Winning the Midwest: We look at how a new solar market is forming in the Midwest

Solar in the Midwest Map

You’ve probably heard, but more solar is being installed than ever before. As the cost of solar dropped the last decade, the economic case in areas of the country with high electricity prices was simple. This isn’t the case in the Midwest, where energy costs are lower, which keeps everyone mellower about the fossil fuels being mined and fracked in their backyards (we say this lovingly as Ohioans).

So, sure, most of the action is on the coasts, but even the Midwest is now starting to emerge from its cave, rub the soot from its eyes and see (and harness) the light.

Here’s what solar industry onlookers are buzzing about in the Heartland.

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Midwest Means MW-scale

Cheaper electricity and a less demanding public means the case for solar in the Midwest mostly starts with policy incentives, and with little public demand for action, the balance of political influence over the shape of those incentives is tipped a bit more to utilities and any other interested stake holders (legacy fossil fuel companies?).

Utility-scale projects represent a little over half of the installations to date in those Midwestern states and about three quarters of the 2016 installations, according to data sent our way by GTM Research. The distributed generation markets in each state are all quite small still — sub 10 MW per state in each of the residential and non-residential markets for all of 2016.

The latest legislative triumphs in the region all seem to support this trend too with renewable energy portfolio standards (RPS) being raised in Illinois and Michigan and unfrozen in Ohio (for now). The Illinois bill in particular was two years in the making and has solar developers excited.

“It creates an adjustable block schedule similar to the successful California Solar Initiative model,” says Owen Goldstrom from Alta Energy, an analytics and procurement company that identifies and executes opportunities for renewable energy. “It’s an opportunity that we are closely tracking, and communicating to our customers with property in Illinois.”

Emerging Opportunities

chicago illinois solar

RPS standards don’t necessarily directly translate to DG solar projects unless there is a way for a smaller scale distributed system to benefit from the renewable energy credits (RECs), Goldstrom says. So, it is worth noting that these RPS bills did come with DG benefits too. The legislation in Michigan helped preserve net metering rules going forward, and GTM Research’s Allison Mond says they are classifying Illinois as an “emerging residential market.”

“The Future Energy Jobs Bill passed in the state mandates that a quarter of the 675 MW of DG required for the new RPS standard consists of sub-10-kW systems,” she says. “Though the market is still quite small, we expect residential installations in the state to double in 2017 over 2016 capacity and then continue to grow by between 100 and 200 percent each year through 2021.”

Illinois also allows for third-party ownership (leases or PPAs) of systems.

Implementation of Illinois’ RPS bill is the top issue of SEIA’s Midwest Committee, which has been working with the Illinois Power Authority to “get the regulatory language that allows the intent of the bill to move forward,” says Sean Gallagher, VP of state affairs for SEIA.

Perhaps the biggest exception to all of our Midwest generalizing so far is in Minnesota, where community solar has grown to become the third largest community solar market in the country after California and Massachusetts.

“It went from a cute idea to big business in two years, and now community solar is really picking up,” says Jake Rozmaryn, CEO of Eco Branding, the agency that represents the Midwest Solar Expo, now in its fifth year. “Large-scale development in Minnesota was over 300 MW in 2016 and is expected to be over a 1 GW in five years. Traction is there.”

midwest-solar-installations-chart

Lingering Problems

We start in Indiana, which is ground zero for problematic energy legislation right now. The much-discussed SB 309 would phase out net metering in tiers: Early adopters would be able to keep net metering for 30 years; those who install between July 1 and 2022 can keep it for 15 years. Anyone installing after that date would be under the new rules.

What are the proposed new rules? Essentially it would be a “buy all, sell all” arrangement where solar customers sell their power back to grid for the wholesale rate (~3 cents per kWh), and then buy it back at the retail rate (11 cents per kWh).

The carrot in the bill for the solar industry is that power purchase agreements (PPAs) would be made legal.

UPDATE: That bill is no longer proposed — the Governor signed it into law.

Gallagher also pointed to Iowa, which doesn’t have a huge rooftop market yet, but has an important DG proceeding happening that will set rate terms and compensation structure going forward “and perhaps set some precedent in the Midwest.”

