to make economic sense and small enough to access the grid. Solar brightfield developments are a strategic component of accelerating distributed solar generation for Chicago. Successfully transforming blighted industrial sites to power- and revenue-generating solar brightfields advances urban sustainability, creates local clean energy jobs, and spurs local economic growth in communities hard-hit by recession. The Environmental Law & Policy Center has preliminarily identified about 200 potential B2B sites in Chicago and about 1,000 potential B2B sites across the Midwest. Site evaluation will involve careful review of industrial brownfields identified in federal and state inventory databases (Superfund, CERCLA, RCRA, MDEQ and other sources) and by local officials. The sites must be big enough to fit at least 1 MW of solar (4-8 acres depending on the configuration), have no visible shading from buildings and trees, appear to have no other higher best-use, and can gain community support. Step 1 – Identify and Prioritize the Best Sites for Solar Brightfields in Chicago. Chicago has many polluted urban brownfield sites, some of which are subject to U.S. EPA and Illinois EPA clean-up programs such as: (1) Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) sites – these are the dirtiest sites and are prioritized for clean-up through federal and non-federal Superfund grants; (2) Resource Conservation and Recovery Act (RCRA) sites – these are sites where contamination resulted from municipal and industrial waste management operations; and (3) Illinois Site Remediation Program (SRP) sites – voluntary clean-up projects aimed at reducing contamination to levels safe enough for redevelopment. The Environmental Law & Policy Center is working with City officials to analyze the cache of large, vacant industrial sites that our policy team has identified, which appear to have high potential for brightfield redevelopment. Step 2 – Improve Financing Options for Brownfields to Solar Brightfields Developments. The largest barrier is financing for new projects. Solar developers need a customer with a long-term power purchase agreement (PPA) for the energy supplied, available Solar Renewable Energy Credits (SRECs), or some combination of the two. B2B projects have no fuel costs over the project life. Fixing the Illinois RPS – and, possibly including a B2B carve-out as the City and some legislators have discussed – and developing a more stable and predictable market for these projects to sell their SRECs will advance a viable financing platform. Step 3 – Remove or Reduce Other Barriers to Solar Brightfields Developments. These include: (1) Streamline city zoning policies for B2B projects; (2) Reduce interconnection barriers; and (3) Identify local financial mechanisms to help lower the cost of capital, such as the Chicago Infrastructure Trust, or municipal aggregation contracts. Engaging communities to repurpose brownfield sites with new solar photovoltaic panels for clean energy production is a multifaceted win: it can create installation jobs, put the property back on city tax rolls, add value to the local community and help achieve cleaner air by putting solar energy on the grid and displacing more polluting electricity sources. There are also potential opportunities to combine B2B projects with small distributed solar installation on nearby multifamily housing and in “community solar gardens” because of lower panel (per unit) costs for the larger B2B projects and lower start-up costs because tradespeople are already doing installations in the community area. * * * Solar energy is on the verge of potential breakthroughs in Chicago. Accelerating solar energy will directly reduce carbon pollution and provide local power solutions, if the right policies are established. Distributing solar generation on the rooftops of buildings and homes can also lighten the load on the power grid and increase reliability. This is a transitional time for advancing significant, systemic change for a cleaner energy future “between the coasts” in ways that reduce carbon pollution, create more jobs and advance regional economic growth.
Seismic Shifts of Declining Electricity Use While the Overall Economy Grows Electricity use and demand are now declining in the Chicago region and broader Midwest while, at the same time, the overall economy grows. Game changing energy efficiency technologies, including LEDs, increasingly more efficient appliances, and sophisticated energy management systems, are causing significant reduction in electricity demand in Chicago and nationally.
The quiet revolution in energy efficiency through more efficient lighting, heating and cooling technologies, more efficient refrigerators and other appliances, better building design and more efficient pumps and motors is saving people and businesses money on their utility bills, creating installation jobs, keeping money in local economies, and reducing carbon and other pollution to protect public health and the environment. Three key data points:
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