Solar power advocates are concerned that new rules approved by the Maine Public Utilities Commission last month, and finalized in an order Wednesday, will slow residential solar power growth in Maine. The rules reduce the credits homeowners receive under state’s net-metering policy for the excess power their panels generate and put onto the electric grid.
“If you change the value proposition, or the payback, or the economic benefits, of putting solar on your roof, fewer people will install. That’s very basic economics,” said Dylan Voorhees, the clean energy director for the Natural Resources Council of Maine. “We don’t know exactly how much that slow down will be, but it’s simple economics that it will slow down the growth of solar compared to what it was otherwise.”
The new rules are scheduled to go into effect on Jan. 1, 2018, and will annually reduce the full retail rate solar power users receive for net-metering credits. Existing customers are grandfathered in at current retail rates for 15 years.
Beginning in 2018, customers who install solar over the next 10 years will see annual decreases to the transmission and distribution of their net metering credit, reflecting the decreasing costs of solar technology, according to the PUC. The supply side of the net rate will stay the same. This means that new solar customers who install units in 2018 will receive a 90 percent credit on the transmission and distribution side of their bill for 15 years, new customers in 2019 will receive a 80 percent credit, and so on.
While Gov. Paul LePage has criticized the PUC’s new net-metering rules for not being scaled back enough, Voorhees and other proponents of solar power say that the rules are coming just as solar power is gaining popularity in Maine.
Five or 10 years ago, the high installation costs of solar power kept it from becoming a big piece of Maine’s energy portfolio, Voorhees said. But improved technology and lower costs for solar panel systems have led to increased installations on homes and small businesses within the last few years. Solar advocates argue that Maine’s policies have not kept up with the solar’s growth.
“If you look across the country … solar is now a leading resource,” Voorhees said. “It’s become competitive at a lot of different scales, it’s really transformed, and Maine has sort of not kept pace in terms of our policies with [solar’s] opportunity.”
Despite seeing more than 50 percent growth in the last year, Maine’s solar installation trails rates in other states. According to U.S. Solar Market Insight data, Maine ranked last among 11 Northeast states in installed solar capacity in 2015.
Without a comprehensive solar policy, like the bill vetoed by Gov. LePage last year, net-metering rules are essential to encourage investment in grid-tied solar power systems, said Vaughan Woodruff, owner of Insource Renewables, a Pittsfield-based energy solutions company.
Since solar systems do not generate the exact amount of power a home or business uses at any given time, solar power users can be tied into the electric grid, use a battery-storage system, or a combination of the two.
With a battery-storage system, excess power generated during the day ― especially during extended daylight hours in the summer ― is stored for use when the panels are dormant. A battery component essentially takes a house off the electric grid, but a battery-storage system is an additional cost that might not be financially viable for some solar users.
The majority of the residential systems installed by Insource Renewables are grid-tied, Woodruff said, meaning that the state’s net-metering policy becomes “a baseline” for the initial installation conversation, giving homeowners credits on their electric bills for the excess power their panels put onto the grid.
“How net-metering has existed for 20 years in Maine, and how it exists in most places, is it’s just a one-for-one credit. You put a kilowatt hour on, you get a kilowatt hour off. It’s very simple,” Voorhees said. “You’ve basically eliminated your electricity bill, or you’ve eliminated it down to the pretty minimal charges.”
Waterville resident Peter Garrett, who has had a grid-tied solar system powering his home and two other buildings on his property since 2015, said net-metering is an equitable way to pay a power generator.
“I’m a generator so they should be paying me,” Garrett said. “It seems quite reasonable.”
Opponents in Maine’s debate on solar power agree that homeowners should be credited for the power they generate but argue that the credit should be substantially less. The debate centers around how customers are paid for their power. When solar customers need power from the grid, they pay the standard retail rate to the electric company. And when they’re paid for the power they send back to the grid, they receive the standard retail rate. This per-kilowatt retail price not only includes the cost of electricity but added costs for transmission and distribution. Solar customers don’t have to pay those additional costs but are credited at a price that includes them.
Proponents argue that having solar systems on the grid have benefits to other electricity users, such as reducing the needs for upgrades to the transmission and distribution system. In addition to the environmental benefits that come with diversifying the state’s energy portfolio, the power gained from the solar user’s excess is helping reduce demand.
“It’s not only just more [power], but more at the right times of the day and more right where you need it,” Voorhees said. “You don’t need the transmission system when you’re generating your power right at the location. Delivering the power is half of the cost of electricity, so distributed solar has substantial value for ratepayers as a whole.”
Given the uncertainty generated by last year’s failed solar policy and the PUC’s review of net-metering, prospective users are increasingly concerned that investment in a solar power system won’t be worthwhile.
“If someone is dropping [$13,000 or $15,000] on a system, that transparency needs to be really clear,” Woodruff said. “There hasn’t been a single project that we’ve sold in the last year that hasn’t involved a 10-minute conversation about what’s going on in Augusta.”
Woodruff said he expects to see an increase in solar installations in the next 10 months, with people trying to get ahead of the new rules and get grandfathered in to the old system.
The conversation swirling around solar and the new PUC rules are also driving solar users to explore battery storage, said Woodruff, who has fielded calls from customers recently discussing “taking their house off grid, because they’re frustrated with what’s going on, and they’re frustrated with the utilities, they’re frustrated with the policymakers.”
Woodruff is a member of the Maine Association of Building Efficiency Professionals, and is the chair of that trade group’s Committee on Renewable Energy. With the approval of the new rules, Woodruff said solar advocates are keeping an eye on several bills being sponsored in the Legislature that would bolster solar policy.
With about only 2,000 Maine homes using solar power, Voorhees said it’s bad timing for the state to alter its net-metering policy.
“It’s really hard to rationalize why that is the right time to put the brakes on for solar,” he said.