Don't Let the Sun Go Down on Net-Metering: The need for more comprehensive legislation on solar policy

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Now that the state legislature is back in session, the Joint Committee on Telecommunications, Utilities and Energy (TUE) is eager to address Massachusetts' notoriously high electricity costs. Also on the docket are the issues of modernizing the power grid, using electricity investments to ensure lower carbon intensity, and ensuring fairness to all parties in bearing the costs of the grid. Fortunately, Massachusetts has one of the highest rates of solar panel installation growth, with nearly 900 MW of capacity in place today–enough to power at least 140,000 homes. A spotlight has been cast on this rapidly-growing industry, as lawmakers consider their options for striking a balance in how the grid evolves, and as utilities must follow increasingly strict requirements to buy a portion of their power from renewable sources.

Net-metering, which enables solar panel owners to sell the excess energy that they generate back to the grid, is one of the biggest incentives for businesses and individuals to use solar power. However, the legislature limits total amount of projects that are eligible for reimbursement that solar panel owners notionally should receive. Once those limits are met, no further solar PV projects in a particular service territory will be able to take advantage of the net-metering process. Hitting the caps means no more projects will be undertaken, as their primary return on investment, through selling power back to the grid, no longer applies. Many clean energy advocates, including the USGBC MA Chapter, are calling for an immediate end to the net metering caps, which limit the ability of solar supporters to develop both community and commercial solar PV projects.

On Tuesday afternoon at the State House, the Joint Committee on TUE heard dozens of testimonies at a packed public hearing. One of those testimonies was from Governor Baker (seen above, with Sec. of Energy & Environment Matt Beaton), who spoke in favor of Bill H. 3724. This bill would raise private and public net-metering caps–capped at 4% and 5% of the installed production capacity in a given utility service territory, respectively–by a modest 2% each.

Proposing to raise these caps is a step in the right direction, especially considering that 171 communities in Massachusetts have already reached the existing cap. But the positive provisions in H. 3724 are outweighed by the lack of comprehensive components that would allow the state's solar industry to grow sustainably in the long-term.

Led by the Acadia Center, the USGBC MA Chapter and nearly 50 other local and regional organizations signed a letter to the Joint Committee on TUE. These organizations support a more far-reaching, comprehensive solar policy framework than the currently proposed legislation, which limits net-metering and restricts the growth and sustainability of the solar industry in Massachusetts.

The signatories of the letter agree that solar policy legislation must minimally accomplish the following four objectives:

Set an ambitious solar target to ensure substantial contribution to environmental and public health requirements, as well as regional energy resource needs;
Maintain or expand equitable access to solar on fair terms with the mechanisms of net metering and virtual net metering;
Provide fair compensation to solar where any changes to rate structures must be based on a rigorous and public value of solar study; and
Suspend and then eliminate net metering caps which are no longer relevant with appropriate reforms.

While there are some constructive aspects of H. 3724, on the whole, this bill does not meet these criteria. One of the issues with the existing bill is that despite a proposed 2% increase, these net-metering caps would likely be hit in National Grid territory in 2016. This would require prompt action from the Department of Public Utilities.

Secondly, this bill would drastically limit net-metering credit values for many solar projects. These cuts on credit values ignore the myriad values that solar provides to the energy grid and MA customers in both the short- and long-term. Furthermore, limiting credit values could disproportionately affect community-shared and low-income solar projects, which derive their benefits from this credit value.

The legislature could ensure that the full value of solar projects are taken into account by taking the advice of their own Net-Metering Task Group. In a report issued last spring, the task group recommended a comprehensive study to determine the financial costs and benefits of solar PV, so that prices could be set accordingly.

As an alternative to Bill H. 3724, the USGBC MA Chapter has endorsed the Next Generation Solar Policy Framework, a proposal for more comprehensive and sustainable legislation on solar policy. Our Chapter supports this framework along with 67 other diverse organizations, including clean energy and environmental advocates, clean energy business groups, community groups, and solar businesses. It would effectively function as a legislative roadmap by outlining how to:

Fairly compensate solar projects after the solar goal of 1600 MW is met,
Cost-effectively incentivize solar development to achieve an ambitious solar electricity target, and
Address any legitimate utility concerns about paying for use of the electricity grid.

This progressive proposal, outlined in the Acadia Center's letter to the TUE Committee, strives for aggressive solar goals, provides fair payments for use of the distribution grid, and strongly supports community and low-income solar. (Read more about the Next Generation Solar Policy Framework here).

Without raising caps on net-metering beyond what H. 3724 proposes–or eliminating these caps entirely–the sun could set on many of the state's solar energy projects.

Stay tuned for net-metering updates, as our Advocacy Committee continues to address this issue that is critical to the green building industry. Send us your feedback about Bill H. 3724, or thoughts about net-metering caps, to: advocacy@usgbcma.org.