PI Original Michael Piskur Thursday November 17th, 2011, 4:15pm

Understanding Illinois’ Smart Grid and Distributed Generation

Nearly nine months after being filed in the Illinois Senate, the Energy Infrastructure Modernization Act is on the books. This legislation, commonly referred to as the “smart grid bill”, will fund the modernization of Illinois’ electric grid and change regulations that allow ComEd and Ameren to seek annual rate hikes.

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Nearly nine months after being filed in the Illinois Senate, the Energy Infrastructure Modernization Act is on the books. This legislation, commonly referred to as the “smart grid bill”, will fund the modernization of Illinois’ electric grid and change regulations that allow ComEd and Ameren to seek annual rate hikes. The utilities claim higher rates will give them a faster return on investment and ultimately save consumers money. Critics of the legislation, including Illinois Governor Pat Quinn, Illinois Attorney General Lisa Madigan, and the Illinois Commerce Commission, say it would gut existing regulations and amount to little more than a giveaway to the utilities. Despite these shortcomings, the Energy Infrastructure Modernization Act also includes important environmental provisions that could boost the clean energy sector in Illinois.

Introduced on February 9, 2011, SB 1652 (PDF) passed both houses in August, but Governor Quinn vetoed it on September 12. "It may be a dream come true for Commonwealth Edison, but it's a nightmare for Illinois consumers," Quinn said at the time. In late October, the Illinois General Assembly voted to override Governor Quinn’s veto, and the smart grid bill was enshrined as Public Act 097-0616. This piece of legislation will modernize the state’s antiquated electric grid by allowing ComEd and Ameren to cover the $3.2 billion investment by increasing the rates they charge customers. When completed, the ten-year project is expected to reduce outages and energy waste. A ComEd report estimates that customers could save $2.8 billion over 20 years.

The “smart grid” is an important part of the high-tech, low carbon future. The existing electricity grid, based on centralized power generation, offers one-way communication between producer and consumer. Utility-owned power plants generate electricity, and send it to consumers without any knowledge of demand or other user information. An automated and networked electric grid, however, would create two-way communication and give utilities the ability to adjust and control the flow of energy to individual users.
The 173-page Energy Infrastructure Modernization Act does more than upgrade Illinois’ aging energy infrastructure and change the regulatory framework. Widespread summer power outages prompted a group of northwest suburbs to push for a provision calling on ComEd to reduce outages or get hit with financial penalties. In order to garner support from environmental groups, the new legislation includes provisions for net metering and distributed energy generation.

Under the net metering provision, large rooftop owners can use a “solar, wind, or other eligible renewable electrical generating facility” to generate and return energy to the grid. This legislation allows these customers to receive credits toward future bills if they generate more power than they consume during a given billing period. Net metering will create incentives for renewable energy investment among business owners and other retail customers.

The state is now required to meet a certain percentage of its renewable energy requirement from small-scale renewable energy generation, also known as distributed generation. The Illinois Renewable Portfolio Standard (RPS) mandates that 25 percent of the state’s electricity come from renewable sources by 2025. The RPS did not include electricity from small-scale producers, but the smart grid legislation requires distributed renewable energy generation to supply one percent of the state’s renewable energy by 2015. Sierra Club Illinois called this legislation “a huge boost to clean energy in Illinois”, and praised the inclusion of a distributed generation requirement:

Just as the existing RPS has already created 10,000 new jobs in large-scale wind and solar projects, this new carve-out will provide purchasers for the output of small-scale projects, allowing cities and suburbs to also realize the benefits of the new energy economy that our RPS has created in more rural areas.

Centralized, utility-scale renewable energy generation, such as the wind farms that punctuate western Illinois, plays a vital role in the transition to a clean energy economy, but it also includes several drawbacks. Large wind and solar farms are situated far from population centers and require significant investment in transmission infrastructure. Several such projects have been constructed on prime farm land, which pits renewable energy generation against agricultural production. Additionally, electricity is lost during long-distance transmission, which means that these utility-scale facilities can suffer from major inefficiencies.

Distributed generation addresses these issues by producing renewable energy at or near the site of consumption. In addition to efficiency advantages over centralized generation, small-scale generation carries the additional benefits of boosting local economies through community ownership of the energy system. Locally-owned renewable energy generation can provide revenue to a community while also making the grid more resilient. Generation that is spread across a large geographic area reduces the frequency and severity of outages. Renewable energy is quickly becoming competitive with fossil energy, and the requirements established by the Energy Infrastructure Modernization Act will create incentives for individuals and communities to invest in distributed generation technology. 

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