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August 8, 2019

Shared solar program heading towards approval, complaints in tow

solar clean energy blumenthal Photo | HBJ File A technician from Norwich-based Lantern Energy working on a solar array.

It’s been more than five years since Connecticut started arguing about shared solar. Now — after a number of legislative actions (some successful, some not), a false start followed by delays in a tiny pilot program many thought unnecessary, and many, many public comments — an actual program is heading for regulatory approval.

And Connecticut is still arguing about shared solar.

Shared solar – also called community solar – is essentially a virtual solar system for homes that cannot have their own panels because their roofs face the wrong way, are too small, too shaded or otherwise unusable. It’s also intended for apartments, condominiums, and rental units that generally can’t benefit from the other solar incentive programs.

It’s estimated that some 80 percent of Connecticut homes may be unsuited for solar.

The way it works is that subscribers buy into a solar installation that is constructed nearby and then the local utility credits them for the solar, even though the power goes into the electric grid.

But the final program rules – delivered by the Department of Energy and Environmental Protection (DEEP) to the Public Utilities Regulatory Authority (PURA) by the July 1 mandated deadline – have resulted in yet another round of griping.

The objections come from an unusual set of allies — solar companies, advocates and utilities. There are no fully supportive comments on the PURA website, even though there is broad support for shared solar conceptually. PURA has until Jan. 1, 2020 to review and approve the program.

The devil is in the details, starting with the frequent suggestion that there simply should be fewer of them.

“This is a government program, over-embroidered, highly brocaded and not necessarily ever able to free stand,” said Karl Rabago, a former utility regulator and executive who is now executive director of the Energy and Climate Center at Pace University Law Center. Rabago has also consulted for various groups in the state and was a member of the Connecticut Academy of Science and Engineering (CASE) team that studied the need for a pilot shared clean energy project and advised going ahead with a full program, not a pilot.

Katie Dykes, Commissioner, Department of Energy and Environmental Protection

Katie Dykes, who ran the DEEP energy division at the time and now is the department’s commissioner, said she has heard the complaints and proposed changes after the draft rules were published in May. Some were accepted, others not.

“Some of those requirements are put there to protect ratepayers, to protect consumers, to assure that the customers this program was designed to benefit are actually going to obtain the benefits,” she said. “The whole purpose of this program is to address climate change. That’s the primary driver here.”

Rabago worries that the many requirements could cause the effort to backfire, however.

“I believe the administrative burdens might outweigh the consumer protection benefits,” he said.

Photo | Contributed
A commercial solar array.

‘Anti-competitive as hell’

A full shared solar program was authorized by the legislature in 2018. The final rules allow for 25 megawatts of solar per year for six years, with no rollover of any unused portion from year to year. That’s quite small compared to programs in other states, many of which have no caps.

No single project can exceed four megawatts or be smaller than 100 kilowatts.

Ten percent of subscribers must qualify as low income and another 40 percent low or moderate income – a considerably higher percentage of those two groups than other states typically require.

Other subscribers can be small businesses and commercial customers, state and municipal entities, renters and condominiums. In the draft rules, homeowners were prohibited. After much protest, the state agreed to make eligible  homeowners with written proof that solar panels cannot be accommodated on their roof, but that is still angering many.

“If people want to subscribe, let them subscribe,” said Charles Rothenberger, climate and energy attorney with Connecticut Fund for the Environment, who says there is little justification for such a low cap and the lack of rollover. “There may be any number of reasons why someone can’t or simply does not want to individually install solar panels on their roof.”

Conceptually it’s a step in right direction, he said. “I just don’t see any rationale why you’d want to discourage anybody from subscribing.”

There are very strict and detailed financial qualifications and experience requirements for solar developers that many worry will favor large, experienced companies from outside the state that have the means to outbid smaller companies. Companies inside the state that are new to shared solar could be left behind, making it difficult to create a local shared solar industry.

Rabago calls such requirements “anti-competitive as hell.”

“Go to anybody and say ‘this is what it costs to participate in this government opportunity’ and I’m not sure they’re going to feel really excited about it,” he said.

Citing the complicated rules, United Illuminating went so far as to offer an alternative to shared solar – procuring locally-sited solar that takes advantage of the current low prices and then re-directs subsidies to help low- and moderate-income customers.

