[T]he Public Service Board announced Wednesday it will continue taking comments until Dec. 2 on a new set of rules governing solar development.
Those rules, first released to the public in August, could curtail some types of solar development larger than 500 kilowatts, and it could diminish the profits developers realize on smaller projects.
Net metering allows electricity customers to receive payment from utilities for renewable energy they generate in excess of what they use.
The state’s net-metering program has paid participating electricity generators a much higher rate than what wholesale electricity generators receive (typically 19 cents per kilowatt-hour, as opposed to as little as 4 cents per kilowatt from the now-shuttered Vermont Yankee nuclear plant).
As many Vermonters have taken advantage of the higher rates, renewable generation has exploded, according to the Public Service Board.
Under a new regulatory regime, that rate of development might slow dramatically.
Some in the industry say they’re worried about the impact of the change on solar development in the state.
Bruce Genereaux, a co-owner of Groton-based Green Mountain Community Solar, said his company has been successful under current rules for net metering in Vermont, especially for residents who can’t put solar on their house and need to access solar from a remote location.
“Going forward, the Public Service Board has a new equation, and from what I can see the pie has gotten smaller,” Genereaux said. “As a result, all the participants are required to take a haircut if additional projects are going to be built.”
Genereaux said his business is under no threat of closing as a result of the new rules, but said the rules could limit or even halt his prospects for future projects.
The rules impose a variety of new challenges on solar developers, Genereaux said. All net-metered projects larger than 500 kilowatts will be located on “preferred sites,” such as in gravel pits, above parking lots, on capped landfills and adjacent to the projects’ primary users.
The rules will also require solar project owners to hand over to Vermont utilities what are called renewable energy credits — certificates that represent the renewable component of renewable energy. Almost all of those credits generated within the state of Vermont today are sold to Connecticut and Massachusetts utilities, leaving Vermont with effectively no in-state solar or wind production.
Utilities in states to which Vermonters sell these certificates may, by purchasing a sufficient number of renewable energy credits, label their energy as renewable even when it originates from conventional sources like fossil fuel and nuclear plants. Conversely, renewable-energy developers who sell their renewable energy certificates commit fraud if they attempt to purvey their electricity as “renewable,” Vermont Attorney General Bill Sorrell said earlier this year.
Under the new rules, Vermont developers may keep or sell the credits for renewable energy they generate, but they’ll receive 3 cent per kilowatt less from utilities.
For the next 10 years, developers who don’t sell or keep the renewable energy credits, but instead give them to a utility, will receive an additional 3 cents per kilowatt. That deal ends in 10 years, however, and that’s a problem for some developers.
“Under the new set of rules, developers essentially are forced to turn the RECs over to their utility, and they get paid 3 cents per kilowatt to them for 10 years, but the projects last 30 years,” said Peter Thurell, owner of East Dummerston-based Soveren Solar. “That seems like a total giveaway to the utilities.”
Other developers criticized the new rules for limiting to 500 kilowatts the amount of generation any single entity may claim payment from under the net-metering program.
“There’s only so many net-metering customers that can take less than .5 megawatts,” said Derek Moretz, vice president of development for Burlington-based Encore Renewable Energy.
Moretz said he fears that entities like Vermont State Colleges, or the state of Vermont itself, might not be able to utilize the net-metering program for more than 500 kilowatts of generation. That’s not enough to make a significant dent in those large entities’ electric bills, he said.
Moretz also said that a provision forbidding net-metered developments larger than 150 kilowatts except in preferred locations would dramatically slow solar development in the state.
“There are only so many of these sites feasible for solar developers, and we’re confident Vermont will come up short on its goals for solar development [by allowing solar farms] on these sites alone,” Moretz said.
His company has begun looking to expand its development efforts outside the net-metering program and outside of Vermont as a result of the proposed rules, Moretz said.
But some developers say the Public Service Board has been wise to slow the growth of solar energy within the state.
The new rules will certainly put the brakes on solar development in Vermont, Genereaux said, but that’s not necessarily a bad thing.
The larger a portion of their energy portfolio that comes from net-metered installations, Genereaux said, the more Vermont utilities will need to charge customers to make up the difference.
“In the end, it’s fairly balanced, and nobody’s going to be completely happy with all these compromises,” he said.
He could have made more money were the existing rules to remain in place, but Genereaux’s business model will permit his company to continue even if the new rules mean he can’t build any more net-metered projects, he said.
“I would have liked to have done more — it would have made my standard of living better — but it is what it is,” he said.
The rate of growth in solar development will slow under the new rules, but the Public Service Board must strike a balance between that concern and the need to achieve a steadier, more predictable expansion than “the steep and fast [growth rate] we saw over the past decade,” Genereaux said.
Other developers are more sanguine.
“We’re just looking forward to it being finalized,” said Kevin McCollister, managing partner of Randolph-based Catamount Solar. “There’s nothing in it so onerous we’re not going to keep moving forward.”
Catamount encourages its customers to keep the RECs associated with their portion of a solar project, McCollister said. That allows those customers to claim that they’re solar-powered, should they want to for marketing or other purposes, but it also means that Catamount — unlike many Vermont solar companies — doesn’t currently receive any financial benefit from selling RECs from projects they build. As a result, the rule requiring that RECs be retired to utilities won’t affect them.
“We never thought selling RECs was a great idea, because it’s giving permission to companies outside the state, to pollute,” McCollister said. “It’s transferring the solar qualities from Vermont to someone else.”
Catamount also builds several different types of solar projects, ranging from small (15 kilowatt) residential projects to large (500 kilowatt) commercial ones, and even some in remote locations that aren’t connected to the grid at all, McCollister said. That fact insulates the company from the effects the new rules will have on projects sized from 150 kilowatts to 500 kilowatts, which will be allowed only on preferred locations.
“That diversity hopefully is going to help us, because if we were doing 100 percent those big 500-kilowatt systems, it’d be a challenge next year, because those are going to be harder to site and harder to build,” McCollister said.
Many of his company’s big projects are for commercial customers that want their panels erected on-site, McCollister said, and under the new rules, projects located adjacent to whoever uses a majority of their electricity are considered to be on a preferred site.
“That’s going to continue working for us,” he said.
“We’re going to hopefully have to scramble a little less than others in terms of realigning,” McCollister said.
McCollister said his big concern is getting the rules finalized so that he and his staff know what to expect.
“We’re ready to know what’s going to be there for next year,” he said. “It’s definitely going to be harder to build the bigger systems … but it’s not going to be impossible. Business will probably go down next year, but hopefully we’ll adjust.”
The Public Service Board is holding a public hearing on the proposed rules on Nov. 18 and will accept comments on them until Dec. 2.
Correction: An earlier story incorrectly said that the Legislative Committee on Administrative Rules would be holding a public meeting on Nov. 18. LCAR has not yet scheduled a hearing on the proposed rules.
