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Comment of the day: Baker vs. solar; future of SRECs

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Author: Charley on the MTA

Informed commenter stomv holds forth on the future of solar and Solar Renewable Energy Certificates, which the Baker administration has in its sights. Bottom line: It’s still the “soft costs” which make solar expensive. A reform-minded, market-y governor might have some interest in reforming those things — IF he’s not too much in thrall to the legacy rent-seekers at the utilities.

Before I dissect the errors [in this Globe op-ed “Nonsolar users bear burden of net metering”, written by representatives of AIM and two utilities], first a comment: we need to ask ourselves: what is the marginal impact of the subsidies? If we reduced the SREC subsidy 10%, how much less solar would we get? If we increased the SREC subsidty 10%, how much more would we get?

This is a really important question. It just might be that the SREC subsidy is large enough to make PV a winner — that, in fact, the barriers relate to uncertainty, sticker shock, marketing challenges, permitting problems, customer confusion, a lack of good siting options, length of timeline from interest to interconnection, or lack of sites. My sense: MA could reduce the SREC prices a little bit without substantially reducing the participation of customers. How much is a little bit? I don’t know — and my clients pay me money for this kind of analysis, so I won’t give it to you for free :P . My hope is that Mr. Baker also or instead focuses on reducing barriers to PV installations — working on that laundry list above. How can he improve permitting? Reduce financing red tape? Etc.

Now, as for the glob article:

Net metering – one of the state’s solar incentives – rewards solar energy owners or developers by paying them for the power they produce at the same rate they would pay if these owners and developers were consuming electricity from the grid. This rate includes payment for benefits and services that solar developments do not provide. In addition, when solar sites produce more than they consume, they don’t have to pay for services such as the use of the wires and poles operated and maintained by the utility and financed by utility customers. For large solar projects, these reimbursements far exceed the value they bring to the electric system. As a result, Massachusetts pays more per kilowatt-hour of solar energy than anywhere else in the nation, and about twice as much as neighboring New England states.

> “This rate includes payment for benefits and services that solar developments do not provide.”

True — but it also includes underpaying for some of the benefits that solar developments do provide, including paying an average energy price instead of the (higher) marginal price in the afternoon, not paying for demand reduction (or supply) induced price effects on the energy or capacity market, avoided transmission and distribution capacity installations, avoided line losses, reduced (FERC required) capacity reserve requirement, reduced Class I REC obligations, reduced demand (and hence price) for RGGI allowances, increased reliability associated with less demand for natural gas, reduced health impacts due to emissions, increased economic activity (including payroll taxes, etc) due to local energy production instead of gas from Pennsylvania or coal from Columbia (South America), and so forth.

> “In addition, when solar sites produce more than they consume, they don’t have to pay for services such as the use of the wires and poles operated and maintained by the utility and financed by utility customers.”

Nor does any other generator for that matter.

> “For large solar projects, these reimbursements far exceed the value they bring to the electric system.”

Says who? Acadia Center studied this very question, and in April 2015 determined that the value of a kWh of solar in MA ranges from 29 cents to 35 cents (p 1), which is more than utilities pay. That result, btw, is very similar to the results of a Clean Power Research / Sustainable Energy Advantage study in Maine, which found a value of 34 cents per kWh (p. 6).

> Massachusetts pays more per kilowatt-hour of solar energy than anywhere else in the nation

Nope. Washington DC’s SRECs are for more dear, and that delta is far larger than any $/kWh difference for electricity. Nevertheless, it’s true that MA pays quite a bit, and (see my comment above) might well be able to reduce this dollar value without a tangible reduction in the amount of PV to be installed, especially with other tweaks to the process.

Were it up to me, I’d do “SREC-III” differently. Going forward, I’d keep “SREC-II” (nearly?) unchanged, but when it’s time to roll out SREC-III, I’d do things differently. Let’s not use our collective wealth to subsidize PV on individual homes. Let’s instead put it on our buildings. Every single time the Commonwealth, the MBTA, a country, a public housing agency, the MSBA, or another state/regional entity builds new or substantially renovates a roof, bam! it gets PV. Rather then use our collective wealth to put PV on individual homeowners’ roofs, why not build it on our government buildings, so that the savings flow back to our (collective) operating budgets rather than to individuals’ budgets? We as a society get the exact same environmental benefits either way, but in the stomv plan we also get the ongoing financial benefits shared throughout the entire community.

via Blue Mass Group | Does the Baker administration want to kill solar?.

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