The solar power industry is booming in NH, with record numbers signing on in the past year to install solar panels at homes and businesses across the state. But the industry could face some dark days ahead if a controversial incentive program for solar consumers, known as net-metering, isn’t updated.
The state’s net-metering program allows solar-producing residents, businesses and municipalities to sell energy they don’t need back to their local utilities at full retail rates. Those credits offset a customer’s electricity costs from nights and cloudy days, drastically reducing their electricity bills.
It’s a common arrangement—more than 40 other states have net-metering programs in place—but NH has a very strict cap at about 2 percent of total peak electrical usage compared to a number of states (including New York and Maine) with no cap and Vermont with a cap of 15 percent of peak usage. This cap, in place since 1997, has never been a problem before now. As of the end of 2014, only about 14 of the available 50 megawatts were online. By the end of 2015, the cap was almost filled, leaving new projects few or no megawatts available. As of the end of 2015, there was only about 7 megawatts available for new projects.
The cap is now at the center of a controversy over how to balance the economic opportunity offered by solar and the economic costs associated with operating the electrical grid. Legislators have come forward with a number of proposals to raise the cap, but solar industry experts worry the increases will not be enough to meet the industry’s needs.
The State of Solar
Eversource Energy, the state’s largest utility with 70 percent of the market, has a limit of 36 megawatts for net metering based on its percentage of the electricity marketplace in NH. As of mid-December, it had almost 20 megawatts online and about 12 megawatts in progress, leaving only about 4 megawatts for new projects. Unitil only had about 3 megawatts of its 6 megawatt cap available as of Sept. 30, 2015. Liberty Utilities reached its net-metering cap of 4 megawatts in July.
Workers complete the installation of solar panels on the roof of Eversource’s headquarters in Manchester. Courtesy of Eversource.
The NH Electric Cooperative, a member-owned utility serving about 11 percent of retail customers, reached its share of the net-metering cap on April 3, 2015. It has since eliminated the cap in its franchise area, and developed new terms and conditions for customers who filed net metering applications after May 1, 2015, including lowering the rate customers are paid for the electricity they send back to the grid.
Meanwhile, applications for new solar projects are still flooding in. At Eversource, applications for new projects have jumped from about 10 a week to upwards of 50 to 75 per week, says Richard Labrecque, the utility’s manager of distributed generation.
But many of those projects won’t come to fruition if the cap isn’t lifted. Customers are able to install solar panels without net-metering, but that means they’d be giving utilities free electricity and would not receive any credits to offset their electric bills. “For most prospective solar customers, that is a deal killer,” says Jack Ruderman, director of community solar initiatives at ReVision Energy in Concord. “The caps are creating uncertainty and confusion. This threatens to drive down demand and slow the pace of growth in the solar sector, which has been creating jobs in New Hampshire at an impressive rate.”
A project installed by ReVision Energy in Alexandria, NH, outside Cardigan Lodge which is owned by the Appalachian Mountain Club. The 73.2-kilowatt ground mount will generate about 87,000 kilowatt hours of solar power each year. Courtesy of ReVision Energy.
As of 2013, the latest figures available, solar was an $11 million industry in NH, with about 70 solar companies employing more than 600 people, according to the Solar Energy Industries Association. Given the recent boom in solar, however, those numbers now are likely much higher, says Kate Epsen, executive director of the NH Sustainable Energy Association.
Since 2013, numerous solar industry businesses have entered the state including NHSolarGarden in Stratham, which started in 2014 and designs and builds solar arrays used by entire communities; and Sunrun and SolarCity, two of the country’s largest solar companies, which started serving NH customers in 2015.
“These are highly skilled, well-paying jobs,” Epsen says of the solar industry. If the cap is not raised, he says, “It would have a terrible dampening effect. To not have that would be a huge economic loss for the state … there’s also tons of investment [in solar] going in on surrounding states, and if New Hampshire did not have a viable net metering policy, we would miss out on a lot of that.”