“We’re also paying attention to a bill in Missouri that would be harmful to rooftop solar,” he says. “We’re just trying to keep those markets open. It’s not a giant market, but we don’t want to see bills that just squash it.”

Arguably worse than the specific inhibitory policies is the general uncertainty lingering over much of the region. For example, we chatted with a developer based in New York who has been eyeing Ohio as a next great opportunity. Well, with the state passing a bill to freeze its RPS, which the governor vetoed, only to have a new, even more limiting bill be passed — how can anyone get a feel for how to proceed over the long term?

Political Will of the Midwest

Getting to this point was definitely not easy, and maturing the market from here will require even more work. Relaxed Trump-era carbon regulations might defibrillate the fossil fuel industries. Longer-term environmental and social arguments in general seem to carry far less weight than short-term costs, politically. Plus, Midwestern utilities have had the benefit of seeing net metered residential systems deployed on a large scale on the coasts, and some are trying to nip it on the bud. For example, ComEd tried to get a demand charge put into that aforementioned bill in Illinois, even though the net meter market in the state at the time was around 800 total customers. The Public Utilities Commission in Ohio is also considering proposals by several utilities in the state to double fixed rates for all customers.

But despite it all, the momentum is real. SEIA and the Environmental Law and Policy Center (ELPC) formed a Midwest coalition about two years ago thinking there were opportunities on the horizon for new markets to develop. It was a baby step. SEIA took a larger step this year and formed a Midwest Solar Committee.

“We recognized that there’s been some activity toward the end of last year that’s starting to bring those potential new markets forward, which provides justification for SEIA and its members to devote more attention to those states,” Gallagher says.

“Utilities in the Midwest have a lot of political clout,” Goldstrom says. “However, solar companies and industry organization have demonstrated a significant capacity to drive change and work with legislators on policy relating to both utility scale and distributed scale generation. I have been pleasantly surprised by the success of a lot of these lobbying efforts.”

By the way, ComEd’s demand charge request didn’t make it into the final version of the bill.

“I think the biggest success solar has had in the Midwest is becoming a competitive form of generation, and as solar prices continue to come down, the cost for electricity in general continues to go up, even in the Midwest,” says TJ Kanczuzewski, president of Inovateus Solar, based in South Bend, Ind. “Even in places that have some cheaper electricity from coal or hydro or even nuclear, electricity prices continue to rise by an average of 5 percent annually while solar continues to become more cost competitive.”

Residential Solar IllustrationROOM FOR Residential

As we wrote about the lagging prospects of residential rooftop solar in the Midwest, Sunrun became the first large national residential rooftop solar company to expand into the Midwest, setting up shop in Wisconsin.

Customers in Wisconsin can either own their system outright with Sunrun BrightBuy or own and finance it with Sunrun BrightAdvantage, using a loan arranged by Sunrun.

“We see a demand for solar that has been underserved in the state and look forward to giving residents a choice to reduce their electric bills with solar, while providing value to the grid,” said Lynn Jurich, CEO of Sunrun.

This highlights Sunrun’s ability to enter new markets in a low fixed-cost way through collaborating with local partners in the state. Sunrun’s economic investment is adding job opportunities in Wisconsin, and it is currently hiring for several positions for its solar team in Southeast Wisconsin.

Chris Crowell is managing editor of Solar Builder.

— Solar Builder magazine

Chicago steps up: City buildings to run on 100 percent renewable energy by 2025

A group of Chicago’s political leaders jointly announced their commitment to move their buildings’ electricity use to 100 percent renew-able energy by 2025 this week. When implemented, Chicago will be the largest major city in the country to have a 100 percent renewable energy supply for its public buildings.

“As the Trump administration pulls back on building a clean energy economy, Chicago is doubling down,” Mayor Emanuel said. “By committing the energy used to power our public buildings to wind and solar energy, we are sending a clear signal that we remain committed to building a 21st century economy here in Chicago.”

Plan details

Chicago solar energy plan

Lots of lights to power!

