How have utilities changed the value of solar? Aurora Solar runs 45 million scenarios to find out

Aurora_remote assessment

Net energy metering (NEM) policies have played a crucial role in making residential solar installations a good investment for homeowners in the United States. However, as installed solar capacity has increased, many utility companies have introduced changes to their NEM programs that reduce the value of distributed solar.

Aurora used its proprietary solar financial analysis tools to conduct a large parametric study that analyzed over 45 million scenarios to determine how these new programs impact solar customers’ savings across the United States. The study analyzes the financial impacts of specific billing mechanisms, as well as the cumulative impacts of different combinations of these mechanisms as implemented by utilities in different states. The policies evaluated slightly diminish the financial value of installed solar but also promote larger system designs in certain circumstances.

Head here to download it and read the results for yourself.

Random notes from the analysis

  • Policies that reduce the compensated value of excess energy impacts customers differently than policies related to monthly fees.
  • Annual credit expiration policies can make or break the financial benefit for the customers depending on the time of year when credits are expired.
  • Hourly export rules scale with system size – high usage households are hit more than small usage.
  • Monthly minimum fees are more likely to impact customers with lower energy consumption and encourage smaller systems compared to ideal designed under standard NEM policy.
  • Installers need to pay attention to the month in which credits expire, as that can have a big impact on financial return.
  • New York’s VDER program promotes an optimal system size of around 105% energy offset while the prior target was around 98%. In Utah, new policy promotes slightly smaller systems for households that have a smaller energy consumption and slightly larger system for households with higher consumption. Over in Hawaii, under a zero-export policy, a sweet sport for design is around 60 percent energy offset for households with low energy consumption and 70 percent for larger households.

The overall takeaway

Knowledgeable solar installers play a huge part in designing systems that make financial sense for customers under the various billing scenarios. Some customers may need to over-size a system to see the best financial return, while others may need a smaller system. Some may need to curtail their usage and couple their system with energy efficiency measures to realize better value.

— Solar Builder magazine

New York extends net metering to solar projects under 750-kW, among other changes to VDER tariff

new york regulations

The State of New York’s Public Service Commission (PSC) issued its long-awaited order updating the Value of Distributed Energy Resources (VDER) tariff, which compensates distributed energy resources, like solar, for the collective environmental and societal benefits they provide to the state’s electrical grid.

“New York has set an ambitious goal of building enough solar to power one million homes by 2025, and the Public Service Commission’s order is one step on the path to achieving that,” said Sean Garren, Northeast Senior Director for Vote Solar.

For more than a year, the Clean Energy Parties, a coalition for clean energy industry associations,  worked with the PSC to drive the important changes. Among many changes, here are a few key improvements that directly benefit future solar projects in New York:

● Revises the method for how the value of reduced energy demand is determined, making these values more predictable for all solar projects, including projects benefiting municipalities and businesses.
● Creates a “community credit” as part of VDER, which will help ensure that all New York customers, including schools, businesses and local governments are able to participate in community solar projects.
● Extends net metering to projects under 750 kW in size, which will encourage the development of on-site solar projects serving certain commercial customers.

The Clean Energy Parties report there is more work ahead to improve the VDER tariff over the long-term, such as making changes to the way environmental values are determined and addressing billing issues, but these changes are a good first step.

“The Commission’s order will help unlock New York’s community solar market and get projects moving forward into construction across the state – creating access to solar for tens of thousands more homes and businesses,” said Jeff Cramer, Executive Director of the Coalition for Community Solar Access. “It will take continued focus from the Commission to truly transition New York’s outdated electric system into one that provides access to affordable local clean power for all New Yorkers. In particular, we look forward to working with the Commission to improve utility billing services for community solar customers to ensure a positive customer experience.”

— Solar Builder magazine

Idaho Power Co. files to suspend commercial net metering solar program

idaho solar net metering

Advocates are raising concerns about a proposal from Idaho Power Company that would increase utility bills and uncertainty for many businesses and farmers that want to use solar energy to meet their own electricity needs. The utility’s application to the Idaho Public Utilities Commission, which was filed Friday, seeks to immediately suspend the state’s net metering solar program for its Commercial, Industrial, and Irrigation Customers and keep those markets closed until 2020. Vote Solar and Idaho Conservation League are urging the Commission to reject this latest attempt by the utility to protect its monopoly energy business at the expense of competitive clean energy and consumer choice.

