The Sol SOURCE: Monthly Report for May, 2018
- May 27, 2018
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The Sol SOURCE is a monthly journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains trends and observations gained through monthly interviews with our team, and it incorporates news from a variety of industry resources.
South Carolina – Facepalmetto. Last month, South Carolina officials dealt two stinging blows to the state’s emerging solar industry, now home to 69 solar companies and 2,829 solar workers.
In early April, a bill with bi-partisan support that would have lifted the state’s 2 percent net metering cap and exempted small systems (less than 20 kW) from property taxes was approved with a 64-33 vote in the state house. However, utility interests cited a rarely used technicality to trigger a revote needing two-thirds majority. On the second try, they won, and the bill fell short.
Sneaky, sneaky. With the net metering cap nearing full-capacity, this move could hinder the growth of South Carolina’s emerging rooftop solar market unless the net metering cap lift is resurrected in the state budget process.
The residential solar market is not the only sector in South Carolina facing fierce opposition. The Public Service Commission (PSC) has approved South Carolina Electric & Gas Company’s (SCE&G) cuts to the avoided cost rates that utilities must pay to large-scale solar energy systems that sell energy to the grid. This move will limit the economics of future utility-scale solar qualifying facilities (QFs).
Massachusetts – Just over two years ago, Chapter 75 of the Acts of 2016 was signed into law by Governor Baker, marking the start of a transition towards Massachusetts’ new SMART program and away from previous SREC regimes. Over these two years, Massachusetts has worked diligently to bring SMART to life, and at the end of April, we moved one step closer to its implementation.
Final guidelines have now been released on agricultural solar tariff generation units, brownfields, land use and siting, low-income generation units, and reservation periods for a Statement of Qualification. While the finalized guidelines do not stray far from initial drafts, they mark another tick in the countdown to the official end of SREC II and the opening of SMART. Many are watching the clock anxiously, hoping to submit their projects as early as possible to qualify for the more lucrative initial blocks.
We expect that once the program opens officially, there will be an influx of applications, raising the urgency for Massachusetts customers to go solar as soon as possible to take advantage of higher incentive levels earlier in the program. Prospective Massachusetts solar customers looking to take advantage of the program should reach out at firstname.lastname@example.org
The opening of SMART is likely still a couple of months out, and the Massachusetts Department of Energy Resources (DOER) is still waiting on the finalization of the proposed model tariff from the Department of Public Utilities (DPU) and final briefs from utilities on the tariff are not due until the end of this month. The DPU will then take time to review and issue their order.
At long last, Massachusetts SMART is almost here. Sit tight. We’ll keep you in the loop.
Pennsylvania – In an effort to repair its oversupplied solar renewable energy credit (SREC) market, which peaked in the high $200s / MWh around 2009, Pennsylvania has closed its borders to out-of-state solar energy systems by passing Act 40 in October of 2017.
Because it has not yet been politically feasible to create more demand for solar in Pennsylvania by increasing the alternative energy portfolio standard (AEPS), advocates have tried for years to remove eligibility for out-of-state solar homeowners and larger-scale solar assets who had previously relied on Pennsylvania’s alternative energy portfolio standard to monetize their investment. And finally, they won.
Per the final implementation order issued by the Public Utility Commission, not only are the borders closed to new systems, out-of-state systems that had previously been certified and selling into the market have lost their SREC certification and have been kicked out of the Pennsylvania market. This is a landmark decision, as grandfathering tends to be the norm in these types of arrangements.
Neither homeowners with small rooftop systems from out of state nor large utility-scale projects from North Carolina, Virginia, and elsewhere in PJM will be immune to a retroactive decertification. Their certifications will instead be converted to a less-lucrative Pennsylvania Tier I REC certification, with any SRECs generated after October 30, 2017 also being de-certified and converted to Tier I RECs.
The retroactive decertification and recertification will certainly be an operational nightmare, as well as a loss to those who invested in solar before the Pennsylvania change-in-law. A potential upside is that this marks a stronger commitment to the future of renewable energy in Pennsylvania. We are hopeful that the legislature will look at examples in nearby New Jersey and Washington, D.C., for example, who just passed a 50 percent renewable energy goal, and realize that at 18 percent by compliance year 2020-2021, Pennsylvania can do better.
- In a landmark decision, the California Energy Commission unanimously approved a requirement mandating that all new houses built in the state will require solar energy. The requirement, which will go into effect in two years, is estimated to bring 650 MW of new solar energy to the state, according to Greentech Media. California, long the outright leader in clean energy, continues to carry an ever-brighter torch.
- SunPower ended weeks of speculation by announcing its acquisition of SolarWorld Americas last month, an unsurprising move that boosts the company’s domestic manufacturing portfolio on the back of their request for tariff exemptions on a line of high-efficiency cells. Meanwhile, SolarWorld’s 201 partner Suniva is being sold in much smaller parts after a bankruptcy judge approved the company’s majority owner, SQN, to auction off Suniva’s assets. So much for the tariffs bringing Suniva’s recovery..
- Michigan’s Public Service Commission (PSC) approved utility DTE’s proposal for a $1 billion natural gas plant, a disappointing decision that opponents note will cost taxpayers $339 million more than renewable alternatives. Over 10,000 residents petitioned against the costly gas plant.
- In New York, the Value of Distributed Energy Resources (“VDER”) program continues to prove challenging. Though it is an earnest attempt to more accurately compensate distributed solar generation for the benefits it provides to the local grid, the complexity and variability of the program leave many customers with analysis paralysis.
- The Illinois Commerce Commissions approved results for the second round of renewable energy credit (REC) procurement for utility-scale and brownfield projects. RECs were awarded at a price of $5.01/REC for this round, as compared to $6.07/REC for winning bidders in the previous round. As with the first round, there were only two bidders, which by rule keeps the number of RECs awarded from being disclosed.
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Photo Credit: Delaware Cooperative Extension via Flickr