Collectively the City, CPS, the Park District, CHA, & CCC used nearly 1.8 billion kilowatt hours of electricity in 2016, amounting to eight percent of all electricity use in Chicago; it is the equivalent to powering approximately 295,000 Chicago homes. The electricity used by these agencies is the same amount of energy created by over 300 wind turbines in one year. The commitment will be met through a combination of acquiring renewable energy credits, utility-supplied renewable energy via Illinois’ Renewable Portfolio Standard, and on-site generation. Initial purchases will begin in 2018 and 2019.

“Today’s action is a historic step forward in establishing Chicago as a clean energy leader,” said Jack Darin, Illinois Sierra Club President. “By moving boldly to repower its public buildings with renewable energy like wind and solar, Chicago is leading by example at a time when local leader-ship is more important than ever. While President Trump and his administration would reverse America’s progress on climate change and clean energy, Mayor Emanuel is ensuring that Chicago will move forward, and that its residents will benefit from the good jobs and cleaner air that come from renewable energy projects. We look forward to working with the Mayor, community leaders, and the people of Chicago to achieve this bold goal on the path to eventually powering all of Chicago with 100% clean energy.”

RELATED: Sunrun becomes first large national installer to try Midwest expansion 

Mayor Emanuel announced Chicago’s new commitment on the rooftop of Shedd Aquarium, which has installed over 900 solar panels in an effort to reduce their energy use by 50 percent by 2020. As a member of Mayor Emanuel’s Retrofit Chicago Energy Challenge, Shedd Aquarium has also retrofitted nearly 1,000 of its own light bulbs to LED and installed a 60,000 pound, one-megawatt battery on their own property.

The City and its sister agencies have already made significant strides to green their energy sup-ply. In 2013, the City eliminated coal from the over 1 billion kilowatt hours in electricity it buys on an annual basis. A dozen CPS schools have had solar arrays installed since 2009, while the Park District and City Colleges currently procure large portions of their energy use from renewable sources.

Earlier this week, the U.S. Environmental Protection Agency announced the City of Chicago earned a 2017 ENERGY STAR Partner of the Year Award. It is given annually to honor organizations that have made outstanding contributions to protecting the environment through energy efficiency.

— Solar Builder magazine

AEE leads discussions on improving energy efficiency in Illinois

Advanced Energy Economy Instituteis meeting with utility, advanced energy, and thought leaders in Illinois (and Chicago, specifically) to discuss the status and barriers of the industrial energy efficiency sector. Increased communication with industrial users was a common theme echoed by many throughout the discussion.

advanced-energy-economyThe industrial sector is the largest user of energy, representing over 30 percent of total electricity usage in Illinois. Various technologies and services can make the use of energy in this industry more efficient. These include upgrades in motors, drives, and other equipment; industrial energy management systems, that analyze and manage energy consumption data within a production facility; demand response (DR) technologies that curtail energy use during periods of peak system demand; and combined heat and power (CHP), which produces both electricity and useful heat from the same fuel, either onsite or through CHP-powered district energy systems. An energy efficiency potential study prepared for Commonwealth Edison estimated that Illinois, by 2018, could easily achieve 5 percent cumulative achievable saving should cost caps remain in place. Without cost caps in place, Illinois would be able to 10 percent cumulative maximum potential if cost caps were lifted.

“There is an important role that industrial efficiency can play in Illinois that provides savings to both businesses and consumers, while spurring economic growth and local and state level,” said Ray Fakhoury, State Policy Associate, AEE. “Energy efficiency and demand response have saved consumers millions on the cost of energy. We thank today’s participants for coming together to identify opportunities and outcomes that could reduce barriers and increase participation and investments in energy efficiency.”

RELATED: First non-California utility achieves 1 GW of solar energy capacity 

AEE Institute brought together energy service business, end-users, city and government officials, and thought-leaders to discuss opportunities to capitalize on innovative technologies that save energy for industrial users and potential policy outcomes. The discussion highlighted projects completed by energy service companies in Illinois, which have helped industrial customers make their facilities more efficient and competitive. Additionally, participants learned about technologies available to the industrial sector to increase their competitiveness and reduce their energy costs. The group focused primarily on challenges surrounding the industrial efficiency sector, including: financing projects, consumer awareness, and improving access to data.

