January 30, 2018

1. Reviewing the Future Energy Jobs Act Part 1 January 30, 2018

2. ISEA Introduction The Illinois Solar Energy Association (ISEA) is a non-profit organization that promotes the widespread application of solar and other forms of renewable energy through our mission of education and advocacy. ISEA is the state resource for renewable energy related policy developments, educational classes, events and access to local renewable energy businesses.

3. Presenter Robin Dutta serves as SunPower’s state policy lead in the Eastern and Midwest US. He joined SunPower in 2015 and works on net metering/rate design, community solar, and the next generation of state renewable programs. Among his various industry positions, Robin currently serves on the ISEA Policy Committee. He also sits on the boards of the Maryland-DC-Virginia Solar Energy Industries Association (MDV-SEIA) and the Georgia Solar Energy Industries Association (GaSEIA). He holds a Master’s Degree in Public Policy from the University of Delaware, and a B.A. in Political Science from Drew University.

4. AGENDA • How Did We Get Here? • Large-Scale Solar Procurements • Adjustable Block Program • Basic Program Design • Residential • Commercial • Community Solar • Additional ABP Program Requirements • Solar for All Program • Net Metering: Present and Future • Smart Inverter Tariff • Implementation Timeline • Q&A

5. Disclaimer This presentation reviews the IL Power Agency’s (IPA) Long-Term Renewable Resources Procurement Plan that was filed for IL Commerce Commission (ICC) Approval on December 4, 2017. Program rules are subject to change, based on the ICC approval/modification and any subsequent revisions by the IPA. REC prices shown in this webinar and the IPA plan are not final and subject to change before the launch of programs.

6. How Did We Get Here? • Future Energy Jobs Act passed in December 2016 - nuclear subsidies and long-term renewable requirements • Mandates that 3 GW of solar be built between 2017 and 2030. Includes distributed generation (=< 2 MW) and utility scale projects (over 2 MW) • ~ 1500 MW of new solar will be built by 2021 & approximately 670 MW of that will be distributed solar • IPA public process kicked off in May 2017 - public workshops, written comment periods, & release of a draft plan • In December 2017, IPA released revised Long Term Renewable Resources Procurement Plan & submitted to the ICC for approval • ICC decided this plan does not require a hearing. Final plan not expected to look much different from the IPA plan

7. Large-Scale Solar Procurements

8. Procurement Basics • Solar projects greater than 2MW(AC) • Projects sited in IL automatically qualify • Projects sited in adjoining states must apply to the ICC and prove they meet a complex set of requirements • Competitive bid process for 15-year REC contracts • Price per REC fixed over the term of the contract – No price escalation • Ability to bank RECs • Credit requirements and instruments

9. Key Provisions of IPA Competitive Procurement • Standard contracts and credit provisions • Sealed bids with pay-as-bid settlement • Bid selection based on price • No post-bid negotiation • Use of confidential benchmarks to eliminate bids not consistent with the market • Standardized bid forms • Standardized/harmonized credit requirements • Procurement Monitor is involved

10. Solar Procurement Schedule • August 2017 – Initial Forward Procurement held for 1 million RECs from utility scale solar • Only 200,000 annual RECs procured • Additional rounds will be held on March 15 and April 26 to procure the remaining RECs • Summer 2018 - Brownfield – 0.08 million annual REC target with 2020-21 delivery start • Spring 2019 – Utility-scale solar – minimum 1 million annual REC target IPA will schedule additional forward procurements following 2019 program reviews

11. Adjustable Block Program

12. ABP – Program Design • Main incentive program for solar projects 2 MW(AC) or smaller • Incentives are payment for REC ownership shifting to the utility for the first 15 years of system life. REC price is for the full term of the contract • REC values administratively set in each block • REC values differentiated by system size • REC contracts have accelerated payout schedule, not paid out over the life of the contract • REC contract will be between Approved Vendor and applicable utility. Contract can be assigned to the customer if there is direct purchase • Declining Block Incentive structure • Undetermined total amount of blocks, but IPA has published first three blocks • REC values will decline 4% block-over-block. • Currently 222 MW of solar statewide in each of first 3 blocks

13. ABP – Program Design • Blocks are broken down by geographic territory • Group A – Ameren Illinois, MidAmerican, Mt. Carmel, and rural co-ops and municipal utilities located in MISO • Group B – ComEd, and rural co-ops and municipal utilities located in PJM • REC values as filed in December are not final. IPA is aware of trade case dynamics, and has authority to adjust REC values in response to a tariff “[T]he Agency emphasizes that these prices should be viewed as preliminary in nature and not necessarily the prices that will be offered once the programs launch, and parties should not take actions in reliance on the availability of these preliminary proposed incentive levels.” – LTRRPP, page 98; 12/4/17

