Reaching Deval Patrick’s New Solar Energy Goal
In a few short years, Massachusetts has seen widespread adoption of solar energy, thanks to solar-friendly legislation and aggressive promotion by Governor Deval Patrick. In 2008, he set a goal of 250 MW solar energy by 2017. Massachusetts met that goal four years early.
Now Governor Patrick has challenged the state to achieve 1600 MW of solar energy by 2020, an amount equal to the power needed for 240,000 households, or almost all the homes in Boston.The key to achieving Patrick’s new goal will be the continuation and revitalization of certain programs:
1. Can the Department of Energy Resources (DOER) make regulatory adjustments to the market structure for solar renewable energy certificates (SRECs) in order to maintain values sufficient to attract solar investment, while sustainable for electric ratepayers over time?
2. Will the utilities meet their net metering caps this coming year? If so, will the Legislature increase those caps, without which solar progress will likely stall?
3. Will the Legislature solve the uncertainty in local tax burdens, which makes it difficult to price electricity from solar projects?
First, the Renewable Portfolio Standard (RPS) carve-out for solar projects is vital to attracting capital from solar developers and financing entities. The RPS solar carve-out program requires distribution utilities in the state to purchase from a structured market a certain number of SRECs, the costs of which are recoverable from ratepayers. These certificates are registered and minted as an attribute of each megawatt hour of solar energy produced.
But because the supply of SRECs from the boom of solar projects in the state has begun to surpass the demand for SRECs by the utilities, based on the RPS carve-out requirement, SREC pricing has fallen in the latter part of 2012 and into 2013. DOER faces a challenge in revising regulations to maintain a sufficient value of SRECs to continue to attract solar investment, while protecting ratepayers from funding excessive subsidies. In mid-March, DOER convened a stakeholder process to consider options and is scheduled to issue proposals for program changes once 400 megawatts of solar capacity have been developed in the Commonwealth.
The second key program to solar development is net-metering — which requires the state’s utilities to purchase surplus energy generated from projects not otherwise used on site. Net metering takes account of the reverse flow of electrons through an electric meter and allows a solar host facility to allocate net metering credits to offset bills at other electric accounts, including for other properties it owns.
Many municipalities are net metering electricity produced on closed landfills to offset electric bills at municipal buildings and schools. However, the utilities must provide net metering credits up to a limit of 6% of their peak electric loads (3% for public and 3% for private hosts). While cap space has not filled up yet, utilities may reach their net metering caps in the coming year. Without an increase in these caps by the Legislature in the future, the forward march to 1600 Megawatts is likely to stall.
Finally, this year has seen progress, but not full resolution, in how solar projects are taxed at the local level. Without sufficient certainty on local tax burdens, it has proven challenging to negotiate the pricing of electricity from solar projects. Communities hosting third-party owned solar projects on public land have struggled with whether to take benefits in taxes, rent or lower electricity prices. It remains to be seen whether the Legislature will come up with a reliable, predictable solution for tax treatment.
About Kevin: I specialize in Environmental Law, Litigation, Energy Law and Municipal Law at Anderson & Kreiger. Prior to practicing law, I was a conservation manager developing and implementing energy and environmental programs for the City of Austin, Texas and its municipal electric utility.
Posted In: Solar Energy