Baker bill speeds solar power growth, then adjusts industry incentives

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BOSTON (STATE HOUSE) – Adding to a hydropower bill that he’s already laid before the Legislature, Gov. Charlie Baker on Friday filed a bill to accelerate the maturation of the solar power industry in Massachusetts and then adjust incentives the industry uses to grow.

The bill triggered quick responses, with solar industry and renewable energy advocates offering mixed reviews, National Grid warning the additional subsidies in the bill will cost its customers $160 million, and a key senator praising Baker for his approach to the issue.

According to the administration, its bill will help the state meet “well ahead of schedule” its goal of 1,600 megawatts of solar power by 2020, while lowering costs associated with large-scale projects and encouraging residential and small business rooftop projects.

“This legislation continues to support and encourage solar power generation while promoting an orderly transition to a stable, equitable, and self-sustaining solar market at a reasonable cost to ratepayers,” Baker wrote in a letter to lawmakers.

The bill, filed in the House, raises private and public caps 2 percent each, which Baker officials say will represent a 50 percent increase in the amount of solar energy available for net metering credits for public entities and a 40 percent increase for private entities. Baker’s plan also calls for maximum use of federal solar investment tax credits prior to their expiration on Dec. 31, 2016.

Net metering, which allows utility customers with solar panels to sell power back to the grid at retail rates, is one of the incentives offered to encourage clean energy production. Utility companies have resisted efforts to lift the cap, arguing that customers without solar end up paying for it.

Baker’s team said the bill “will provide immediate support for projects being developed in service territories where the caps have already been reached, and provides the Department of Public Utilities with the authority to raise the caps further, as needed in the future.”

National Grid officials indicated Friday that it would expect to reach the proposed new caps by October, “making it imperative for the Department to immediately begin the process of developing a new, more cost-effective solar program in the Commonwealth.”

“National Grid appreciates the Baker Administration filing this legislation in an attempt to reign [sic] in the exorbitant subsidies that solar developers continue to enjoy in Massachusetts,” National Grid spokeswoman Mary-Leah Assad said in a statement. “However, we anticipate that raising the cap by the proposed 4 percent would cost our customers an additional $160 million, on top of the $1.5 billion in solar subsidies that National Grid customers will already shoulder by 2020.”

She continued, “Massachusetts pays about double for solar what other states are paying for the same energy. We must emphasize that the cost of these subsidies is not borne by the utilities, but by the 99 percent of our Massachusetts electricity customers who do not own solar. As the Baker Administration acknowledges, the solar industry in the Commonwealth is no longer nascent. National Grid is enthusiastically leading the way to the next chapter of renewable energy, supporting the democratization of solar benefits and ending access to some of the most lucrative subsidies in the nation.”

Eversource spokesman Mike Durand told the News Service Baker’s bill “is a step in the right direction toward addressing the significant costs associated with solar development. We’re always mindful of customer costs and feel it’s crucial that those who aren’t able to install solar generation shouldn’t have to subsidize those who do.”

In his letter to the Legislature, Baker said his bill also proposes changes to transition the state to a “more balanced solar incentive program” upon reaching the 1,600 megawatt goal. Those transition measures quickly drew some skepticism from industry officials and critics who say Baker may be undervaluing solar power’s benefits.

“The current incentives were designed to jump start a new solar industry,” Baker wrote. “This legislation recognizes that the industry has matured, and as we continue our support of solar development, we must also protect ratepayers and provide long-term stability to the solar industry.”

Under Baker’s bill, reaching the 1,600 megawatt goal will trigger changes in solar generation incentives. Solar generators receiving net metering credits will continue to receive those credits under the existing program for 20 years, Baker wrote, while all residential and small businesses will continue to be excluded from existing or future net metering program caps. All new medium and large-scale solar generators would receive credits equivalent to the monthly commodity price of energy, the governor said, and the state will create a solar incentive program for new solar generators and may create similar incentive programs for other renewable technologies.

Sen. Benjamin Downing, co-chairman of the Legislature’s Committee on Telecommunications, Utilities and Energy, said it was “great” that Baker has recommended short-term cap lifts and also praised the governor’s long-term framework for adjusting incentives.

“I give him a lot of credit. I know it’s not a sort of easy needle to thread,” Downing said.

Downing said he could understand how some people might be surprised that Baker recommended cap lifts based on previous statements from the administration, but suggested Baker was “data-driven” in his decision-making.

The Pittsfield senator said it made “no logical sense” that incentives would remain the same as the industry develops. “We ought to be open to change going forward if those changes are about creating a sustainable long-term market,” he told the News Service.

Senate President Pro Tempore Marc Pacheco said in a statement to the News Service, “I’m pleased that the administration continues to move forward in embracing a clean energy future for Massachusetts. Lifting the net metering cap, as we demonstrated in the Senate, has broad bipartisan support and significant backing within the business community. We would do well to try to come to an agreement between the House, the Senate and the executive branch to get a bill done in September.”

In a Tweet, Sen. Jamie Eldridge (D-Acton) called Baker’s overall bill “good,” but said he was concerned about proposed market-rate credits.

There are 806 megawatts of installed solar capacity in Massachusetts, according to the Solar Energy Industries Association, with the state ranking sixth in the country on that metric. The industry group, based in Washington D.C., says there’s currently enough solar power in Massachusetts to support 12,000 jobs and power 131,000 homes, with 250 additional megawatts scheduled to be installed by the end of 2015.

Association officials credited Baker for “moving the conversation forward” and said the bill’s passage would assist projects that are stalled in 171 cities and towns in Massachusetts, but association president Sean Gallagher said Baker’s long-term changes in solar incentives “would be a backward step for solar in Massachusetts.”

“As the bill moves through the legislative process, SEIA urges policymakers to join other states that are leading on solar, such as New York and California, which are figuring out how to fairly compensate customers who go solar, even as they move to the next generation of solar policies. The Senate’s version of the net metering bill, passed two weeks ago, would do that,” Gallagher said.

Caitlin Peale Sloan, staff attorney at the Conservation Law Foundation in Boston, told the News Service that the group was encouraged that Baker was recommending cap lifts, noting “we’ve heard in the past that he was not interested in doing that without other reforms being implemented first.”

But the cap lifts Baker is seeking are “not enough,” Peale Sloan said, recommending instead a doubling of the caps as recommended by the Senate in a recently approved climate change adaptation bill. The Senate voted to set the cap at 1,600 megawatts of solar, rather than use a percentage of peak load generation.

“They’re emphasizing the cost of net metering without adequately accounting for the value of solar to the system,” Peale Sloan said.

Ben Hellerstein, state director for Environment Massachusetts, offered views in line with Peale Sloan’s comments.

“Rather than put the brakes on solar, we should bring as much solar to Massachusetts as we can, as quickly as possible. By 2025, we can get at least 20 percent of Massachusetts’ electricity from the sun. We hope Governor Baker, House Speaker Robert DeLeo, and other state officials will embrace big goals for solar and enact policies that will keep solar growing,” Hellerstein said in a statement.

As a member of the House, Energy and Environmental Affairs Secretary Matt Beaton, Baker’s current point person on energy issues, was deeply involved in efforts last year on an energy bill that led to the caps in place currently.

“It’s as watered down as watered down can be. Essentially it’s kicking the can down the road,” Beaton, a Shrewsbury Republican who sits on the Energy Committee, told the News Service last summer as final details of the bill were being ironed out. Former Gov. Deval Patrick signed the cap lifts into law Aug. 6, 2014.

Copyright 2015 State House News Service

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