By an overwhelming majority, the Vermont House on Wednesday advanced a bill that aims to expand the number of small-scale solar energy projects in Vermont. Supporters say the legislation will deliver both environmental and economic benefits.
The bill passed the House by a 136-8 margin, and it deals with something called "net metering." Even people unfamiliar with the term have likely begun to notice its impact on the state.
“If you see solar panels on your neighbor’s roof or in a farm field, that’s probably a net metering project,” said Darren Springer, deputy commissioner of the Department of Public Services.
"If you see solar panels on your neighbor's roof or in a farm field, that’s probably a net metering project." - Darren Springer, deputy commissioner of the Department of Public Services
The number of those solar panels has surged dramatically over the past three years. And Springer and others said that growth is the result of a net metering program that allows the owners of small solar installations to send their excess electricity back to the grid.
Net metering has been around since 1998, but it wasn’t until 2011, when lawmakers required utilities to purchase excess electricity from net metering projects at a premium, that the program really took off.
Between 1998 and 2011, the state approved 16 megawatts worth of community-scale solar capacity. Since 2011, capacity has jumped to 38 megawatts.
“You’ve seen solar itself [increasing] in capacity in the state over the past couple years, and that would not have been possible, no ifs, ands, or buts, without net metering,” said Ben Walsh, clean energy advocate at the Vermont Public Interest Research Group.
But the supporters of net metering – notably the growing renewable energy industry lobby – say the meteoric growth will come to a halt if legislators don’t act soon to the save the program.
The existing net metering law requires utilities to pay 20-cents per kilowatt hour premium for excess power generated by the owners of the solar systems. But that mandate expires when net metering projects account for 4 percent of a utility’s peak demand, a cap that many utilities have already hit.
The new legislation increases the cap to 15 percent of total demand. The mandate applies to projects of up to 500 kilowatts.
Gabrielle Stebbins, the head of Renewable Energy Vermont, a trade association for about 100 companies in the renewables industry, said the net metering initiative has spawned a growing industry. If lawmakers do nothing, Stebbins said, the results will be grim.
“For the solar industry, you’d see people fired and laid off, you’d see Vermonters not be able to reduce their energy load, and you’d see businesses leave the state, and go to greener pastures,” Stebbins said.
About 40 states offer net metering programs.
Bill Driscoll, vice-president of Associated Industries of Vermont, said the benefits of net metering need to be weighed against their impact on all ratepayers. A report issued last year by Department of Public Service found that at a macroeconomic level at least, net metering does not result in a cost shift onto residential ratepayers.
The new legislation increases the cap to 15 percent of total energy demand. The mandate applies to projects of up to 500 kilowatts.
That’s in part because smaller, distributed energy projects reduce load on power lines serving the area, and forestall the need to upgrade the transmission infrastructure.
But individual utilities said last year that within their territories, the program was having an inflationary effect on rates. And Driscoll said expanding the program could exacerbate the transfer of costs of the program onto people who don’t directly benefit from it.
The legislation is in many ways a temporary stopgap measure designed to prop up the program until its next major hurdle, which comes in 2017, when federal solar tax credits are scheduled to expire.
The legislation directs the Public Service Board to come up with a new net metering program by 2017. It also includes language instructing the PSB to make sure that the program doesn’t result in a cost shift.
But with caps nearly quadrupling, and solar developers at the ready, Driscoll said rates could begin rising long before the PSB has implemented the revised program.
“This could be the bulk of the program … And it’s important to build in the safety standards to prevent costs shifts onto other customers for the projects that are built in the next couple of years,” Driscoll said.
The bill is expected to win final approval in the House Thursday. It then heads to Senate, where supporters are guardedly optimistic. Proponents hope to have the bill signed into law before Town Meeting Day, in order to prevent the existing 4 percent cap from stalling new projects.
The legislation would preserve the 20-cent per-kilowatt rate for the first 10 years for projects under 15 kilowatts. The price would drop to 19 cents for projects between 15 kilowatts and 500 kilowatts.
Utilities would pay the owners of solar systems the going retail rate after the 10-year period was up.
