Jonathan Kamens asks:
Will, can you give us some idea of what the goal of H.4185 is and, if it is passed in its current form, what impact it will have on existing and new solar panel installations. Also, will it make solar panels less attractive and therefore slow the expansion of solar power in Massachusetts?
There are a number of states in which concerted lobbying and financial pressure (i.e., campaign contributions and all the other tricks lobbyists play) by entrenched fossil-fuel interests have made solar panels on people’s rooves at best less attractive and at worst completely impractical. I don’t want to see that kind of thing happening in Massachusetts!
The short answer is that I’m not sure how House 4185 will play out. It is very much in flux right now.
Here’s a longer answer: One of the major incentives for installing solar has been the “SREC” market. SREC stands for Solar Renewable Energy Credit — utilities pay people who have installed residential solar for the right to take credit for the renewable power flowing from the installation. The utilities use that credit to meet the Renewable Portfolio Standard, a law we fought for in 2008, which requires utilities to meet a certain portion of their energy needs with green power. The SREC sales are income source over and above the payment from the local utility for any solar power sold back to the grid. Over the past few years SREC sales have gone as high as $0.50 per kilowatt hour.
Recently, the SREC market has tanked as there has been a glut of SRECs available. People in the solar industry whose business depends on the SREC subsidy have been actively lobbying for an approach to putting a floor under the market. At the same time, they have been active in seeking to raise the net metering cap which in some areas limits the expansion of solar. Utilities have a variety of countervailing concerns and the issues are exceedingly complex.
People (like me), who have installed solar panels on their homes, get to use the utility grid as a giant battery — pumping power into it and drawing it out when we need it. If our generation meets our needs, then our utility bills net out to close to zero and we get the battery service essentially for free. That’s a great benefit to us and to the cause of solar, but those who don’t have solar (for any number of reasons), are carrying the fixed costs of the grid for us. So, there are legitimate tensions between solar users and solar installers on the one hand and utilities and non-solar customers on the other.
As I understand it, House 4185 has become a very complex effort to strike a balance among those concerns — responding to the SREC crash and raising net-metering head room, but trying to address concerns about solar cost. Right now, there is no consensus about whether or not it is fair and I’m not sure it will pass in any form this year, given the level of confusion at this late date.
There is no question that everyone who pays taxes and uses electricity (i.e., pretty much everyone) is subsidizing the installation of solar panels on private homes. Free use of the grid; federal and state tax credits; federal, state and local rebates; all of these “redistribute income” from people who do not have solar panels to those who do.
People who think that’s a bad thing need to suck it up and get a clue. Our climate is in free-fall, and much of the United States, including much of the Massachusetts coast, is likely to end up underwater in our lifetimes. Yes, I and other solar panel owners benefit financially from them (albeit not for ~10 years after installation, when they are finally paid off and cash-flow positive), but every solar panel installed on a roof in Massachusetts is a blow against climate change.
In short, installed solar panels benefit everyone, not just the people whose rooves they are sitting on, and therefore everyone should be subsidizing further expansion of solar power and making it more attractive, not less so.
It pains me to see all the huge, unobstructed, south-facing rooves in my neighborhood that don’t have solar panels on them. Given the incentives and cost structures available right now, there is no excuse for those rooves not to have solar panels on them. We need to make sure that remains the case.
I hope you will stay on top of this bill.
One clarification… The reason why the solar panels on my roof in particular won’t benefit me financially for ~10 years because I chose to own my panels outright. That’s the most beneficial arrangement if one can afford it, but if not, there are other options nowadays for installing solar panels which require zero out-of-pocket expense for the homeowner and start accruing financial benefit the day they are turned on.
You are absolutely right that the subsidy through the rate structure is just one of a number of climate-oriented subsidies and not the largest. The largest is the federal tax credit — a 30% rebate off the top. And indeed, the cost of that rebate is born by all other taxpayers.
What some utilities argue is that they can have a greater carbon impact through other green investments — that residential solar is not the most cost-effective carbon-reduction investment to subsidize, even from a pure carbon reduction standpoint. I haven’t been able to evaluate that claim yet and it is very much in dispute and is part of the confusion around the legislation.
