Shared solar program in Connecticut stalled over who pays for what
Shared solar – a way to make solar power available to homes that are unsuited for solar panels or renters who can’t have them – is having a balky go in Connecticut. After a two-session legislative battle that began in 2014 and resulted in approval of only a small pilot project, the state is now a month past the statutory deadline for getting the first part of that pilot up and running.
And the finish line is not yet in sight.
The holdup is the Department of Energy and Environmental Protection’s request for clarification from the Public Utilities Regulatory Authority on aspects of what is and is not allowed as part of the pilot project. Only when it receives a ruling from PURA will DEEP formulate a preliminary request for proposals – something that was supposed to have been finalized and issued by Jan 1.
It is also possible that to resolve the questions before PURA the whole matter will wind up back in the legislature in the upcoming session, delaying the pilot program even longer.
“The pace of all this is concerning,” said Bill Dornbos, Connecticut director and senior attorney for Acadia Center, a regional environmental advocacy group that has fought for shared solar throughout the northeast. “DEEP probably would have been better off seeking some simple amendments from the General Assembly in this upcoming legislative session.”
Shared solar, also known as community solar, allows homeowners who can’t put up their own panels to subscribe to a system built wherever there’s a suitable site. It’s estimated that as many as 80 percent of Connecticut homes cannot have solar for any number of reasons, such as the roof facing the wrong way, it’s shaded, it’s too small or the home is a rental or apartment.
The electricity generated in a shared solar installation doesn’t go directly into homes; it goes into the electric grid over the existing utility infrastructure of lines and poles, and the subscribers receive credit.
DEEP asked PURA to look at a couple of specific issues – whether the existing legislation authorizes utilities to pass on to ratepayers costs related to shared solar, such as maintaining poles and wires, and whether the legislation permits utilities to administer such a program, which the state would like them to do.
While it sounds pretty arcane and eye-glazing to most folks just trying to access renewable power, it has everything to do with how much those people will pay for the power.
Dornbos said he was surprised all these issues hadn’t been addressed in the legislation. “Energy bills that involve utilities usually are fairly thorough and make sure there are cost recovery provisions,” he said. “This is a foreseeable issue.”
But what’s happened through the PURA process is something of a re-arguing of the whole shared-solar concept, despite the fact that it is already in use in many states. That, in turn, has revived earlier legislative clashes over renewable energy and who should pay how much and for what.
“Our intent was not to litigate before PURA questions about the structure of the program,” said Katie Dykes, the deputy commissioner at DEEP who oversees the energy bureau. “It was really at this stage meant to go to PURA to seek the clarification that is necessary to attract good bids.”
All of this is now playing out against a national backdrop in which utilities have been pushing back, often successfully, against financial incentives for renewable power that utilities see as harming their existing business models. And that has some in Connecticut suspecting that a pushback may be at work here.
“I am furious that the utilities appear to be working so hard to sabotage our shared solar pilot program,” said Rep. Lonnie Reed, D-Branford, a co-chair of the Energy and Technology committee and a strong shared solar supporter. “If there are issues that need to be clarified and resolved, let’s get together right now and get that done.”
Reed led the effort for shared solar in 2014 and again in 2015, when she and others argued that, with so many shared solar programs around the country offering models, including in Massachusetts and Vermont, Connecticut could skip a pilot program and plunge right in.
But all the legislature could muster was a six-megawatt shared clean energy (it doesn’t have to be solar) pilot project – four megawatts for Eversource’s territory and two for United Illuminating. (UI recently was purchased by Iberdrola and now operates under its subsidiary Avangrid.) That’s about enough power for 6,000 homes.
“Right now, we’ve got multiple solar companies eager to participate in Connecticut’s RFP selection process for our shared solar pilot, and it’s important to sustain their enthusiasm, not frustrate it,” Reed said.
The thought is to get the outstanding questions answered before the RFP goes out so project developers don’t get blindsided later on. But the utilities’ joint comments to PURA on the matter seem to indicate that they have broader concerns.
In their letter, Eversource and United Illuminating make it clear they are not interested in administering a shared solar program, which would amount to handling billing and credit duties. They would prefer developers do that. They also prefer a specific method of charging customers to recover costs.
The ‘net metering’ issue
Another thing they have made clear is they do not favor a system currently in place in Connecticut – as well as throughout the country – for compensating the owners of renewable power systems for excess power they put back into the grid.
That concept is called net metering. It has become a rallying cry for all parties in the renewable energy discussion.
Net metering allows solar power customers to credit the extra power they put into the grid against the power they take from it when the sun isn’t shining. Those customers also pay lower service fees because the fees are based on the amount of grid power they use.