The Politics of Solar
Sunrun and SolarCity both allow customers to install solar panels with no down payment and no responsibility for maintaining or insuring the panels. The companies maintain ownership of the solar panels and install them, and homeowners pay a rate that is lower than what they would pay their electric utility. That model has opened up solar to consumers of all income levels, says Susan Wise Glick, a senior manager on Sunrun’s public policy team.
“The response in New Hampshire has been robust,” she says. Since arriving in New Hampshire in June, the company has garnered about 500 customers. But she’s quick to add, “that growth can only continue if NH lifts the net metering cap. There’s been excellent economic growth and employment from solar in the state, and you’re going to put a stop to that if you enforce the cap.”
But utilities say the net metering program places “upward pressure” on rates by shifting fixed costs for maintaining the grid to non-solar customers, and that could dissuade prospective businesses from coming to NH. “That has an effect on the overall economy of the state,” says Labrecque of Eversource.
Solar companies, on the other hand, say the credits are a vital incentive for prospective customers and contend that solar systems reduce the amount of power that utilities have to purchase during times of peak demand, such as summer heat waves or frigid winter months, when power costs tend to skyrocket.
Other states have also grappled with the issue of how and when to raise their caps, with many choosing to eliminate the cap altogether. New York, Maine, New Jersey and Ohio eliminated their caps; Vermont’s cap is 15 percent of the peak electrical usage. (In comparison, New Hampshire’s is about 2 percent.) In Massachusetts, there’s no cap on residential projects, while non-residential projects are capped at 9 percent, though lawmakers there are currently battling to raise that cap.
In NH, the point of contention is not just whether to raise or eliminate the cap, but also the rate at which solar customers are compensated for the electricity they put back on the grid. Utilities say that paying retail rates, which can run four to five times higher than wholesale prices, is too high and doesn’t make economic sense. “In the long run, there does not need to be a cap if a fair, sustainable rate structure was in place,” says Labrecque of Eversource. “We all want solar to continue. We know it is the future. But we question whether the incentive structure needs to continue.”
Several bills to adjust the net-metering policy are up for debate in the Legislature, each of which proposes a different solution. One calls for lifting the cap from 50 megawatts to 100 megawatts; another, co-sponsored by State Sen. Jeb Bradley, R-Wolfeboro, would temporarily lift the cap to 75 megawatts, require the Public Utilities Commission (PUC) to set a new rate to compensate customers, then the PUC would have the authority to remove the cap altogether once that new rate is set. The new rate would “not, in all likelihood, be as generous as today,” Bradley says, but it would create a compromise by allowing solar companies to keep an incentive program in place while easing utilities’ concerns about cost shifting.
Bradley’s is an approach similar to the one taken in 2015 by the NH Electric Cooperative (NHEC), a member-owned, rural electric cooperative whose members voted that it be deregulated and is subject to limited PUC jurisdiction. NHEC eliminated the cap and implemented a new “Above the Cap” program, which the company believes fairly compensates members for the costs that NHEC avoids because of that generation. Even with the lower rates for solar [members], interest in solar remained steady, says Judy Gove, vice president for business and government affairs at NHEC.
“Since the new program was implemented, interest has been consistent,” she says. The utility installed about 197 systems in 2015, up from 107 in 2014, she says. The utility plans to make periodic adjustments to the rates it pays solar customers but believes this approach is a reasonable compromise to the net-metering cap.
Whether that approach can work statewide remains to be seen. Bradley says his bill has the support of several utilities, including Eversource and some solar companies, and he’s hopeful that the state Senate will act on the bill quickly. Others, however, worry that it could take months or even longer for the Public Utilities Commission to set a new rate. They also worry the proposed temporary increase to 75 megawatts won’t be enough to keep from stifling the state’s emerging solar industry.
The largest and first solar garden in the state was installed by NHSolarGarden on a landfill in Milton. Courtesy of NHSolarGarden.
“It’s a Band-Aid on a gushing heart bleed. It’s not going to fix the problem for more than five minutes,” says Andrew Kellar, founder and director of NHSolarGarden. He says interest in solar and applications for new projects are already so high that a new cap “will already be used up before the law is even put into place. My hope is it moves toward a big cap. If they want to stay with net metering … they need to raise the caps big enough to where solar can survive.”
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