Senator David Woodsome, Chair
Representative Seth Berry, 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. We support this bill, which includes new innovations and builds on policy ideas developed and supported by diverse Maine stakeholders over the last few years, including utilities and solar advocates. Our testimony provides the basic reasons for our support and one area of concern which we encourage the committee to address.
Community solar is very important for Maine people to maximize benefits of solar
There are many reasons why community solar is important, including large-scale community solar. Shares from a community solar farm should be available to nearly every home, business or institution in Maine, regardless of whether they own, rent or lease their property. They should be available to all regardless of the solar suitability of their roof or land.
Community solar also brings multiple benefits of collective action. This includes the simple fact that buying in bulk makes most things, including solar, somewhat cheaper. There are additional expenses with community solar, but these should be outweighed by the savings. There is also an intangible benefit that comes with taking action together with ones neighbors. Community solar is exciting because we are social creatures. Solar power is a somewhat unique source of generation where principle investors need not be utilities or Wall Street hedge funds, but individuals willing to put their capital to work generating the power we need. Getting homes and businesses excited about investing in solar is important.
For those who do not or cannot own their own solar, a community solar share may be a relatively affordable way to gain the direct benefits of solar. It is important to remember, however, that because of when and where solar power is produced, we know it provides substantial benefits to Maine ratepayers in general, regardless of whether they own solar or a solar share.
The bill would help Maine ramp up quickly on large-scale community solar. In the first year (2018), the bill aims to procure slightly more large-scale community solar than there is total solar in Maine today. The final buildout would provide enough solar to power the homes of every resident in a city the size of Auburn or South Portland, although it is likely that the actual community solar would include significant numbers of business and municipal shareholders.
Maine is behind with regard to community solar development and policy
Despite these benefits, Maine has only about 10 small community solar farms because the Public Utilities Commission (PUC) has continued to impose a huge barrier on community solar. That is the well-publicized but persisting 10-meter/9-person limit on shared net metering. This significantly reduces the economies of scale and kept community solar something of a niche market.
As a result of this limit, and the absence of new policies like this bill offers, Maine has not attracted investment by community solar developers like those who have helped bring this bill forward. That is a missed opportunity for Maine, because the rest of the country is benefiting not only from the reduced price of solar power, but from innovative business models and market competition in community solar.
The bill harnesses power of market competition, but adds stabilizing forces
Competitive markets can be a powerful force for driving down costs and fostering ingenuity. Consumers win when they have choices, and ratepayers benefit from procuring energy in open, competitive markets. This bill uses open auctions to harness the power of competition.
These auctions must be deemed competitive for the PUC to award any long-term contracts. The auctions will be regular, transparent, and standardized. While the targets in this bill may seem ambitious, we think these auctions will be very competitive and drive down bid prices to the lowest possible level.
It is also critical to understand that Maine must also grow and develop its solar market in order to achieve greater benefits of competition. A single auction doesn’t create a strong market, nor does significant volatility in demand or supply. The bill is designed to achieve steady, predictable market growth, which improves competition. This is not only good for new solar-related jobs, but it enables the ratepayers and solar owners to capture greater benefits from more competitive markets.
There are limits to what this bill can achieve on its own.
Of course large community solar alone is not sufficient for a robust solar market. For one thing, community solar can be a form of “distributed generation” in that it can reduce the need for and operations of large central power plants and thus reduce prices for all. However the larger a project, the less likely it may be to reduce or offset transmission and distribution costs. It is more important to site 5 MW projects in a way that fits within existing T&D capacity than it is with smaller projects—that’s true whether they are community solar or not.
As the title suggests, this bill is focused on very large projects The bill is not a substitute for lifting the 9-person limit in net metering rules. There should be a way for more locally-developed medium-scale community solar projects. It its disastrous recent net metering rulemaking, the PUC proposed getting rid of the arbitrary 9-person limit in their draft rules. However their final rules kept the limit, claiming (rather speciously, given the extremity of other changes) that this was a matter for the legislature. Other legislation will be needed to address this limit.
Finally, the bill isn’t likely to increase the total amount of solar in New England compared to what is already required by law. That is because all of the solar built under this bill will generate Renewable Energy Credits (RECs) that will almost certainly be sold to utilities in southern New England in order to comply with their existing Renewable Portfolio Standard obligations. That is not inherently a bad thing; the reason RECs exist is as a mechanism to achieve those renewable standards. But it is important for Maine policy makers to understand that RPS laws in other states will be helping drive the solar under this bill. That is not meant to undermine the importance of the long-term contracts from the Maine Standard Solar Buyer, but it is important to understand.
The provisions—or lack thereof—on Renewable Energy Certificates concern us
This bill requires every participant in a large community solar farm to sell the RECs associated with their share. That means that the shareholders will be solar energy producers, but not solar energy consumers. This is a recipe for confusion that in some circumstances has also been a recipe for fraudulent activities.
If a customer does not own RECs to go with the power they consume or purchase, they are effectively using the same electricity mix as exists on the grid, a mix of renewables, nuclear and fossil fuels. RECs are not intuitive to most people, but nonetheless that’s the fact of the matter.
The bill states that consumers will be given information about purchasing RECs separately, presumably from some other source of generation. Of course every Maine consumer can already purchase RECs and some do—but not easily. NRCM receives frequent calls and emails asking us to help customers sort through the bewildering array of REC products, and frankly we have a hard time keeping up with markets and products. (We have declined to endorse the Maine Green Offer that the PUC administers because too much of that mix has been too old and too environmentally questionable.)
In some places solar companies have been warned (e.g. in Vermont by the Attorney General) that selling “solar power” without the accompanying RECs is fraudulent. We believe customers who are shareholders in a solar farm will believe that their power is coming from solar and are very unlikely to feel the need to buy RECs on top of their share. Having clear disclosures is important, but not likely to fully remedy this concern any more than disclosure of the terms of a credit card obviates the need for lending laws or prevents abuse.
The solar bill last year had a weak mechanism to partially address this concern which NRCM reluctantly accepted. It allowed any large community solar shareholder to buy-back their solar RECs, and at a level price slightly less than the market value. This is a low cost mechanism that will help solar shareholders get the value they are likely expecting. We recommend that paragraph 13 at the end of page 5 of the bill be amended to include the same language from the bill last year:
The commission shall establish a mechanism to allow a residential or small business customer who has entered into a long-term contract under this section to purchase renewable energy credits equivalent to those the customer has sold to the standard solar buyer at a price equal to 80% of market value.