Editor’s note: This commentary is by Steven Letendre, Ph.D., of Middletown Springs, who is a professor of economics and environmental studies at Green Mountain College.
[G]iven our communities’ strong environmental values, it’s no surprise to most Vermonters that solar power is a growing trend in our state.
Public policy drives the benefits and costs homeowners, farmers, schools, towns and businesses will realize when they invest in solar power. The successful growth of Vermont’s clean energy economy, similar to many other states across the nation, has been made possible through favorable net metering rules. Current rules require utility companies to purchase solar-generated electricity from net metered system at the retail rate that all Vermonters pay plus a “solar adder,” which depends on when the system was installed and its size.
The Vermont Public Service Board (PSB) is currently in the process of revising the state’s net metering rules. The current proposal would reduce the value of net metering payments and vary them depending on the location and size of any new solar power projects. It’s important that the PSB consider the full range of benefits that renewable energy projects bring to Vermonters when deciding how to appropriately revise the state’s net metering rules. If we as a state want to encourage renewable energy, we must ensure that Vermonters are appropriately incentivized to make the investments necessary for solar power, and the net meter rates are an important part of that calculation.
Solar creates many benefits for the grid including delivering power during summer months when the price of wholesale electricity is high driven by peak power demand for air-conditioning. The distributed nature of solar reduces energy losses from the point of production to consumption and often eliminates the need to invest in upgrades to the distribution network saving ratepayers real dollars.
The PSB should acknowledge the economic development and job benefits of in-state generation, including solar, when considering revisions to net metering rules.
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The traditional centralized nature of our power grid leaves it vulnerable to frequent and prolonged outages, especially during weather related events, which are increasing due to climate change. Distributed renewable net metered energy generation can increases grid resilience and in the future will enable the development of local “micro-grids” to enhance the health and safety of all Vermonters when faced with a prolonged grid outage. Green Mountain Power is developing this concept through their Stafford Hill solar plus storage project, which will provide critical power for an emergency shelter at Rutland High School.
Net metered solar systems can help to reduce electric rates in the longer term through the price stability that results when solar investments are supported with appropriate net metered rates. While the price of electricity can fluctuate sharply from month to month and year to year due to volatile natural gas prices, the primary fuel used to produce power in New England, in-state generation can protect Vermont utilities and ratepayers from price volatility. Furthermore, the benefits of solar energy go beyond those associated with the costs of producing and delivering grid power. Top among these are the benefits of using a zero emissions source of energy to support regional and national efforts to improve air quality and address climate change.
Current proposals to revise Vermont’s net metering rules impose a financial penalty to households, community projects and local businesses that choose to retain their Renewable Energy Credits (RECs). Without retaining the RECs, the owner of the solar array is not allowed to claim that they are using renewable energy. Why should I be compensated less if I choose to retain the RECs than my neighbor that chooses not to? We are both investing to support a clean energy future for the state and the nation.
Another important value that should not be overlooked is the local jobs and economic development that Vermont experienced as the renewable energy has grown in recent years. The 2015 Vermont Clean Energy Industry Report found that the clean energy sector supports at least 16,231 jobs in the state, representing 5 percent of Vermont’s workers. The large majority of these jobs are in installation and maintenance jobs that cannot be sent overseas. Changes to net metering rules could significantly impact the future growth of Vermont’s clean energy economy and the families supported by clean energy workers. Electricity purchased from out-of-state sources may be less expensive than solar energy generated in Vermont; however, the dollars spent on out-of-state generation leave Vermont likely never to return. The PSB should acknowledge the economic development and job benefits of in-state generation, including solar, when considering revisions to net metering rules.
Net metering should not be misunderstood as a “subsidy” to solar homeowners. It is the way that utilities and non-solar ratepayers value Vermonters’ personal investments (which can be tens of thousands of dollars) for the numerous benefits their investment in clean energy provides to the grid and to society. Recent economic studies in New England found that the holistic value of net metered solar systems equate between 29 to 34 cents per kWh. By comparison, the latest rates proposed by the Public Service Board range from 12 to 16 cents per kWh considering proposed REC penalties and depending on the location of the project – representing a 20 percent to 50 percent reduction from current Vermont net metering rates.
The public expects that state regulators will weigh all the numerous values that solar delivers when determining the amount utility companies should pay for net metered power. Vermonters have a strong ethic of independence and environmental stewardship. Solar energy provides a real opportunity for communities across Vermont to demonstrate these long-held values. Numerous towns have already taken control and embraced solar energy to power their communities using an abundant and clean source of energy — the sun, let’s enable more of our Vermont neighbors to do the same with a strong net-metering program.