A news article published this week looking at some of the misconceptions about Vermont’s renewables industry has generated an electrifying debate over how “green” our state actually is – not what it claims to be.
In 2016, the Institute for Energy and the Environment at Vermont Law School was asked to do an analysis of renewable energy credits (REC) in Vermont.
That report pointed out that Vermonters received almost 0 percent of their energy from solar and wind sources, in part because of flawed policies. The report found that nearly all energy credits generated in Vermont were being sold outside of Vermont.
RECs are the means for tracking the production and consumption of renewable energy. When electricity from a renewable energy source enters the electric grid, the electricity is mixed with all other electricity also in the grid, so it is impossible to differentiate between them. They were developed to offer proof of renewable energy production from multiple sources. In effect, RECs are like stocks that can be sold in what amounts to a renewables commodities market. Due to less stringent policies here, nearly all of Vermont’s energy credits have been sold off, sometimes to states looking to bolster their own renewables portfolio.
Compounding the issue is this double whammy: not only do Vermonters not get credit for the renewable energy they generate, the fact that their credits are bought by out-of-state utilities serves as a disincentive for those utilities to build their own renewable facilities in their home states.
While solar panels seem to be everywhere around Vermont because of the recent “solar revolution” here, overall, numbers are low. U.S. solar energy production has experienced unprecedented growth, increasing by 1.2 gigawatts of installed capacity in 2008 to 42.4 gigawatts at the end of 2016. However, even with those dramatic gains, solar energy is still a dim provider, generating less than 1 percent of the total electricity in the United States. According to the Fordham Environmental Law Review, which used the law school report as part of its own analysis of solar growth, a lack of transparency in the solar industry has led to deception in marketing and widespread problems in the industry, including in Vermont. The findings were published in the April 2017 article.
“The U.S. mortgage market, made infamous by the sub-prime mortgage debacle, is the best-known asset-backed security. Securitization, a form of off-balance sheet debt financing, can be applied to the cash flows of aggregated residential solar leases. … The growth of third-party ownership (through REC sales) has thus led to increased opportunities for deceptive practices.”
That’s not to say that has been the motivation here. Solar providers in the state maintain they have been upfront about the ownership of the RECs and clear on who will benefit from them. It is also stipulated as a clause in contracts for solar projects. However, there are solar customers (and critics of the industry) who are calling for more transparency, a tightening of policy loopholes and a push to impose regulations to keep Vermont-made energy in Vermont.
For certain, it is suspect that a state that prides itself in claiming leadership in renewable energy nationwide can only lay claim to owning a handful of renewable energy credits.
“Out-of-state REC sales are one of the biggest contributors toward the growth in electric sector greenhouse gas emissions, and are in direct conflict with the state renewable and greenhouse gas reduction goals,” the review wrote. “… Vermont is not consuming the renewable energy that is generated within its borders and which its citizens are subsidizing.”
It goes on, “When a state like Vermont sets an aggressive (energy) policy but then enacts laws counter to that goal we create false hope about climate change.”
And while Vermont is definitely singled out for its hypocrisy in policies and claims, the authors of the law review remain optimistic that RECs will eventually play their intended role in the energy markets here and across the nation, and that people hoping to “go solar” can truly do so, and feel good about those investments.
“For better or worse,” the law review article concludes, “history has proven that we can only fool the customer for so long and that Mother Nature operates in the realm of science, not perception.”
|Wind Watch relies entirely
on User Funding