“Idaho Power may be promising 100% clean energy, but now the monopoly utility is making clear that it wants to be the only one that controls that affordable, reliable clean power,” said Briana Kobor, Regulatory Director with Vote Solar. “Every Idaho family, church, school and business should have the right to go solar on their own property if they so choose, and they deserve fair net metering compensation and predictability from their utility for making that investment. This proposal is bad for businesses that want to go solar, bad for Idaho’s growing solar job market, and another worrisome blow to consumer choice and energy freedom from this utility.”

Net metering makes sure that solar customers receive fair credit on their utility bills for the valuable, reliable electricity they deliver to the grid. This individual investment in local solar power reduces the need for expensive utility infrastructure, lowers energy bills, and supports local solar installation jobs. This sudden move by Idaho Power to restrict net metering is already impacting local energy businesses that have developed pipelines of planned solar projects for commercial, industrial and irrigation customers across the state.

“We are a third-generation family-owned Idaho solar company and shocked to hear of the recent filing as 75 percent of our projected revenue for 2019 comes from agricultural and commercial projects,” said Cat Gietzen of Gietzen Solar. “In our experience, it has become clear that the impact of electrical costs on agricultural operations can be extremely prohibitive and solar has given them the opportunity to combat those costs. We hope the Public Utilities Commission will realize the detrimental impact this could have on local Idaho businesses and their families.”

Friday’s filing comes on the heels of a 2017-2018 proceeding in which the utility created a discriminatory new rate class for its residential and small commercial net metering customers for the purpose of modifying net metering in the future, making it the latest in a series of attempts from Idaho Power to weaken this important consumer solar right. The Commission is expected to take up the case in the coming weeks and Vote Solar and Idaho Conservation League will be advocating for fair treatment for Idaho Power’s solar customers.

— Solar Builder magazine

Regulatory roundup: Maine and Maryland both pass pro-solar legislation

signing bills

Maryland and Maine are moving two pieces of legislation through their halls to keep their solar momentum going.

Maine kills gross metering

You may recall the previous governor of Maine Paul LePage working feverishly to charge solar customers more through a gross metering rate structure. In this setup, the Public Utility Commission set the valuation for distributed solar power, even for the amount consumed on-site, in which solar customers ended up being charged an extra fee. This regressive policy would also require the installation of a second smart meter at all homes. This was the part challenged by a petition started by Insource Renewables, which showed just how expensive this entire setup would be for all ratepayers despite it being sold specifically as a solution to avoid “cost shifting.”

Anyway, regulators came to their senses at the end of last year and suspended gross metering and now the Maine legislature has approved a bill that will eliminate it. The former governor LePage also famously vetoed similar legislation in 2016 that local solar installers thought was a good bipartisan compromise at the time.

The bill is expected to be signed by Gov. Janet Mills.

Maryland boosts RPS

The Maryland Senate has passed the Clean Energy Jobs Act (CEJA), which is going to also boost the state’s renewable portfolio standard (RPS) to 50 percent by 2030 along with providing millions of dollars for workforce development programs. This would jump solar’s mix in the state from 2.5% under current law to 14.5% by 2028.

“We applaud the Senate for its passage of the Clean Energy Jobs Act,” states David Smedick, campaign and policy director for the Maryland chapter of the Sierra Club. “Now it’s time for the House of Delegates to show the same leadership to combat climate change and pass the Clean Energy Jobs Act now. Maryland still has six large, polluting coal-fired power plants that contribute to climate disruption and the state’s continued failure to meet health-based air quality safeguards set by the Environmental Protection Agency. This bill will bring significant growth to the state’s clean energy economy helping us transition away from harmful fossil fuels like coal.

This comes not a moment too soon. An analysis conducted by the Maryland Solar Energy Industries Association (MDV-SEIA) compared projected federal tax dollars to Maryland under scenarios in which CEJA is passed into law in the current 2019 legislative session vs. delayed a year and passed in 2020 as is currently being considered by Maryland’s legislative leaders. The impact of a delay would not be pretty.

