Senator David Woodsome, Chair
Representative Mark Dion, Chair
Joint Standing Committee on Energy, Utilities & Technology
My name is Dylan Voorhees and I am the Clean Energy Director for the Natural Resources Council of Maine. Thank you for allowing us to present this testimony. Passage of this legislation is one of the top priorities for NRCM and our members this year. More importantly, this bill will benefit all Mainers through increased access to solar power—solar power that provides broad public benefits, from lower energy costs to reduced pollution to thousands of good-paying new jobs.
- Solar technology and markets have undergone a transformation that has led to huge investments in this attractive energy source.
Today’s solar technology and markets bare little resemblance to anything that existed a decade ago. The drop in prices and the need for sources of clean power that do not suffer from volatile prices has meant massive growth in solar investment across much of the country (and elsewhere). This level of economic activity meant that, last year, one out of every 78 new jobs in this country was a solar job. The greatest growth in solar has been in places that have adopted policies to encourage access to solar and ease some of the barriers to entry.
- Maine is missing out and falling badly behind, to the detriment of residents and our economy.
Despite a very strong solar resource, Maine is basically in last place in the entire Northeast for investment in solar. Much of the Northeast is a leader in solar—plus California—precisely because we struggle with higher electricity rates and solar is an essential part of controlling energy costs. This is troubling and ironic, given Maine’s abundant renewable resources and general emphasis on reaping the rewards of clean, local energy sources. The amount of solar capacity in Massachusetts now exceeds Maine’s installed wind capacity. Vermont has twenty times the solar of Maine and correspondingly vastly more jobs. We’re also missing out on a major opportunity to capture federal funding for solar, which puts our state economy and clean energy markets at a disadvantage.
- Maine not only lacks specific policies to encourage solar, but is failing to address important barriers that are limiting access to solar.
In Maine today you can cooperate with nine friends, neighbors, or colleagues to co-own a solar project to provide credits on your bill. But not twenty, nor eleven, nor ten other people. This entirely arbitrary regulatory limit puts the brakes on community and shared-ownership solar. Not everyone has a home with a south-facing roof. Many homeowners and businesses would like to capture the economies of scale from larger projects. Municipalities may have suitable land not otherwise being put to use that could benefit the community if used for solar. In addition, many states allow net-metering projects up to 2 MW, more than double the limit in Maine law now. It’s time to get rid of arbitrary regulatory barriers like these.
Another key barrier is the upfront cost of solar. You pay once, and with no fuel costs, your power is virtually free for 25-30 years. The levelized price is attractive, but this is a huge barrier in comparison to simply paying the higher rate for grid power on a monthly basis. There is no one solution to this problem. Ultimately the private sector will address this problem if state government provides the foundation by better recognizing the value solar provides. (See #7 below.) In states that encourage solar by improving the overall economics, the solar market has grown and provides different models of businesses that make solar financially accessible to more people. It also increases competition, which benefits consumers as well.
- There are many elements to the benefits and costs of solar. It’s clear that the net benefits are large and many of those benefits would accrue to Mainers and ratepayers generally.
The PUC’s value of solar study showed that the wholesale value of the energy itself was worth about 8 cents/kwh levelized over the life of a solar installation. Almost all of the rest of the 33 cent value of solar are in the form of benefits for the public or ratepayers at large. That includes things like:
- A reduction in transmissions costs borne by Maine ratepayers.
- A reduction in how much ratepayers have to pay for generation capacity to be available when we need it.
- Avoided emissions of key air pollutants. Carbon contributes to climate change, SO2 and NOx are air pollutants that cause smog and respiratory illness.
- The reduction in power supply prices for all ratepayers, by reducing the use of more expensive generation at peak times (known as “price suppression”).
- The financial value of solar as a hedge against natural gas fuel price uncertainty.
Some of these are values that exist in our energy markets today, but many, like price suppression, are not currently valued at all. We are missing out of capturing this value because we’re simply not paying anything for it. Tracking each of these benefits in various energy markets may be complex, but the bottom line is that each kilowatt-hour of solar in Maine provides substantial benefits to those who don’t own a solar panel on their roof.
- The PUC study shows many of the ratepayer benefits are on the supply side. LD 1263 responds appropriately by aligning most of the cost of paying for solar on the supply side.
All of the bullets in the previous section, except the first, are benefits on the supply side of rates as opposed to on the transmission & distribution (T&D) side. Please do not lose track of the benefit of solar to T&D costs. We believe these benefits have been underestimated, but some—such as CMP—would apparently have you believe solar might raise T&D costs. The evidence before you shows the opposite and we urge anyone who makes these claims to substantiate them.
But it is true that the bulk of the benefits may be on the supply side. LD 1263 therefore assigns any new costs we will pay for solar on that side as well, in the form of the SREC provisions. T&D rates are not affected by SRECs, and supply prices will reflect both costs and benefits of solar.
- The PUC study shows net-metering is undercompensating solar owners for the value their solar generation is providing.
Net-metering is a foundational policy for distributed generation that has worked well in Maine and elsewhere. Weakening it now, as some would have you do, would take Maine in the complete wrong direction when we are already falling behind. It’s not a perfect policy, but Maine needs to balance policy perfection with practicality. We believe net-metering isn’t a permanent policy; however replacing it will take considerable complicated efforts in rate design, some of which are contingent on ongoing smart grid developments. Maine lawmakers have twice rejected a feed-in tariff approach, which is a more sophisticated alternative to net-metering. Policymakers might need to be more concerned about net-metering if there was evidence net-metering was too generous. The PUC study shows the complete opposite. Any discussion of cost-shifting among T&D rates may be interesting and eventually important but this is like losing the forest for the trees. Which matters more, total electric rates or the portion of your bill made up of T&D? Solar ultimately benefits ratepayers overall, so failure to increase access to solar is ultimately harmful to them.
- Adoption of LD 1263 will substantially lower the payback period for all kinds of solar, from residential rooftops to larger-scale community solar.
That will dramatically increase access to solar and make the choice to become more energy independent available to many more residents and businesses. As the attached charts show, Maine is falling badly behind because investment in solar is not only much higher than all of the surrounding states, but it is a more difficult investment for homes and businesses. There are some who can and will make an investment with a 12-14 year payback if the benefits will flow for 25-30 years, but that is a lot to ask—especially if we are also asking those solar owners to provide substantial benefit to others that we are unwilling to pay for.
- Adopting a solar policy with more than one element to it is critical to growing Maine’s solar market and creating more jobs.
Maine has the start of a growing solar industry, but it is nothing compared to what it could be and what exists in states around us. The solar sector can provide a wide range of types of jobs, including many that are good quality jobs but don’t require advanced training. Based on the experience in states across the region, building 200 MW of solar, which this bill would achieve by 2022 would be associated with having 2,000 – 3,000 solar jobs. Vermont is already up to nearly 1,500 jobs, Massachusetts has over 10,000 solar jobs. What are we waiting for?
For all of these reasons we urge you to pass this legislation.