Solar developers want to expand the state’s net metering program this year to make larger solar arrays eligible for incentive rates utilities pay customers. The program is designed to encourage the construction of small-scale renewable energy projects.
The net metering program allows electric customers to own solar panels and sell power they don’t use back to their utility at a fixed price. But the law limits the size of net-metered projects to 500 kilowatts and prohibits the grouping of these installations into so-called solar parks.
Developers pitched a plan to the Senate Finance Committee last week that would allow 500-kilowatt arrays to be grouped together. They say this would help large customers, like businesses and schools, generate their own electricity.
But the state’s two largest utilities, Green Mountain Power and Vermont Electric Coop, say the policy proposal spearheaded by two solar developers may require utilities to pay more for solar power than they would under an existing competitive bidding program known as standard offer. They also say the incentive price under the net metering program is designed to encourage smaller renewable energy projects.
“For us, we’re going to look at what is the most cost-effective project we can do for customers. And the way the law is now is to benefit individuals,” said Kristin Carlson, a spokesperson for Green Mountain Power, the utility that serves North Springfield.
Winstanley Enterprises of North Springfield and Green Lantern Development of Waterbury want to build a 500-kilowatt solar array at an industrial site in North Springfield. They plan to build more projects at this site that add up to a 2.5-kilowatt solar park. But current net metering law forbids any additional projects in “close proximity.”
Luke Shullenberger, a managing partner of Green Lantern Group, said the project concept is designed to serve larger customers like municipalities, universities, schools and hospitals who want to generate their own electricity.
“They want to participate in these kind[s] of programs and projects, but they need larger projects,” Shullenberger said.
He is also looking at two to three other sites across the state with a similar concept in mind.
But utilities say they can purchase this amount of power at a lower cost through the state’s standard offer program where developers compete to build projects at the lowest price. The latest bid for a solar project came in around 11 cents per kilowatt-hour. Utilities pay 19 to 20 cents for net-metered electricity.
Dave Hallquist, CEO for Vermont Electric Cooperative, said the proposal would increase the cost of solar for customers.
“It’s a huge windfall they’re making,” Hallquist said. “Let the free market determine the rate of those larger projects. You’re creating an incentive to do things at the lower cost.”
But Shullenberger said the proposal would not affect overall electric rates. He said state law caps the amount of net-metered electricity utilities can purchase. The current cap is set at 15 percent of a utility’s peak load.
“The simple math says whether the projects are sprinkled around Vermont or clustered together, the net impact to the ratepayers [is] the same. So why should there be a strong concern from the utilities about the impact to ratepayers?”
But Hallquist said this will prevent individuals from installing rooftop solar because the larger projects would fill up limits on how much net-metered electricity utilities can purchase.
“These larger projects take away from the ability for folks to do rooftop solar,” he said.
Gabrielle Stebbins, executive director of Renewable Energy Vermont, based in Montpelier, said the program should not be confined by “arbitrary bookends.”
“I actually think given the scope and the scale of how much energy we need, we need to be focused on more people,” she said.
Darren Springer, deputy commissioner of the Department of Public Service, which represents ratepayers, said it remains unclear whether there would be any significant cost savings from the proposal. However, he supports the concept of grouping net-metered projects together in order to serve larger entities like businesses.
“The definition that prevents co-location doesn’t seem to me to be necessary in that type of environment. But the key part for us is if we’re going to have something of that scale, there ought to be a cost reduction associated with it for ratepayers,” Springer said.
Springer said the department pitched a proposal to lawmakers to co-locate multiple net-metered projects in a solar park, and to reduce the credit utilities pay customers based on the savings generated from economies of scale. However, he said his proposal would kick in by 2017, when the state’s proposed renewable energy program, RESET, and a new net metering program are scheduled to take effect.
But Shullenberger and others say they want to change the law so projects can be built before the uncertain reauthorization of the federal solar tax credit in 2017.
Rep. Tony Klein, D-East Montpelier, chair of the House Committee on Natural Resources and Energy, did not have a position on the proposal. But he said he has initial concerns about using the net metering program to build 2.5 megawatt projects, like the one in North Springfield.
“That’s a lot, and I’m not sure that that’s what the net metering program was about,” Klein said. “That’s why we have a standard offer program.”
Grouping the arrays together in an industrial park will also address a concern over the visual impact of solar arrays, according to Shullenberger.