14. ABP - Residential • Small project category (residential only) - systems =< 10 kW(ac) • Defined residential (under 10 kW) receives 100% up-front payment for 15-year REC contract • For residential systems greater than 10 kW, payment schedule for REC contract is the same as for commercial systems • Meter requirements: Must be UL-certified, include a digital or web-based output display, and utilize meter that is accurate to +/- 5% or inverter that is specified by manufacturer to be accurate to +/- 5% • Set of consumer protection requirements includes submitting a copy of contract with IPA, submitting disclosure form regarding system information, and other requirements

15. ABP – Residential Blocks Note: Prices are proposed and not yet final

16. ABP - Commercial • Different REC values set for different system sizes • 15-year REC contract will be paid out over four years • 20% of total contract value is paid up-front. Then balance of total contract value is paid quarterly for following 16 quarters • IPA estimates total 15-year REC output using assumed capacity factors and degradation • Capacity factors: fixed tilt is 16.42%, and tracker is 19.32% • System developer can propose alternative capacity factor using PVWatts or equivalent tool • Degradation is assumed at 0.5%/year average, as part of formula that calculated capacity factors • Co-location for on-site NEM systems: ALLOWED up to 2 MW(ac) • Total solar capacity at customer’s location will be considered single system for purposes of applying REC price (i.e. 2 200 kW arrays will count as a 400 kW system for Adjustable Block Program) • NEM systems and community solar systems will be considered separately and not impact each other • Metering requirement: Meters must meet ANSI C.12 certification

17. Note: Prices are proposed and not yet final ABP – Commercial Blocks

18. ABP – Community Solar • Different set of REC values as NEM systems • 15-year REC contract is paid out using same formula as commercial systems • Co-location: No more than 2 MW(ac) of community solar owned or developed by single entity (or affiliates) may be sited on a single parcel or on its contiguous parcels • No small subscriber requirements • No one subscriber may have subscription in excess of 40% of community solar project’s capacity • Community solar credit value is equal to value of subscriber’s generation rate • Similar to residential systems, various marketing and consumer protection requirements for community solar subscription sales

19. Note: Prices are proposed and not yet final ABP – Community Solar Blocks

20. ABP – Additional Program Requirements

21. Approved Vendor Requirements • Solar companies must register with IPA as “Approved Vendor” and follow set of rules • Long-term plan outlines requirements, but more detail and subsequent forms created following final plan approval • Criteria includes: • Provide info to IPA on Approved Vendor’s organizational history, capacity, financial info, regulatory status in IL and other states (including current complaints or other actions against Vendor or prior complaints within past five years) • Disclose to IPA names and other info on installers and projects, while otherwise maintaining confidentiality • Document that all installers and other subcontractors comply with applicable local, state and Federal laws, and maintain Distributed Generation Installer Certification • Provide samples of any marketing materials or content used, by Approved Vendor and/or affiliates to IPA at their request • Submit timely Annual Reports

22. Project Maturity Threshold for Incentive Application To apply for ABP, project must have: • Info about system location and size, including but not limited to technical specifications of main system components, site map, or other project details • Proof of site control and/or host acknowledgement • Project-specific estimate of REC production during 15-year delivery term using PVWatts or similar tool • Signed Interconnection Agreement ( > 25 kW ONLY) • Evidence of having obtained all non-ministerial permits (> 25 kW ONLY) • Shading study

23. App Process: Batching Projects • Approved Vendor must submit project applications in batches no smaller than 100 kW(ac). • Can consist of multiple projects receiving different REC values • Can be single project, if larger than 100 kW • Application fee is $10/kW, capped at $5,000 per project • Collateral requirement: 5% of total contract value, paid either in cash or withheld from the final incentive payment • Program Administrator will review and approve batches, prepare REC contract, and send to ICC for final approval • If at least 75% of kW volume of batch is approved, it will move forward (minus rejected projects) • If less than 75% of kW volume of batch is approved, then entire batch is rejected. Approved projects in rejected batch can be resubmitted in new batch, and would receive expedited review process • Plan is for ICC, which meets every two weeks, to approve REC contracts in each meeting

24. Project Development Timelines • Distributed generation projects will be given one year from time of REC contract approval to be energized • Community solar projects will have 18 months from time of REC contract approval to be energized • Extensions: • Once system considered “electrically complete”, extension is indefinite. Defined as system only requiring utility interconnection • 6-month extension for documented legal delays, including permitting delays • 6-month extension granted for DG projects upon payment of refundable $25/kW deposit to contracting utility • Community solar projects granted 6-month extension upon payment of refundable $25/kW deposit to contracting utility. Second 6-month extension (with additional $25/kW refundable deposit) granted only to achieve subscriber rate, not system construction • IPA may grant extensions for good cause, on case by case basis

