New concerns are being raised by solar advocates in Massachusetts about recent solar policy revisions resulting from a landmark agreement between utilities and the solar industry.
The solar bill H.4185 is currently working its way through the state legislature after stakeholders reached common ground. The agreement was a unique compromise brokered by the Massachusetts Department of Energy Resources (DOER) between the Solar Energy Industries Association (SEIA), the New England Clean Energy Council (NECEC), National Grid, and Northeast Utilities.
The bill makes five changes to existing solar policies:
- Net metering would be unaltered and its cap eliminated.
- Virtual net metering customers would be reimbursed at a lower rate to cover their use of the distribution system.
- The solar renewable energy credit (SREC) incentive system would be replaced by a performance-based, declining tariff incentive.
- All utility customers would be subject to a minimum bill.
- Governor Deval Patrick’s ambitious target of 1,600 megawatts of installed solar capacity would become a legally binding mandate.
But not everyone is happy with the legislation, particularly those involved in the business of trading SRECs. The proposed solutions offer the solar industry “an unfair exchange of net metering capacity for a centralized incentive program," wrote a group called Massachusetts Stakeholders for Competitive Solar (MSCS) in a letter to legislators.
The bill, MSCS wrote, protects net metering “at the expense of Massachusetts’ highly successful, decentralized SREC program.”
With the SREC program, Massachusetts saw more than $1.5 billion invested in solar and the development of almost 12,000 solar projects, representing over 600 megawatts of capacity, said Steven Eisenberg, CEO of the firm SRECTrade, which spearheaded the formation of MSCS. Even the government has affirmed the “proven success” of the SREC program, Eisenberg said.
But DOER Commissioner Mark Sylvia doesn't agree. “We were all concerned about ratepayer impacts of the SREC program,” he said. “With this new bill, we ratchet down costs.”
“DOER hired independent consultants to do a cost-benefit study of the SREC program,” said Dan Berwick, Borrego Solar's VP of business development. “They concluded that though the program delivered a net benefit to ratepayers, it could be more beneficial if a fixed-price, standard-offer incentive program replaced the SRECs.”
Eisenberg argues that the SREC program was also key to the success of the state’s renewable portfolio standard. He cited a recent LBNL/NREL survey of cost-benefit estimates of state renewable portfolio standards which found that “2012 costs of $111 million compared to benefits of $328 million in the same year.”
But as MSCS’s letter noted, “net metering policy is the issue at hand here, not the SREC program.”
“The SREC program, along with net metering, has spurred significant growth in Massachusetts, but there is no guarantee that it will continue working because of the uncertainty associated with net metering,” said Cory Honeyman, GTM Research Solar Analyst. He added that that uncertainty has led to a broader discussion about how to manage the net metering cap, which eventually touched on the possibility of changes in the SREC program.
"The bill's provisions provide a lot more certainty, because the performance-based incentives are in place and predictable, and now net metering is certain to remain available.”
Opponents of the changes are concerned about giving regulated utilities and the Department of Public Utilities the power to control the incentive program and the minimum bill. They have called for a committee “tasked with evaluating [the prospect of] a minimum bill” and an analysis of distributed generation's benefit to the grid.
That is what will happen when the DPU takes up the minimum bill in a public rate review proceeding that all stakeholders will be able to participate in, said Janet Gail Besser, vice president of the New England Clean Energy Council. “Decades of precedent show that DPU rate decisions have to be just, reasonable and non-discriminatory, and that rates can’t change dramatically from year to year.”
MSCS also called for more study and debate, as well as postponing the final decision until June 30, 2015.
“In the past, we would go back to the legislature and they would increase the net metering cap by a percentage point or two,” Sylvia said. “That has impacts on the market and development, and everyone, including legislators, recognized that we needed a better, longer-term solution.”
But there is an election in November. Governor Patrick is termed out, and a new administration and legislature may not want to take the issue on next year.
“It is possible we will have a new governor who is not as supportive of solar, and there is nothing in statute now protecting the 1,600-megawatt goal and the other long-term objectives,” Berwick said. “Right now, we have a favorable legislature.”