Nationally, utilities and the groups that speak for them have argued that it costs them the same amount to maintain their grid even if a customer isn’t taking power from it all the time. Therefore, they have argued, if a customer is paid for excess power at all, it should be at a lower rate, such as a wholesale rate, not a full retail rate, and they should pay a tariff to make up the difference in service fees.
A number of states don’t allow net metering. Some, like Connecticut, do it at a retail rate, which renewable power advocates argue is necessary to make it cost-effective for homeowners who purchase solar systems. Even a wholesale rate, they say, could have a chilling effect on the adoption of renewable power.
“Those customers that have distributed generation (such as solar) resources should pay their fair share of the cost of running and maintaining the grid,” said Camilo Serna, Eversource’s vice president of strategic planning and policy. “The fact that you have solar doesn’t mean that the grid goes away. It still has to be maintained, up kept.”
Eversource, he said, would like to see wholesale rates replace the current retail ones.
Nationally this all boiled over recently in Nevada when the state raised the various fees for solar power customers and cut the net-metering rate, not only for new solar customers but also for existing ones. Other states that have rolled back incentives and net metering have typically grandfathered existing systems.
The nation’s largest solar company, SolarCity, which has a huge presence in Connecticut and had told DEEP it was interested in participating in shared solar here, pulled out of Nevada, dumping 400 jobs. (SolarCity declined to speak with the Mirror for this story.) Another major company, Sunrun, also pulled out of Nevada.
Acadia has done studies on solar’s value to the overall grid, which it believes includes greater reliability that, in turn, can help keep rates down for everyone. Acadia has argued that solar customers therefore should be compensated more for using renewables, not less.
“The way that this is unfolding,” Dornbos said of the Connecticut situation, “it does raise the issue of whether we’re experiencing a slow-play by the parties involved.” He worried that the pilot would lose another year, making its target date for reporting results, Jan. 1, 2018, difficult to meet.
Greenskies, a Middletown-based solar company that has installed a grid-scale solar project in East Lyme, is interested in developing shared solar projects in Connecticut, especially using brownfields, landfills and other unusable properties.
“Net metering is an essential element of distributed generation – it works,” said James Desantos, vice president of business development. “The wholesale rate is not advantageous.”
Leah Schmalz, program director of Connecticut Fund for the Environment, said shared solar was a real opportunity, especially in terms of environmental justice – being able to supply clean power to low-income communities.
“Other areas in the region are picking this up and moving quickly with it, and Connecticut’s getting left in the dust,” she said. “We’re already behind on the deadline; utilities appear to be calling into question things that most people think are pretty clear in the legislation.”
Shared solar has caught on in a number of states, but there have been growing pains. Minnesota has had more than 1,500 proposals, but implementation has been slow.
Massachusetts has installed a half-dozen facilities, with more than 60 in the pipeline, but last year the state hit a cap it has placed on net metering, stalling out shared solar until the tug and pull between the utilities and the environmental community can sort through many competing legislative fixes.
New York has also hit a net metering cap, but Gov. Andrew Cuomo has waived the cap so that solar, including plans for shared solar, can continue until a new rate structure is established.
“I hope that New England and the Northeast have more foresight than Nevada policymakers recognizing the value of clean energy and the value of the net metering construct to jumpstart and get this market going,” said Janet Besser, vice president of policy and government affairs for the Northeast Clean Energy Council.
But she also worried that the Connecticut shared solar pilot is so small that it may not attract many developers. “So you don’t want to restrict it any more than that,” she said. “The more restrictions you place on it, it’s not going to work.
“You really need to design a program that’s going to allow more customers to participate rather than fewer customers to participate, that’s going to maximize flexibility and the ability to adjust if something isn’t working as planned in order to assess the benefits,” Besser said.
She said Connecticut might want to consider going back to the legislature and redesigning the pilot.
“It’s easy, I think, to design a community solar program badly, unfortunately,” said Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association, a trade association. He said SEIA sees the value in it, but that the rules around renewable adoption, such as net metering, are crucial.
“Utilities that stick their heads in the sand and hope that nothing changes are going to find that things have changed,” he said. “It’s going to be better for all parties to try to work together to find a way that we can find a system that’s fair for utilities, and it’s fair for customers, and it’s fair for solar companies.”
For now, PURA has not issued a schedule for ruling on the shared solar matter. And concern is growing that if it’s not until after the legislative session and also doesn’t resolve everything, delays will continue indefinitely.
“We’re looking at and thinking about here at DEEP what’s the most expeditious way to get these issues clarified,” said energy chief Dykes. “We would not be trying to seek clarification of these issues if we did not think it was a critical preliminary step to putting out the RFP.”
It has everything to do with how or even whether developers can get the projects funded.
“It’s really important,” she said, “to get these issues of cost recovery buttoned down.”
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