“Procurements. No subsidy. No cap,” said Patrick McDonnell, UI’s vice president of Connecticut regulatory affairs, who believes getting a lot of people to sign up will help push the price low enough to compete with, or even fall below the current standard service price for electricity. “One hundred percent Connecticut-based solar. Save the subsidies for low income.”

He plans to make his case to legislators next year.

Working out the kinks

The final plan follows the inception, though not completion, of the pilot program. The pilot included three projects, none of which are operational yet. Each is a year or more behind schedule.

The process has left Connecticut to play catch-up with other states that are years ahead, including nearly all its neighbors, but especially Massachusetts and New York.

Clean Energy Collective (CEC), based in Colorado, has been working at shared solar longer than just about any company in the U.S. It operates in 16 states and has more than 80 projects running, another 20 under construction and around 100 in development.

The company is going gangbusters in Massachusetts, with 38 projects totaling more than 56 megawatts running and another 45 megawatts in development. In New York, three projects are about to come online and another 23 megawatts are in development.

Both states have less restrictive rules and it shows. Massachusetts, which has been doing shared solar longer, has 317 megawatts of shared solar operational and another 554 megawatts in the pipeline.

CEC is also the developer for one of the Connecticut pilot projects — 1.62 megawatts in Bloomfield, 60 percent of which will be used by the local board of education. The rest is split evenly between low-income housing projects and general residential homes. It’s built and awaiting utility testing, which could come within the month, making it the first of the pilots to fire up.

Tom Sweeney, CEC’s president of renewable assets, is diplomatic in his assessment of Connecticut’s final program rules.

“We’re pleased that they’ve defined rules and are enabling a program,” he said. “I’d never say it’s not a good thing they got it done.”

But he has a list of concerns, starting with his disappointment that the program is so small, which makes it difficult to achieve economies of scale.

“We can’t build 10 at the same time to help reduce the cost of equipment,” he said, pointing to Massachusetts where CEC has more than 60 megawatts underway now, with 150 additional megawatts likely in the next 18 months. “It helps reduce costs.”

Connecticut’s small size also means if his company does not win a bid, there will be little opportunity to re-apply, leaving them with stranded capital spent on proposals. In a program with no cap, like New York’s, there’s a good chance the project could eventually be selected even if CEC loses a bid.

Sweeney is also concerned that the billing system proposed in Connecticut – which adds an extra step that most states do not require, will mean extra costs, more expensive projects, and pose more financing difficulties.

“It’s a combination of issues,” he said.

Arcadia Power also voiced its concerns to DEEP. The company, which operates in about a half-dozen states including all Connecticut’s neighbors, provides subscriber management – which comes in after developers, builders and owners are on-board.

“Our strong belief is that community solar should serve as many customers as possible. The best programs have the broadest particulars,” said Richard Caperton, senior director of regulatory affairs and market development. And he said he likes rules that will create as much certainty as possible.

That’s the same message Isabelle Hazlewood, manager of statutory and infrastructure programs at the Connecticut Green Bank, heard at a recent conference on shared solar. “Developers want market consistency and uniformity,” she said.

“Overall, we’re happy DEEP is complying with the timeline and is committed to creating a program,” she said, calling it workable. “There are some challenging aspects.”

Since 2011, the Green Bank has handled the state’s residential solar program with a particular eye toward including low- and moderate-income households, making deep inroads in that population using standard marketing approaches.

Among what Hazlewood called the “kinks” are that the large program requirement for low- and moderate-income will make project financing more difficult. She is also concerned that requirements for project bidders will be prohibitive for Connecticut companies that have never done this before and could result in big national companies winning large projects with no opportunity for smaller companies and projects.   

“What’s really most important for DEEP is to be committed to being flexible going forward and make adjustments if needed,” she said.

For her part, DEEP Commissioner Dykes said small Connecticut solar companies have done well against large companies in the various solar programs over the last eight years. And she reiterated her commitment to a robust low- and moderate-income component.

“That’s something I’m really excited about in this program design – pushing developers to make those customers a priority,” she said.

As for the program requirements, she said, “We need to solve climate change and this is an important program, one of the many important programs that we have to do that. If we have projects that look good on paper that can’t actually get built, then we’re not meeting that goal.”

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