Thanks to the Illinois Climate and Equitable Jobs Act, customers in Ameren or ComEd utility service territories are now eligible for the Distributed Generation Rebate (DG Rebate) – a unique opportunity to drive your sustainability initiatives forward while achieving significant cost savings. Stem, a leader in AI-driven clean energy solutions and services, recently hosted a webinar to help you harness the benefits of this incentive.
In this informative session, Stem’s Zach Einterz, Director of Product Marketing, and Ethan Fink, Behind-the-Meter Business Development Manager, discuss the new Illinois Distributed Generation (DG) Rebate, implemented as a result of the 2021 Climate and Equitable Jobs Act (CEJA). With a statewide goal of achieving 100% carbon-free electricity by 2045, Illinois is paving the way for a greener future. And the best part? These incentives are available right now! The DG Rebate program provides a substantial incentive, offering $250/kW for solar capacity and $250/kWh for storage capacity, effectively offsetting the out-of-pocket costs associated with deploying renewable energy assets. By taking advantage of this initiative, commercial solar+storage projects can yield a remarkable rate of return, surpassing 20%, while minimizing downside risk. Read on to learn more about the rebates in this webinar recap.
To be eligible for the DG Rebate, the project must be interconnected behind-the-meter (BTM) at a C&I site with a load of over 100kW, or interconnected to the utility distribution system for a front-of-the-meter (FTM) installation. It should be served by Ameren or ComEd, with ComEd offering the best economics for solar and storage projects. If your project was interconnected before August 2022, you can apply the rebate to new equipment included in a new interconnection application, such as inverter replacement or re-powering. The solar rebate is capped at 5,000 kW, while the energy storage rebate has no size cap. The energy storage system (ESS) must be associated with a solar asset and should be at the same account as the solar asset, although it doesn’t need to be behind the same meter. Whether your solar+storage system is AC- or DC-coupled, there are no solar-charging requirements. Additionally, there are no storage size or duration limits relative to the solar site. New solar plus storage projects, and new storage that is retrofitted onto existing solar, are eligible for the rebate.
Projects must have an executed interconnection agreement to be eligible for the DG Rebate. The application requires several documents, including invoices or proof of purchase for all equipment, equipment spec sheets, and the account holder’s signature. Additionally, payment information in the form of a W9 for the asset owner is necessary. It’s important to note that applications expire unless the project has achieved permission to operate within 24 months of application submittal. To lock in the current rebate amount, projects must apply by December 31, 2024, as rebates may change in 2025 based on a “Value of DER study” that the Illinois Commerce Commission (ICC) is required to implement in 2025. It’s worth mentioning that there is currently no program cap, and the utilities will continue accepting applications until directed otherwise by the ICC.
BTM Storage Value Streams
Behind-the-Meter energy storage can benefit wholesale market participants through various value streams. One of these value streams is Wholesale Market Participation (WMP), where customers can bid into ancillary service markets using demand response techniques such as RegD and synch reserves. Another value stream is Transmission Coincident Peak Reduction (Transmission CP), which uses ESS to discharge and reduce customers’ contribution to the highest coincident peaks in their respective transmission zone. The time period for this varies, but many zones recognize peaks between June 1 and September 30, or even year-round. Additionally, BTM storage offers Capacity Coincident Peak Reduction (Capacity 5CP), which allows customers to discharge their ESS and reduce their contribution to the five highest coincident peaks in the PJM system. This value stream is applicable between June 1 and September 30. Lastly, BTM Storage provides Utility Bill Optimization (UBO), primarily based on Locational Marginal Pricing (LMP) energy arbitrage and offers potential demand savings. With these value streams, BTM Storage aims to help customers optimize their utility bills and participate in the wholesale market effectively.
Capacity and Transmission Charges
Understanding how capacity and transmission charges are billed to commercial and industrial (C&I) customers in ComEd is essential. These charges, which can range from $50,000 to $100,000 per megawatt (MW) depending on the customer’s supply structure, are based on the customer’s demand during times of system Coincident Peaks (CPs). However, C&I customers could reduce or eliminate these charges through energy storage assets. Businesses can avoid capacity and transmission fees by discharging during CP hours, resulting in significant cost savings.
PJM Sounds the Alarm on Grid Stress
PJM has sounded the alarm on the potential stress the grid may face in the coming years. According to a report released by PJM, there is a significant risk of generation shortfalls in the 2020s – this is primarily due to a sharp increase in their demand forecast, coupled with difficulties in developing their Forward Capacity Market (FTM). However, a solution – in the form of behind-the-meter (BTM) storage systems – is on the horizon. These systems are well-positioned to help alleviate the stress on the grid and, in the process, offer significant cost savings.
ITC adders can improve project IRRs
The Inflation Reduction Act can potentially increase renewable energy projects in Illinois. One key takeaway from the webinar was the opportunity for projects to improve their internal rates of return (IRRs) through Investment Tax Credits (ITCs). Eligible projects may qualify for up to 70% ITC in certain areas within Illinois – this includes a 30% base ITC rate, with additional adders available for domestic content, Energy Communities, and Low-Income Communities.
To learn more about how the Illinois DG Rebate and ITC adders can benefit your renewable energy project, click here to view the webinar on-demand.