Will,
This bill, H4185 has some very valuable merits, including eliminating the net metering caps immediately to allow for stranded projects to get built and to put the Governor’s goal of 1600 MW into statute. Beyond the raising of the net metering cap immediately, there is no urgency in completely overhauling the current virtual net metering system other than to reduce costs to ratepayers and utilities. If this bill passes as written, the utilities will receive an effective zero interest loan from solar owners like yourself who will not be allowed to allocate excess production or to use excess production to offset the as of yet undefined amount of the new minimum bill that they are insisting is necessary to maintain the distribution system so you may accrue net metering credits for years before you can monetize them, giving the utility the use of millions of dollars for no interest. There are several other grave concerns in the bill, such as the fact the residents in Municipal Light Plant towns, like Belmont, will no longer be eligible for solar incentives like SRECs as the SREC program is replaced by a declining block incentive that is only for residents of Investor Owned Utility territory towns.
For these and many other reasons (eg Lack of incentives for Community Shared Solar in the final draft language despite promises from NECEC all along that Community Solar would get an adder in the Declining Block Incentive).
I suggest the Joint Senate and House Ways and Means Committee recommends that the Net Metering Cap be expanded by 4% immediately as an attachment to the current Environmental Bond Bill and that all the other provisions of H4185 are implemented after a two year period in which the elements of this bill may be properly and openly debated by all stakeholders, not just the select few who sat down with the utilities to write H4185 behind closed doors.
Respectfully,
Haskell Werlin
Solar Design Associates
Harvard, MA.
Thanks, Haskell. It is indeed a likely outcome that, as you suggest, we might just adjust the cap and leave the other issues for later, given their complexity. Probably not in the EBB — that’s about other things, but likely in another vehicle.
That works for me,
Thanks,
Haskell
There is little published in the Globe about how SRECs work:
“Solar success costing owners – Price of state bonds dips with popularity of panel systems”, by Jose Martinez (Jan 17, 2014)
http://www.bostonglobe.com/metro/regionals/west/2013/01/17/values-drop-for-solar-power-certificates/dE06kqyIGuAu9mivNiq3MI/story.html
“Equal and equitable access to solar” – op/ed by David Enos and Worth Robbins (July 8, 2014)
http://www.bostonglobe.com/opinion/2014/07/08/equal-and-equitable-access-solar/irnDIwfKhhWwvCxqKh8E1I/story.html
Reading these, my understanding is the old legislation tried to set up an artificial supply and demand market SRECs, in expectation that the market would take off and would adjust itself, but in reality, the market diverged from equilibrium. The solution is to understand what are the underlying causes – could it be costs for solar panel installs are kept artificially too low? Could it be that the cost to utilities to maintain the smart grid needed in the back end are perhaps too high?
One can always mandate that the utilities buy more SRECs, to prop up the demand, but before doing that one has to analyze whether the whole scheme (a) makes economic sense, and (b) serves to help the environment.
In the long term, favoring a particular solution in legislation is a bad idea. Technology changes and what may be perfectly rational at one point may become counterproductive at another. Case is point is the mandated use of ethanol. It is now clear that ethanol is not achieving the environmental goals we hoped for, but the powerful political lobby will not go away and we are consequently stuck with a bad solution.
A much better strategy is to make sure that the market price of every energy source reflects all costs, including, environmental ones. In the case of fossil fuel, it means we need to add a tax on carbon. Once we do, solar will naturally be more attractive without any subsidies. But other solutions, like wind, electric cars recharged from non-carbon energy and good old conservation will also be more attractive. Consumers will naturally gravitate to what is most appropriate in any given case. Best of all, we will not be creating vested interests and will retain our flexibility to follow new developments in technology.
Kiril
One cannot rely exclusively on market forces in a partially regulated market, and one cannot entirely deregulate the electricity generation and distribution industry because of the environmental, safety, and right-of-way issues involved. Therefore, striving for market prices that reflect reality is at best a partial solution.