“Data access and energy intelligence software (EIS) are vital tools that helps end users control their energy use in real-time and to actively manage their energy costs,” said Greg Poulos, Director, Regulatory Affairs, EnerNOC. “The ability to identify savings opportunities and work directly with energy experts provides business leaders with an added value proposition to participating in energy efficiency.”

While Illinois continues to make significant progress on energy efficiency, more can be done to help all consumers. Illinois is presented with various opportunities for improving efficiency programs. An example of a policy measure that could be improved is the restructuring of the cost caps that dictate how much a utility is able to spend on energy efficiency programs. By improving the cost cap measure that is currently in place, utilities would be able to increase their investments in energy efficiency programs and achieve the efficiency goals, which the state is not currently reaching.

“Energy efficiency is a low-cost resource for meeting the state’s energy needs. It provides benefits to energy consumers and employs tens of thousands of Illinoisans in the manufacturing and installation of the products while saving Illinois’ largest companies thousands in energy costs. We hope that today’s conversation will open a dialogue between the region’s utilities, large energy consumers, government officials, and the companies that provide these valuable energy efficiency services,” concluded Tolbert.

 

— Solar Builder magazine

ComEd launches new solar rebate proposal in Illinois

As part of its commitment to driving the clean energy future Illinois’ consumers want, ComEd announced a new rebate proposal designed to jumpstart solar in Illinois. The proposal, which is part of a series of solar initiatives ComEd supports, will help reduce the up-front costs of installing solar panels for both residential and business customers. ComEd was joined in its announcement by leaders of the Chicago Federation of Labor, the International Brotherhood of Electrical Workers Local 134 and Local 15, Millennium Solar, Englewood Blue, the Chatham Business Association, and several local faith communities.

ComEd illinois solar rebateComEd and its partners are seeking to make solar an increasingly viable and accessible option for Illinois consumers, setting the foundation for the growth of smart, sustainable solar in the state. Through the proposed solar rebate, ComEd would provide a rebate of $1,000 per kW of installed solar capacity to residential customers and $500 per KW to commercial and industrial customers.

The solar rebate is part of a larger policy package that includes initiatives aimed at increasing access to, and shared benefits from, solar energy – including equitable pricing policies, access to community solar, and lower up-front costs for consumers desiring to install solar devices. The solar policy package, which will require approval from the Illinois General Assembly or Illinois regulators, is supported by solar companies like Universal Solar – a company which manufactures panels and creates jobs in Illinois.

RELATED: Two top solar installers announce new financing deals this week 

“We are proud to announce this innovative solar rebate proposal, which would help reduce barriers to solar ownership even as we work to adjust net-metering policies to ensure that some customers don’t have to pay more for the choices of other customers,” said Fidel Marquez, ComEd’s Senior Vice President of Government and External Affairs. “We are committed to the communities we serve, and this is a pioneering part of a smart solar policy that will benefit our customers and the environment for years to come.”

As part of ComEd’s larger focus on getting solar right in Illinois, the solar rebate proposal and comprehensive policy package will serve to set the policy stage for the smart, sustainable growth of solar.

“The solar rebates will greatly benefit residents and businesses in our communities, and will position Illinois as a leader in how to incorporate solar in a smart and responsible way,” said Reverend Walter Turner, New Spiritual Light Missionary Baptist Church. “ComEd is committed to meeting the needs of our communities, and we’re glad to see their leadership in ensuring solar incentives and policies benefit all of us, not just some.”

RELATED: Four steps for converting more solar sales 

Labor leaders in attendance heralded ComEd’s announcement as important for Illinois’ green economy. “ComEd’s proposed solutions to help support the growth of solar hold great promise for good-paying jobs in Illinois,” said Jorge Ramirez, President of the Chicago Federation of Labor. “We look forward to working on the surge of solar panel installations we anticipate ComEd’s policies would make spur.”

In attendance at today’s event was Christopher Williams, President of Millennium Solar – which helped run the first Solar Spotlight program – who stated that, “We are thrilled to have partnered with ComEd as it launched such an innovative solar education program. ComEd is leaning forward when it comes to embracing solar, and we’re proud to be a part of that.”

— Solar Builder magazine