The value of solar power credits will go down if rate adjustments sought by Vermont utilities are approved by regulators.
The change comes as part of the state’s new net metering law that was signed in April. The program allows residents to generate their own electricity and receive a credit on their electric bills.
The small reduction in the solar credit is not expected to stifle the growing solar industry in Vermont, according to Andrew Savage, a strategist with the solar manufacturer AllEarth Renewables.
“I don’t think the industry is surprised by it. And I think the solar industry has been doing a very good job of continuing to reduce costs,” Savage said. “Not that anyone wants to see that adder go down.”
The state’s largest electric utility, Green Mountain Power, introduced the idea of a 6-cent credit, or “solar adder,” in 2008. Since then, the price for solar has dropped and solar net-metered installations have more than doubled since 2012. Now, utilities are adjusting how much they will pay for the electricity.
“The cost of solar has gone down significantly. So the financial incentive to give people incentives to build solar should go down,” said Dotty Schnure, spokeswoman for Green Mountain Power. “You don’t need the same kind of incentives now as you did in 2008.”
Schnure said GMP is not adjusting its credit to save money, but the company will save about $500,000 in 2015 by reducing the solar credit from 6 cents per kilowatt-hour to between 5.3 and 4.3 cents, according to the company’s tariff filing on Nov. 17. This represents about .20 percent of the company’s residential retail sales.
Net-metered projects installed before the new rate adjustment will receive the same 6 cent credit, Schnure said.
Many of the state’s utilities benefit from solar power — and are willing to pay a premium for it — because it offsets more expensive power during hot summer days when demand is greatest.
But the benefits are not the same for all utilities, particularly those that peak in the winter when solar panels generate less energy. One rural cooperative added an infrastructure service charge to its net metering program.
According to Darren Springer, deputy commissioner for the Department of Public Service, the changes to the net metering law were a compromise between the state’s utilities and the solar industry.
“We were able to provide some flexibility immediately to the different utilities,” he said. “(And) provide some certainly to the renewable energy industry with enough cap space to operate and enough of an incentive. I think we achieved that compromise. And I think you’re seeing solar is continuing to grow.”
Solar developers did not oppose the changes and celebrated the lifting of a cap that limited the amount of net-metered power a utility could accept. Several utilities have had to deny applications for projects because they had reached the cap. The new program lifts the limit on a utilities total installed net-metered power from 4 to 15 percent of its power supply at peak demand.
Springer said utilities that did not meet the previous cap had until Nov. 15 to file for a rate adjustment. Others that met the cap were able to file shortly after the law was signed.
The program will be overhauled in 2017, a time when the reauthorization of a federal solar tax credit is uncertain.
