Editor’s note: This commentary is by Kevin B. Jones, who is a professor of energy technology and policy at Vermont Law School, where he leads the Energy Clinic.
Vermonters are signing up for solar energy in record numbers. With current federal and state incentives, going solar has never been cheaper and is a great way to have a softer impact on our warming planet. Unfortunately, more and more Vermonters who believe they are buying solar energy from local companies are actually supporting fossil-fueled energy and worsening their carbon footprint in the process. Let me explain.
Historically, one of the most convenient ways to reduce your impact on the planet was to contract with a local solar company to install solar panels at your home and interconnect them with your utility. As your solar system spun your electric meter backward, you would reduce your utility bill and your carbon footprint. This is called solar net metering. Your interaction with your solar installer was simple. The solar company installed your system, you paid the company upfront for the solar system and you owned the solar system along with the rights to the renewable energy it produced.
Today, new financing and purchase options are increasing Vermonters’ access to solar energy. These are positive developments, except that some solar companies take advantage of the complexity of these options with deceptive sales practices. While their Vermont customers believe they are getting solar energy, in fact, the company is instead selling their solar energy to a third party, often a utility outside the state. That’s right, if you read the fine print of your solar contract, you, too, may find that you are not really purchasing solar energy.
This deceptive practice is taking advantage of both individual Vermonters and honest solar companies trying to reduce their impact on a warming planet.
Since electricity follows the path of least resistance, and for simplicity’s sake, travels at the speed of light, the electric power industry has created an accounting system to track who produces and who consumes renewable energy. For every megawatt-hour of renewable electricity produced, a generator creates a corresponding certificate to account for its production and use. The certificates are called “Renewable Energy Credits” (RECs).
These RECs can be separated from the electric power produced and sold to utilities to meet a state’s renewable energy requirement or sold to another customer who legally wants to consume renewable energy. Whoever buys the REC has paid the extra cost that is required to bring renewable energy to the grid, and has the only legal claim to that renewable energy.
Historically, these RECs remained bundled with a Vermont customer’s net-metered solar energy. Today, many developers are contractually separating the RECs from the net-metered energy Vermonters purchase, and selling this solar energy out of state for an additional profit. Unfortunately, while the developer puts a lot more green bills into their bank account, the energy you are purchasing is much less green than you might believe. Without the RECs, the energy provided to the Vermont customers is not solar. In fact, by proper accounting, it is some of the dirtiest power on the New England grid.
This practice of stripping the RECs from net-metered solar products has become even more deceptive in what a number of companies are marketing to Vermonters as “Community Solar.” While there are a number of excellent Vermont companies selling honest community solar products to Vermonters, there seem to be just as many who are deceiving Vermonters for additional profit.
Recently, at the Montshire Museum in Norwich, I introduced a panel of six Vermont companies marketing community solar products. In my introductory remarks, I discussed what it means to strip the RECs from the net-metered solar and sell the solar RECs out of state. Following my introduction, three of the six companies present admitted that they were selling the RECs separately from the net-metered energy, while they were marketing their product to Vermonters as community solar.
We should be concerned about this practice for a number of reasons. First, many Vermonters are signing contracts believing they are purchasing clean, local solar energy when they are, unfortunately, being misled into doing the opposite. Second, by selling the Vermont solar energy out of state, companies using these deceptive practices gain added revenue, which allows them to lower their prices and increase their profits, undercutting honest Vermont solar companies. Finally, the environment is being harmed when Vermonters believe they are buying solar energy while in reality they purchase polluting fossil-fueled energy in its place.
This deceptive practice is taking advantage of both individual Vermonters and honest solar companies trying to reduce their impact on a warming planet. From what I observed at the Montshire Museum, and elsewhere, this is a rapidly growing problem in Vermont. Where are the regulators and the multitude of state officials who are charged with protecting consumers and the environment?
Apparently, when it comes to solar energy and a warming planet, the cold, hard facts of capitalism prevail for those interested in profit over real environmental improvement. Unfortunately, Vermont electric customers and ethical solar businesses are also being harmed. It is time for our state government to act to protect Vermont electric customers and our planet and enforce our public service and consumer protection laws.