It’s very messy — I do support a carbon tax, but that’s a new tax (always politically difficult) and also hard to implement for an individual state. The interim alternatives do get horrendously complicated, but that’s what we are working with. If we can’t just leave it to the market, we take on the responsibility of sorting through which technologies are cost-effective in reducing emissions and that is precisely the set of computations that is bogging us down.
Here is an additional helpful resource about SREC’s .
Will,
Thanks for hosting this forum, I find it very informative. I’d like to take a friendly exception with how you think your PV is impacting other rate payers.
The impact to other rate payers is from you buying less energy from the grid, and thus making a lower contribution to support fixed costs. But energy conservation (a lot of it incentivized by utility programs and the state) also has this impact, and I haven’t heard anyone suggesting we should do less energy efficiency.
The fact that a residential, behind the meter PV, may push some power onto the grid I think is relatively trivial in the grander scheme of impact to rate payers. (At least at current residential PV penetration rates). Further there are some studies that show that there may be a net benefit to rate payers from net metering. Thus, I wouldn’t assume that you’re free riding on other rate payers. I also suspect your energy conservation efforts may be having just as big, or bigger impact, on other rate payers.
Not to say that equity is not an issue (I’m a renter). But the community shared solar model hopefully can enable much broader participation – including lower income and urban households. Watertown, with its high proportion of rentals, I think could especially benefit. Unfortunately these projects are not easy to do. Very complicated.
Thanks for the opportunity to participate in the forum.
p.s. I take no position on the pending legislation. My company is a long term contractor to state agencies like DOER, so I don’t think it’s appropriate for me to comment.
Very well taken point, David! Investments in energy conservation, which I deeply believe in, look the same as investments in renewables from the standpoint of utilities. And, in fact, there is some push back developing on utility subsidies for conservation — not all ratepayers are in a position to take advantage of those subsidies, especially the larger grants, which require even more substantial investment by the homeowner. And money aside, major conservation projects involving interior work can be prohibitively disruptive in some homes.
This is the morass of competing goals and equities that we get into when try to bureaucratically optimize billions of dollars of private investment. In the long run, we have to get back to market forces — we need a national carbon tax to drive down fossil fuel consumption in a way that doesn’t put clumsy government regulation in the middle of every energy-related consumer decision. For now, we’re stuck with a whole thicket of very messy and ambiguous regulatory problems.
There are some boobytraps in this legislation. A minimum monthly contribution to be included on a customer’s total bill that ensures each customer contributes each month a reasonable amount toward the costs of the electric distribution system that are not caused by volumetric consumption
This will hit the low income strata the most. And discourage energy conservation. It does not matter if you have solar or not. Get rid of this.It is most regressive.
And “not caused by volumetric consumption” sounds like corporate welfarewith the low usage consumers subsidising the large consumers.
I Have oil heat and my fuel company just charges per gallon for oil. He does not charge me for his equipment and truck trips. The cost is embedded in the per gallon price. With electricity ,I think we should go the other way and even get rid of the fixed “customer charge” and replace it with a per KWh based charge Any fee or charge should be based on energy usage. The more kilowatthours you use the more you pay.
I don’t trust utilities and their commissioners to do the right thing so I decided not to convert to gas.
Even the current “customer charge” can be paid with net metering credits. Any minimum payment will disproportionately burden smaller residential solar installations..
No thought is given to the value of the source (carbon free electricity) and if you produce more electricity than you use you are a producer. So that being the case does pilgrim power pay a fee to get on the grid, and do these coal & gas fired power plants ?
And anyone who installed solar undertook the capital risks for the system. Do they get a payment for their“Stranded Assets”
Why the urgency wait for next session. shoot this turkey down. maybe the DA will indict someone under the golden dome or dark money scandel exposed. Re introduce this next session and shed some light on it.
Following my reply above to David: I agree it’s a mess. But some very environmentally-oriented legislators feel it is the best mess they can put together. Frank Smizik, House Chair of the Committee on Global Warming, and someone completely committed to responding to climate change, just circulated a letter in strong support of the bill. I’ll continue to study this issue — not sure where I’ll end up. The text of Chairman Smizik’s letter appears below:
REBUTTAL to Frank’s letter
“The new incentive program will be overseen by the Department of Public Utilities, with all decisions being made through an open, public process.”
