It’s showdown time for the solar industry in Massachusetts. One of the main challenges facing the Legislature before it adjourns its formal session for the year on Wednesday is how to handle the incentives that help finance the proliferation of solar panels across the state.
Environmentalists, solar panel companies, and utilities are all pushing for changes, with the clock ticking on key federal subsidies.
Governor Charlie Baker and the Senate have each proposed solar bills already, with the Senate’s legislation widely considered to be more generous to the solar industry. But the House of Representatives has yet to offer its own version, leading to furious lobbying in recent weeks, in which utility representatives, including Eversource Energy chief executive Thomas May, have been making the rounds.
House leaders say they hope to have a bill ready for a floor vote on Tuesday, but that still doesn’t leave much time to reach an agreement with the Senate before the end of the day on Wednesday if the bills contain significant differences.
The prosolar side wants the current incentives expanded to accommodate more solar construction, at least until Massachusetts hits its target of 1,600 megawatts of installed solar power; currently the state has less than 1,000 megawatts installed. Utilities, meanwhile, want to pare back the costs that drive up the electricity bills of customers who don’t use solar power.
Among the issues facing lawmakers:
Net metering and solar credits
Net metering allows solar panel owners to be reimbursed for the excess electricity they send back into the power grid, with a state imposed limit on how much each utility has to accept.
National Grid has hit its cap, delaying the installation of new solar panels in its service area in some cases. (Residential projects are not affected by the caps.)
Solar developers want the state to increase the caps again — lawmakers have raised them several times in the past — so they can finance additional installations. The utilities don’t want the caps raised under the current reimbursement scheme.
Another issue: utilities want solar panel operators to bear some of the costs associated with sending that excess electricity into the system. Utility customers’ bills are currently based on the amount of power they take from the grid and don’t reflect any surplus energy that solar panel owners send off-site.
As part of this debate, lawmakers are also considering whether to referee a dispute over solar certificates purchased by utilities to fulfill their state-imposed obligation to buy a certain amount of renewable energy every year.
The certificates represent the output from a specific solar generator. Utilities fret that the certificates can be too expensive, while representatives for solar builders say the system can be reformed to make it more reliable and less pricey.
Federal tax credit
A 30-percent investment tax credit that subsidizes solar for homes expires at the end of 2016, while the one for businesses shrinks to 10 percent. Some solar companies are trying to decide where to invest ahead of the deadline based on which states offer the best additional incentives.
But if Beacon Hill doesn’t clarify the state’s solar policies soon, then the companies might build in other states.The next chance for the Legislature might not come until well into next year, which may be too late for some solar companies.
State of solar
Massachusetts is among the most solar-friendly states in the country thanks to its current incentives. When he was governor, Deval Patrick set an ambitious goal of reaching 1,600 megawatts of solar capacity by 2020, and the state is already on pace to hit that mark by a much earlier date.
For a state not known for its sunlight, the incentives here helped to spark a cottage industry of sorts. The Solar Energy Industries Association estimated that 400 solar companies are doing business in the state, employing more than 9,000 people, with the 900-plus megawatts in place enough to power at least 140,000 homes. It’s this success story that the prosolar forces say could be jeopardized if incentives get scaled back.
Residents and businesses who don’t use solar panels end up helping to defray the expense of solar energy. But the total cost of those subsidies isn’t easy to calculate.
Eversource Energy says its average residential ratepayer spends an extra $83 a year because of these solar incentives, an amount that is only going to grow as more people put panels on their roofs. But solar supporters say the actual cost is much less — as little as $23 — and the benefits outweigh the upfront expense.
The widespread use of solar panels can reduce the expense utilities pay for power lines to bring electricity from distant plants, and improve the reliability of the regional power grid.
The state’s aggressive greenhouse gas emissions standards could be tougher to meet without more help from solar panels.
State lawmakers know these things, and they don’t want the solar industry’s success to subside. The trick, though, will be balancing the good that the solar industry does with the inevitable costs.