25. Illinois Solar for All Program

26. Solar For All Overview • Program created as part of FEJA. Mandate to provide solar access to people and communities with greater barriers to renewables adoption • Four main programs within: • Low-Income Distributed Generation Program • Low-Income Community Solar Program • Non-Profits and Public Entities Solar Program • Low-Income Community Solar Pilot Program • Except for pilot program, all Solar for All projects will receive up-front payment for 15-year REC contract • Program availability subject to budget availability, dependent to appropriations by General Assembly to Renewable Energy Resources Fund

27. Low-Income DG Program Eligibility • “Low-income households” means persons and families whose income does not exceed 80% of area median income, adjusted for family size and revised every 5 years” – FEJA 2016 • “Area” as stated in act uses various HUD accepted definitions • DG projects on homes or buildings that qualify for HUD vouchers or rental assistance can also qualify for Solar for All • Low-Income participants go through income verification before incentives awarded • For projects serving building with 2-4 units, at least 2 households must qualify as low-income • For projects serving building with 5+ units, at least 50% of tenants must be verified as low-income, or qualify under affordable housing criteria

28. Tangible Benefits for Tenants • Solar for All incentives must deliver tangible economic benefits for eligible low-income customers, including those that live in multi-family buildings • Participating master-metered multifamily buildings must commit to pass along portion of energy savings to tenants, either through reduced rents, rents held constant, or other means. This must be detailed in written commitment • For multi-family buildings that are not master-metered, building owner must commit to pass along energy savings that solar provides to common-area and building-wide loads. Can be done by allowing tenants to receive net metering credits from building’s solar system

29. Low-Income Community Solar • Project must be developed in partnership with community stakeholders in community where project will be located • Low-income community solar system is eligible for higher incentives, applied proportionally to capacity subscribed to qualified low-income households or non-profits • i.e. if anchor tenant is for-profit entity, that subscribed capacity will not be eligible for higher low-income REC values • If anchor tenant is public or non-profit entity, low-income REC values will apply to anchor tenant

30. Public Entities and Non-Profits • Designed to mirror Adjustable Block Program: • System owner receives 5 payments over 4 years for 15 years worth of RECs • REC values will be higher than those in Adjustable Block Program • Program will have incentive levels revised annually • No set MW size for currently announced Block 1. Real limitation will be budget availability. However, public projects could also apply to ABP at those REC levels • Eligible projects must demonstrate one of the following: • Document that project has sufficient connection to, and input from, low-income community members • Demonstrate that project is located at facility owned by organization that is a critical service provider for community (i.e. youth centers, hospitals, schools, homeless shelters, senior centers, community centers, places of worship, affordable housing providers including public housing sites)

31. Net Metering: Current Rules and Expected Changes

32. NEM Caps and NextGrid • Net metering credits currently valued at customer’s full volumetric retail rate • NEM caps set at 5% of total peak demand of each electricity provider’s eligible customers. Calculated differently than in other states with retail energy choice • i.e. ComEd eligible customers receive energy service from them, not total amount of customers in their geographic territory • ICC has launched NextGrid proceeding, which will begin investigation of how successor NEM tariff should be structured/valued • When NEM cap for electricity provider has reached 3%, ICC will launch formal proceeding to determine successor NEM tariff • When NEM cap has reached 5% for electricity provider, additional systems will receive successor tariff to traditional NEM. If not yet determined, credit value will be equal to customer’s generation-only rate

33. Smart Inverter Rebate • Created by FEJA • Will be available for non-residential (including community solar) systems at level of $250/kW(dc) • Any project that takes rebate will forego traditional NEM. Instead, project will only be eligible for generation-only crediting (applied only to excess generation, not on-site consumption) • Rules and standards on what constitutes a smart inverter have not been finalized. ISEA anticipates Ameren and ComEd to file their draft tariffs at ICC soon, with approval later this year • When utility’s net metering load reaches 3% of peak demand, ICC will initiate investigation to determine whether rebate value should change. ICC will also determine what value smart inverter rebate should have for residential systems

34. Implementation Timeline • September 2017 – IPA released draft long-term plan • December 2017 – IPA filed long-term plan withICC for review and approval • April 3, 2018 – Expected timing for ICC approval of IPA long-term plan • Q3 2018 – Anticipated launch of programs in long-term plan (i.e. Solar for All, Adjustable Block Program)

35. Questions? Lesley McCain, ISEA Executive Director lesley.mccain@illinoissolar.org Robin Dutta, SunPower Corporation robin.dutta@sunpower.com