In principal you are correct, I disagree in practical terms:
While the process is open, It is difficult for the average lay person to even become aware. I became aware of the 4183 because I do general surveillance of the legislature and read the bills. Why does the average citizen have to be an astute expert sleuth? Amend the bill to require in non ambiguous terms how the ratepayers are to be informed of an impending hearing on whatever issue coming to the DPU. Such as bill envelope stuffing’s, ect.
Also, the commissioners just have to go through the hearing process but ultimately can do what they want to. That may not matter if we have an environment friendly commissioner but if we get a bad governor that stuffs the commission with his cronies that can be bad with no legal safety interlocks to trip preventing a bad outcome.
“H.4185 also creates a minimum bill requirement that only applies to specific customers in a very specific situation.”
Again be specific:
That is what I hope it would be but that is not what 4185 says. Why not amend the bill to specifically say that?
There is nothing to prevent a commissioner to raise it to $50.00 or interpreting it literally and minimum billing for any and everyone. Typical bills have lots of weasel worded implied terms.
“Five dollars is an educated estimate of what the amount could be”
Codify this into H4185 like not to exceed Five dollars in any billing period. You might credit this against the customer charge which already does this? I pay $6.43 customer charge.
May I ask, who drafted this bill? ALEC or the Koch Bros.? Does not sound like Frank’s wording after reading his letter.
There is a lot of linguistic work with the language of the bill and its intentions that are out of alignment. Personally I don’t think there is enough time to correct this considering the slow process but I could be surprized they did this with the upskirting bill after the Supreme Court shot down the existing law.
Will chamber a round and shoot this Turkey (H4185) down. Frank has his grammatical homework to do. My suggestion that he takes his letter and drag and drop language from his letter into the new bill. Can this be reintroduced on a priority basis next session?
And can all future bills be plain language like our auto insurance policies?
As an SREC-I generator, I agree that I should contribute toward maintenance of the grid that my system relies upon. But this should be proportional with giant producers and consumers who benefit from it in much greater scale than I. A minimum bill is the opposite of that.
Wouldn’t it make the most sense to recoup this cost from all consumers and producers in proportion to the AMPERAGE of their connections to the grid, rather than to their usage/production?
That way two similar residences would contribute equally, regardless of who is producing solar energy — removing a disincentive to install solar.
Large producers and generators would pay proportionately more due to the higher amperage of their connections.
So, those with a 200 amp connection would pay a certain fee regardless of how much they use?
Correct. A “certain fee” that would be a good deal smaller than $5 since large-scale customers that had a hundred times worth of hookup amperage would be paying a hundred times that fee.
It treats “depending on the grid” as an infrastructure cost rather than a usage cost.
I agree it is an infrastructure cost. I think that’s a not a bad way to think about charging for it.
Yesterday I attended a briefing on H.4185 for legislative staff. You can see the PowerPoint presentation from DOER here.
Andrew Bettinelli
Legislative Aide
Office of State Senator William N. Brownsberger
If the caps are raised, 4% is really not enough. The muni cap of National Grid – which is the cap of most concern – would be raised by approximately 50 MW. That would probably get eaten up in a matter of days. 5 or 6% would be a more logical number so that any new state solar system could be developed without this sense of panic to do so too quickly. I am ambivalent like most solar industry folks at to whether 4185 or a cap raise goes through this session. I see some sense in 4185 – although the process to get there was troubling. One thing is clear – the industry is in deep trouble if nothing at all happens by Wed.
Got it. Hope we can work something out!
Another letter in environmentalist support of the bill (with changes) recently arrived — this one from the Sierra Club.
Bottom line for the year: Failure to reach consensus. We did pass a stop-gap bill raising the net metering cap.
I would like to point out that the way Green power is marketed, it never will show a cost advantage over fossil fuel power. I would like to see a slow decoupling between the green power plans on offer and the cost of conventional fueled electric. It would provide an incentive to have green power for cost reasons so that when fossil power spikes like it is now, green power would be a good market based alternative rather than a political and moral statement.