At the heart of the analysis is the Federal solar investment tax credit, or the ITC. The ITC, which is on a schedule to sunset over the next 3 years, provides a 30% tax credit for solar projects that start construction by the end of 2019. The tax credit is reduced to 26% for projects that start construction in 2020. The tax credit is further reduced to 22% for projects that start construction in 2021 and sunsets for projects that start construction in 2022.

For the typical residential installation, each annual decline in ITC represents $1,200 per Maryland homeowner. And because of the “construction start” requirement that allows a solar projected to qualify for the tax rate in the year they started construction, numerous commercial solar farms that start construction in 2019 but are come online in 2020 will earn the full 30% ITC, a benefit that accrues directly to the Maryland ratepayer.

The baseline for MDV-SEIA’s analysis is the current stagnant Maryland solar market, with anemic solar additions and hemorrhaging of good paying solar jobs – 800 jobs lost in 2018 alone, representing 15% of Maryland’s homegrown solar industry. CEJA sets the stage for a decade of solar growth in Maryland, ramping up the state’s share of solar from 2.5% under current law to 14.5% by 2028. By delaying passage of CEJA until 2020, Marylanders can expect approximately 464 fewer megawatts (MW) of solar constructed in the state through 2022.

Developing 464 fewer MW of solar would mean Maryland would lose out on approximately $247 million in Federal tax credits between 2019 and 2022 if CEJA is delayed by 1 year (based on $2/Watt average solar facility cost). Because the delay of CEJA will result in continuation of the current stagnation through the remainder of the full 30% ITC period, most of the approximately 464 MW of solar that will be delayed by 1 year would have qualified for the full 30% ITC.

For much of the last year and through the current legislative session, Marylanders, and a majority of their representatives in the Maryland General Assembly, have called for expanding Maryland’s share of renewable energy to 50% via the proposed Clean Energy Jobs Act, or CEJA. Yet despite the clear majority support for the bill, the tens of billions of dollars in economic benefits, including the hundreds of millions in federal tax credits CEJA would bring to Maryland’s economy, and the catastrophic cost of delay both in Maryland’s ailing home-grown solar industry as well as in terms of our state’s environment, some state leaders are considering punting passage of this important legislation to 2020.

— Solar Builder magazine

This report looks at the status of net metering and alternative rate designs across the U.S.

net metering rate design

The National Regulatory Research Institute released a new study of actions by U.S. states to change distributed energy resources rate designs for the customer side of the meter. Review of State Net Energy Metering and Successor Rate Designs is a summary of the activity among state public utility commissions in finding alternatives to the more commonly used net metering rate design. Some of those alternative proposals include various combinations of compensating for energy delivered to the grid at a price other than the retail service rate; increasing fixed charges and sometimes also minimum bills; time-varying rates; and adding demand-charges to bills for customers who did not have them previously.

State actions may occur either as a response to preexisting legislative or regulatory requirements that trigger reviews when the total installed net energy metering system capacity or energy production reaches a predetermined threshold (for individual utilities or statewide) or because utility companies proposing to replace net-metering with other alternatives request regulatory review.

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“This report provides a timely status report on how states are transforming net metering as a method of crediting customers for energy that they produce and inject into the grid,” said NRRI Director Carl Pechman, PhD. “Net metering has played a vital role in transforming customers into prosumers and has provided a strong impetus to the development of a robust rooftop solar industry in many states.

“Initially, net metering was seen as a reasonable approximation for valuing power that customers injected into the grid. Increasingly, there is a concern that net metering has resulted in customers without rooftop solar, subsidizing those with rooftop solar. Whether a subsidy or a revenue shift exists, where rooftop customers are paying more than their fully allocated costs, but because of the underlying rate design there is a revenue shortfall, would take a much better understanding of the costs and benefits of solar, than currently exists. This paper reports on the growing interest among the states in improving methods of paying customers for their production of power.”

NRRI’s goal is to help inform the state commissions and all interested parties on the major approaches that are already under consideration in growing numbers of states.

— Solar Builder magazine