The renewable power that Vermont homeowners and businesses generate has more than doubled since 2012, according to a report by the Department of Public Service on the state’s net-metering program.
This growth is expected to continue, the report says, especially as the solar industry pushes to install more panels ahead of looming uncertainty over the federal solar tax credit.
The state’s net-metering program allows electric customers to generate power from solar, wind and other renewable sources. In exchange, Vermont utilities credit these customers for the power produced.
Several utilities last year had to halt applications for new projects after reaching a statutory limit on the amount of power they can receive from net-metered installations. Though this cap has been lifted, persistent growth is already creating more challenges for utilities.
Jacksonville Electric Co., a small municipal utility in Windham County with 170 kilowatts of net-metered power on its system, has nearly reached the new cap set at 15 percent of a utility’s peak demand. In 2013, net-metered power from solar, wind and methane accounted for 14.4 percent of Jacksonville’s peak demand.
Some utilities use solar energy to offset more expensive power during peak demand hours in the summer, and pay a premium for it. But as more solar installations come online, utilities expect to see a shift in the summer peak to later in the day – a time when less power can be generated from the sun – and may soon see less value in solar.
These are the challenges stakeholders will begin to address in the coming year. Ultimately, regulators will redesign the net-metering program in 2016 to provide utilities with more flexibility to implement the law.
Darren Springer, deputy commissioner of the Vermont Department of Public Service, said possible changes include lifting the cap and providing new financial incentives for producers.
He said there could be incentives for locating projects on already developed areas like rooftops, brownfields and industrial parks, or offering benefits to customers who provide power during times of peak demand.
“I think we can have a much more innovative program,” Springer said.
Critics of the net-metering program have long raised the concern that if net-metered customers generate all their electricity – and zero out their bills – then perhaps non-net-metering customers are paying for the fixed costs of distributing electricity, such as poles and wire.
That concern prompted Washington Electric Co-op to issue a fixed customer charge as part of its revised net-metering program. The state recognizes that the program is not one-size-fits-all, and as part of last year’s law, allowed utilities to adopt their own programs if they meet certain criteria.
The DPS report says that the cost of net metering to nonparticipating ratepayers is just about zero statewide, but fluctuates from one utility to another.
For example, a residential net-metered 4 kilowatt fixed solar installation costs a Vermont Electric Co-op member 1.4 cents for every kilowatt-hour of energy generated, according to the report. By contrast, Green Mountain Power customers gain 1.1 cents per kWh for the same size system.
Under all scenarios described in the report, net metering is a net loss to VEC’s customers, the utility has been saying for years.
“I think that’s the part we’re going to take a long hard look at,” VEC CEO David Hallquist said. “Our data continues to show there is a serious cross-subsidization issue.”
According to the report, Washington Electric Co-op, a winter-peaking utility, received nearly no benefit from fixed solar installations – and nearly no benefit from solar trackers. However, during the winter, wind power did reduce peak demand.
The report says wind is performing better than it had in the past due to higher winter electricity prices, and it could be effective at cutting peak demand for some utilities.
Watts on the grid
The program was designed to support small-scale renewable energy generation. As a result, 48 percent of all net-metering applications are smaller than 5 kilowatts, as of September.
However, the report found a significant number of 500-kilowatt applications submitted in 2014, indicating a trend toward larger, group net-metered systems.
Vermont’s net-metering program has grown sixfold over the past five years, and is expected to continue to accelerate before the uncertain changes to the federal solar tax credit in 2016, according to the department’s report. Also, last year’s law increased the size of solar installations that qualify for expedited application review.
Solar installations have grown from 141 applications in 2008 to 1,027 in 2013. This is in part driven by the premium utilities pay for solar net-metered projects. Solar now accounts for 93 percent of all net-metered capacity in Vermont.
By contrast, the number of wind net-metered projects has declined over the same period, from 23 to seven. Green Mountain Power is the only utility with net-metered hydropower. Only three utilities net meter energy from methane, a gas derived from manure or landfills.
The report states there will be 150 megawatts of net-metered generation in Vermont by 2016 if Vermont keeps at its current pace. Combined with larger installations, Vermont will have 250 megawatts of permitted solar.
But this is not without concern. The report states that the solar installations will have a noticeable impact on the state’s landscape and also push Vermont’s peak later in the day, when solar power does less to offset it.
As a result, “This would have a significant impact on the value delivered by solar PV in terms of avoided in-state transmission and distribution infrastructure,” the report states.
Hallquist says the shifting peak is a surmountable problem.
VEC is in the process of closing on land deals to build a solar array that positions panels toward the setting sun to capture energy later in the day. The co-op closed on a lease in Alburgh and is nearing a land deal in South Hero. VEC is still scouting additional sites to divide its proposed 5-megawatt solar project.
Hallquist said the west-facing panels will not provide power after 7 p.m., however. For that reason, he said VEC is discussing ways to change consumer behavior to manage demand during peak hours.
But, he said, this requires making investments in smart-grid technologies and perhaps offering customers time-based rates that discourage electricity consumption during peak demand hours when electricity prices are highest.
GMP, the state’s largest electric utility, is building a solar farm on a closed landfill in Rutland that includes battery storage. The purpose of the project is to draw solar-generated power from batteries later in the day when the sun is not providing energy.
“The future of all of this is in storage capacity and allowing renewables to become dispatchable. When this occurs all the peak problems disappear,” said Rep. Tony Klein (D-East Montpelier), chair of the House Natural Resources and Energy Committee.
The Department of Public Service was required under the state’s 2014 net-metering law to review the impacts of the program on utilities and electric customers, including the pace of the program and the extent of cross-subsidization.
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