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New Solar Subsidy Program Gets It Right

Posted by Robert Rio on Feb 2, 2017 2:00:00 PM

The Massachusetts Department of Energy Resources (DOER), after months of public comment, released on Tuesday its proposal for a new solar-energy incentive program to replace the complex and overly expensive program now in place.

solarpanels.small.jpgWe think the state got it right. And employers and other electric customers will be the better for it.

The proposal adopts suggestions made by AIM to rely on market competition to establish the amount of incentives that developers will receive to install solar energy. The result will be a program that costs half as much as the current one and still encourages the development of solar installations throughout the commonwealth.

Total savings to employer and other electric ratepayers: $250 million per year.

The new program will eliminate Solar Renewable Energy Credits (SREC), one of two methods through which solar developers currently collect subsidies. The other, net metering credits, will remain unchanged.

While some of the details are still being worked out, the new program, called the Solar Massachusetts Renewable Target program or SMART program, will establish a solar tariff rate only after bidding is complete for an initial 200 megawatt block of solar projects. Developers will receive that bid price for 20 years.

That incentive rate will remain the same for all solar projects and will automatically decline 4 percent for every 200 MW block in the future. There will be some “adders” to the base price - for building-mounted systems, solar canopies, and cases in which solar is combined with storage technologies - that would add small amounts to the baseline price.

Projects may still receive net metering credits, but those will offset the tariff to determine the final subsidy. So if the base rate is established at 15 cents and the developer receives net metering credits of 10 cents, the utility will make up the 5-cent subsidy through the tariff.

AIM opposed the scope of the current solar program and was concerned that early proposals for the new program relied on government officials to set tariff levels for solar incentives without using the competitive market to drive down costs to the ratepayer. Such a system would fail to pass along to the ratepayer the 50 percent reduction in solar installation costs that have occurred over the last few years. 

Driving down costs is important for the future of the Massachusetts economy. Massachusetts not only has one of the highest electricity costs in the country, but one of the most generous solar and renewable incentive programs, adding up to nearly $1 billion in 2016 and $2 billion by 2020. Those subsidies add up to nearly 4 cents per kilowatt hour for individual customers even before the new solar incentive program kicks in.

AIM, in a series of comments, urged DOER to adopt a model based on competition. Other states where solar installations cost half as much as Massachusetts already use the competitive model.

Read First Set of AIM Comments

Read Second Set of AIM Comments

Competition reduces prices. Competition is also the hallmark of the recently passed Massachusetts energy bill, which requires utilities to solicit market proposals for hydropower and offshore wind, a notion AIM supports.

The solar proposal still needs to go through public comment and any tariff needs to be approved by the Massachusetts Department of Public Utilities. During the transition period between now and the point at which the new program is approved by the Department of Public Utilities (DPU) – expected January 2018 - the existing solar incentive program will remain in place at a lower incentive rate.  

DOER has developed a program that is well thought-out and enjoys wide support. AIM commends DOER for this step in the right direction and we look forward to working with the Baker Administration and others to get this program approved and implemented as soon as possible. 

If you are interested in following this issue and engaging with AIM on Massachusetts electricity prices, contact me at rrio@aimnet.org or 617-262-1180

Review the DOER Proposal

Topics: Energy, Solar Subsidies

Pulling the Plug on Solar Reform

Posted by John Regan on Apr 6, 2016 3:05:08 PM

Massachusetts lawmakers last week imposed an $8 billion tax on electric ratepayers and put the money into the pockets of solar energy developers.

solarpanels.small.jpgThe state Legislature approved a bill that does nothing to reform the commonwealth’s bloated solar-energy subsidy program. The result: businesses and homeowners will continue to foot the bill for twice as much in solar giveaways as residents of other states.

Governor Charlie Baker said Friday that he will sign the measure.

And big solar isn’t done. Even before the ink dries on the current bill, solar energy advocates are rallying to raise the cap again before the end of the legislative session, continuing what appears to be a never-ending demand for government-mandated support.

“AIM supports the development of solar energy and takes pride in the fact that many of its 4,500 member employers have installed solar at their plants and offices,” said Robert Rio, Vice President of Government Affairs at AIM.

“But this bill represents lawmakers turning their backs on ratepayers to perpetuate an ideologically based energy policy.”

The solar bill that emerged from a legislative conference committee on Tuesday would raise the cap on net metering – the process by which solar developers sell excess electricity back to the power grid – by 60 percent for private projects and 75 percent for public projects. The primary reform contained in the measure would lower the net metering credit to 60 percent of the retail rate, but that reduction would not apply to facilities owned by municipalities and government entities.

“Municipalities and other government entities will still receive retail rates for net metering – a sad case of ‘taking care of your own’ while others pay,’ ” AIM said in a letter to the Legislature this morning.

