Yesterday, the Senate passed a climate adaptation planning bill by a roll call vote of 37-0 with 1 abstention. Notable among the amendments to the bill was an extension of solar net metering for investor owned utilities. This amendment was adopted without objection. The bill now moves to the House of Representatives where its prospects are unclear.
Under solar net metering, solar installations can sell any power that they don’t use on site back to the grid at or near retail rates. There has been considerable controversy about solar net metering — a recent task force on solar incentives was unable to reach consensus. Some argue that net metering gives solar energy an unnecessarily deep subsidy. Others argue that it fairly compensates people and companies who invest in solar panels for the benefits that they provide to the grid and the environment.
The issue has been divisive in Belmont which is a municipal utility and therefore would not be affected by the new legislation. My family installed solar panels in 2010. When the controversy about solar net metering policy arose in Belmont and some asked me to become involved, I sought advice from the Ethics Commission about possible conflicts of interest. The Ethics Commission advised me that I should not participate in the debate about Belmont’s net metering policy. That does not prevent me from taking a position on statewide solar policy, which is a general as opposed to “particular” matter.
Having gone through the solar installation process, I have developed a personal feel for the deep subsidies that solar receives, among which net metering is actually the least significant: The federal tax credit (at 30% of installation costs) is the largest, followed by the ability to sell Solar Renewable Energy Credits. SRECs are a way for utilities to meet their obligations under the Renewable Portfolio Standard. The RPS, which we strengthened by legislation in 2008, requires utilities to purchase a portion of their power from renewable sources. The SREC market is an artificial market run by the state in which utilities can purchase credit for renewable energy production and apply it to their RPS obligations without actually purchasing the power. In effect, it gives utilities RPS credit for subsidizing solar installations. The SRECs vary in value, but are on the order of 25 to 50 cents for every kilowatt hour produced whether used on site or sold back to the grid. Net metering only applies to the power sold back to the grid and is on the order of 10 to 20 cents per kilowatt hour.
The larger debate at the state level concerns the Solar Renewable Energy Credits as well as net metering. While it is appropriate for solar to receive some form of subsidy to reflect its low carbon impact, well-informed economists debate the appropriate magnitude of that subsidy with great passion. I have been agnostic and have been waiting for a full legislative debate on the issue before settling on a position.
The language we approved yesterday came forward without the chance for full vetting. Since it did not come out of the committee process, but surfaced directly on the floor, we have no feel for whether the House will consider it at all. It serves effectively as a statement of Senate interest in resolving the issue and an offer of a direction.
In substance, the measure extends the availability of net metering for investor owned utilities on a statewide basis until the state reaches its stated goal of 1600 megawatts of installed solar capacity. Previous formulations of net metering policy applied within utility territories and were expressed as a percentage of power consumption. The new framing is a simple statewide cap. Additionally, the legislation directs the Department of Public Utilities to, by regulation, create a new subsidy regime (addressing the future of both SRECS and net metering) to take effect after the 1600 megawatt cap is reached.
The Senate was eager to move this issue forward in part because some areas of the state have reached their current cap and solar installations are at risk of losing the federal subsidy which is currently set to expire at the end of next year.