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July 6, 2015

Law prevents cities from building large solar arrays

PHOTO | HBJ File Hartford was the first — and remains the only — Connecticut municipality to put solar on a closed landfill, although it had to do it without the benefit of virtual net metering. David Bodendorf, senior environmental engineer for landfill operator Materials Innovation & Recycling Authority, helped oversee the array's construction.
PHOTO | HBJ File Connecticut has made a push to install solar arrays on closed landfills, as Hartford has done, in order to create positive environmental use out of the properties.

Connecticut's attempts to create a self-sustaining clean energy industry that no longer needs government subsidies are being undercut by the state's own laws, stifling millions of dollars in potential projects.

The latest snag has to do with virtual net metering (VNM), a subsidy-free program created in 2013 that allows certain utility ratepayers — cities, towns, farms and state-owned property — to offset the costs of a solar system by building larger arrays and sharing or selling the power to neighboring properties. Municipalities around the state have proposed 15 megawatts in solar projects under the program, all on closed landfills.

Those projects, however, might never come to fruition because the state VNM law caps the amount of electricity that the systems can collectively sell or share at $10 million. Furthermore, the law divides VNM projects into three categories — municipality, farm and state — and no category can use more than 40 percent of the $10 million cap.

As a result, the proposed municipal projects can't generate more than $4 million of combined power, leaving more than half of the developments in the cold.

“Those projects are going to die on the vine,” said Paul Michaud, executive director and founder of the Hartford trade association Renewable Energy & Efficiency Business Association. “It is a very popular program. The municipalities would be eating it up.”

The VNM cap joins a string of other policy decisions since 2011 where Connecticut seemingly takes two steps forward and one step back toward Gov. Dannel P. Malloy's goal of creating a clean energy economy, Michaud said. Other issues included failing to exempt commercial renewable energy systems from property taxes, which slowed the rate of commercial solar installations until the law was changed in 2013.

There was also a three-year ban on wind turbine development that wasn't lifted until 2014 after legislators approved regulations governing new installations.

“The cap is frustrating because we have a great project that would help lower taxes for our residents and businesses by creating savings on our energy bills,” said Woodbridge First Selectman Ellen Scalettar. “Very importantly also, we would like to maximize our reliance on clean energy, be better stewards of the environment and lead by example.”

Woodbridge is working with German installer Deutsche Eco to put a 1 megawatt solar array on the town's closed landfill, but using the VNM program is key to the system's affordability, Scalettar said.

Raising or eliminating the $10 million cap and the 40 percent provision would have to be done by the Connecticut General Assembly, but the legislature balked at making any changes during the session that ended in June.

“The concern at the time the law was written, especially among the agricultural community, is that municipalities would eat that $10 million all up,” said Jessie Stratton, policy director for the state Department of Energy & Environmental Protection.

The clock is ticking, too, for proposed municipal projects in Branford, Cheshire, Putnam and Bethel. Besides the VNM program, municipalities are using Zero-Energy Renewable Energy Credits (ZREC) to finance their projects. That $720 million ratepayer-subsidy program allows solar array owners to receive 15-year contracts for electric utilities to purchase credits created by clean energy systems.

The ZREC program, which awards contracts annually, is in its fourth year and set to expire after its sixth year. Municipalities that applied June 18 for this year's round of ZREC contracts will find out July 24 if they received them. If awarded, the cities and towns will have a year to bring their projects online.

Without virtual net metering in place, however, it will be hard for towns to justify the costs, said Walt Gancarz, town engineer for Cheshire.

“That is a key component to getting a lot of the savings we are anticipating,” Gancarz said.

The Cheshire Energy Commission is considering a 1 megawatt solar array on five acres of its closed landfill, Gancarz said, set to be installed by California-based SolarCity, which has offices in Rocky Hill.

Cheshire would expect to save about $1.7 million in energy costs over 20 years, as the solar system would supply roughly 20 percent of the town's electricity needs. Those savings can only be realized because VNM allows the town to spread the solar array's electricity around to multiple properties.

Typically, solar system owners can only apply the electricity generated to one utility meter, so a solar array could power a wastewater pump station and any excess power would be sold onto the grid at lower cost. With VNM, municipalities can maximize their savings by spreading the power around to up to 10 municipal properties. They also can sell power directly to their neighbors, as long as they are either farms or state-owned properties.

Cheshire plans to use the solar power at seven town properties, including the fire station, town hall, library and a wastewater pump station, Gancarz said.

“It can be a real neat and effective tool in helping towns and cities reduce their energy costs,” said Shaun Chapman, vice president of policy and electricity markets on the East Coast for SolarCity.

Chapman said policies and programs Connecticut has put forth since 2011 — including ZRECs and the formation of the Connecticut Green Bank public financing authority — have made the state a desirable place to install solar.

“We want a great partner who at the very least won't get in the way, and Connecticut has gone above and beyond that,” Chapman said.

Connecticut's programs have helped drop solar costs and increased the number of systems installed each year, Chapman said.

VNM gives installers the ability to create even larger systems, which will further drive down costs. That will help push the state towards its goal of having solar costs be equal with the cost of grid power, after which subsidies will no longer be needed.

“Now that the rules and best practices are proven, we need to move forward with virtual net metering,” Chapman said.n

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