The proposal will add $8 billion to the energy bills of Massachusetts consumers during the next 10 years - 2.0 cents/kilowatt hour for residential customers and 1.6 cents/kWh for Commercial and Industrial customers.   

AIM supports reform of solar subsidies because Massachusetts employers already pay some of the highest rates for electricity in the country. The legislature with the current bill has shown neither the will nor the inclination to say no to unnecessary subsidies, even when other states have reformed their programs in the face of falling costs for solar installations.

Solar subsidy advocates are already planning to seek additional increases in the program.

"With the bill's 3 percent increase to the program cap, we expect to address net metering again next year in order to avoid endangering solar jobs yet again,” said Sean Garren of VoteSolar.

AIM urges the state Senate not to pass the conference report and asked Governor Charlie Baker to veto it.

Topics: Massachusetts House of Representatives, Energy, Solar Subsidies

Infographic | The Cost of Solar-Energy Subsidies

Posted by Bob Rio on Feb 4, 2016 11:26:15 AM

Here is AIM's new ad opposing the $8 billion giveaway to solar energy developers.

AIMSolarAd.Final.jpg

Topics: Energy, Solar Subsidies

The 300 Percent Energy Solution

Posted by Bob Rio on Jan 13, 2016 11:28:16 AM

Advocates of renewable energy are fond of saying that the billions of dollars siphoned from ratepayers for mandated green programs actually save money in the long run.

The facts tell a different story.

Finance.pen.small.jpgAnalysis performed by Energy Tariff Experts, LLC, has found that the cost of state-mandated renewable energy programs has increased by a whopping 320 percent since 2010 for a typical large commercial customer in National Grid territory. These programs include solar energy subsidies, energy efficiency and carbon-reduction taxes.

Similar results occurred in Eversource territory.

It’s even worse for residential customers – the increase in costs for these same programs is more than 400 percent in five years.

And the increases are just beginning. Solar energy subsidies alone are on a trajectory that will add billions of dollars to the cost of electricity over the next decade.

Massachusetts in January 2010 had the third highest commercial and second highest industrial rates in the continental United States. Nearly six years later, after all the renewable energy initiatives, Massachusetts still suffers from the third highest commercial rates and now has the dubious distinction of having the highest industrial rates in the continental US.

Where are the economic benefits claimed by advocates? If they exist, they are clearly not flowing back to ratepayers. 

AIM supports the development of renewable energy, but believes that renewable initiatives funded by ratepayers must provide maximum benefit and efficiency for minimum cost. 

To understand how much of your monthly electric bill goes to pay for mandated renewable energy programs, download the AIM energy calculator. I also invite you to share your thoughts with me at rrio@aimnet.org

 

Download the AIM Energy Calculator

 

Topics: Energy, Business Costs, Solar Subsidies

How Much Do Energy Giveaways Add to Your Electric Bill?

Posted by Bob Rio on Jan 11, 2016 7:30:00 AM

“It will only cost a cup of coffee a month.”

We hear that phrase a lot from renewable-energy advocates seeking to justify uneconomical and inefficient government subsidy programs by arguing that they waste only a small amount of money at a time.

solarpanels.small.jpgBut put enough cups of coffee together and these programs turn into a something like a Box O’ Joe that poses a real threat to the Massachusetts economy.

The incremental costs of half-baked energy subsides add up, particularly for large customers like manufacturers and hospitals that cannot avoid them unless they reduce their electricity use to zero through onsite generation, which is not always practical. These politically generated costs are not added to the bottom lines of competitors in other states.

The subsidies avoid ratepayer outrage in large part because their cost is virtually invisible to the consumer, hidden in dark corners of electric bills. Some are tucked under the “energy” portion, some are under “distribution,” some are listed separately. Some, like solar and energy efficiency are listed under both. And don’t forget other costs that are sure to increase over the next few years, including transmission.

How much do these programs cost residential and commercial ratepayers? The state solar subsidy program checks in at $600 million per year and is headed for $1.5 billion per year. The energy efficiency program tacks on another $600 million per year. The regional greenhouse gas program, which charges electrical generators for their carbon emissions, totals another $60 million.

AIM is today unveiling an energy calculator designed to help Massachusetts employers decipher the maze of government-mandated energy subsidies. The calculator was developed with Energy Tariff Experts, LLC, and works for most customer classes (including residential), in National Grid and Eversource territories. Other rate classes will be added as necessary.

Based on trials with some members, the results show:

  • Total subsidies for state-mandated programs, most of which have been added since 2008, can equal 25 percent of a customer’s total bill.
  • Solar subsidies are so large they will likely become the largest mandated program on a customer’s bills this year. In fact, the cost nearly equals the cost for energy efficiency.

We invite you to use the AIM energy calculator. Also, if you are inclined, please save the spreadsheet and send us a copy. No identifying information is collected on our Web site or on the spreadsheet.   

Download the AIM Energy Calculator

Topics: Energy, Business Costs, Solar Subsidies

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