Too Much of a Good Thing? Inside Vermont's Solar Standoff
Vermonters have embraced renewable power faster and with more gusto than anyone in the state ever anticipated. That’s brought increased energy independence to some but ironically has put others in “a bit of a purgatory,” as one solar installer describes it.
Jayne Nold-Laurendeau has the perfect spot for solar panels on the Woodbury property where she and her husband plan to retire.
“We have great sun,” she says. “It just seems practical to use it.”
The problem? Nold-Laurendeau’s utility — Hardwick Electric — won’t hook up any more panels to the electrical grid.
Hardwick is one of three small Vermont utilities that have stopped approving so-called “net-metered projects” — those that involve utility customers who are generating their own power via small-scale energy installations. Current Vermont law builds in additional incentives for solar net metering in particular; utilities are required to credit customers for solar energy they produce themselves at 20 cents per kilowatt hour. Anyone who produces enough power can eliminate his or her monthly electric bill altogether.
But the law also allows utilities to stop taking on new projects at the point that homemade energy makes up 4 percent of their peak energy-generating capacity — a provision lawmakers wrote into the last round of revisions on net metering to give utilities a chance to step back and assess the costs and benefits of the program.
That time has come. In addition to Hardwick, which reached its DIY limit a year ago, Vermont Electric Cooperative (VEC) and Morrisville Water and Light stopped permitting new net-metered projects last August. Washington Electric Co-op is still taking on projects but limits the size to 5 kilowatts — roughly 16 solar panels — per installation.
Spokespeople for two of the four utilities say that, as more Vermont homeowners jump on the solar bandwagon, the current 20-cent tariff is too high to sustain, and that traditional energy customers are picking up too much of the tab for customer service, infrastructure and other fixed costs. Renewable-energy developers and advocates counter that locally generated power can offset the cost of expensive transmission upgrades and lowering incentives now would cut alternative energy development off at the knees.
Last week, VEC applied to the Public Service Board to resume net metering, but at a substantially lower rate than the 20-cent tariff set by current law. The Vermont Public Service Department opposes the plan, along with arguably every environmentalist in the state.
“We need way more renewable electricity than we’ve got,” says Ben Walsh, a clean-energy advocate with Vermont Public Interest Research Group. “We should give the solar entrepreneurs in Vermont some space on the runway to take off.”
Net metering, Walsh says, is the policy mechanism Vermont lawmakers settled on to encourage new solar generation. “We don’t think we’re anywhere near the point where we need to be changing course,” he says.
That will likely fall to lawmakers to decide. Rep. Tony Klein (D-East Montpelier), who chairs the House Natural Resources and Energy Committee, vows to make the net-metering standoff a top priority in the upcoming legislative session. He says no one in the Statehouse would have imagined utilities would hit the 4-percent cap so soon after the 2011 state law passed.
Klein plans to take up the issue in the first week of the session and hopes to have a solution by the end of the second.
In some parts of the state, meanwhile, solar-panel installation has ground to a halt.
“I’ve had to say no a lot lately,” says Jessica Edgerly, the lead solar organizer at SunCommon, a solar development company that has installed photovoltaic panels on more than 400 homes since its launch in 2012. SunCommon had to deliver the bad news to Nold-Laurendeau.
“No homeowner expects anyone to tell them, ‘You can’t make a decision to invest in your own power production,’” she says. “They feel angry and like it’s utterly unfair.”
Forty-three states plus the District of Columbia have some kind of net-metering policy on the books. Vermont has had one since 1998, but in 2011, lawmakers decided to expand the state’s program, building in more incentives — including streamlined permitting procedures and a guaranteed per-kilowatt-hour price.
In the two years since those tweaks, net-metering generation has nearly tripled, from 12 MW to almost 36 MW of statewide generation. In 2012, more than 600 customers submitted applications for net-metered solar arrays, up from fewer than 100 five years earlier. The 20-cent tariff, which clocks in at roughly 2 to 5 cents above retail electricity rates, depending on individual utilities, gave homeowners and lenders the certainty they needed to invest in solar panels.
That said, it’s still a relatively small slice of total energy generation in Vermont; solar panels — by far the most popular type of generation used in net-metering projects — produce roughly 1 percent of the total electricity consumed by Vermonters each year.
VEC CEO Dave Hallquist argues that the market price of solar is now markedly lower than the original tariff set by lawmakers. Solar projects are much less expensive to build today; costs have dropped by half in the last eight years.
Hallquist says those higher rates mean that the rest of his utility’s customers are subsidizing net metering — to the tune of an estimated $580,000 a year.
“The net-metering members can roll their meters all the way back to zero,” Hallquist says. “They’re using the system, and they’re not paying.”
Disputing those numbers are solar-energy advocates and the Department of Public Service. DPS released a study in January that found net metering provides an overall benefit, rather than a cost, to the state. Darren Springer, deputy commissioner at the Vermont Public Service Department, says net metering allowed the Vermont Electric Power Company (VELCO) to avoid a $250 million transmission line upgrade.
Looking at VEC’s proposed tariff — which dips as low as 12.5 cents per kilowatt-hour for short-term contracts — Springer is skeptical that solar development could continue as a viable investment.
“I’m not aware of anybody in Vermont that’s been able to build a solar project at that price,” he says.
Lawmakers will have to find the common ground between utilities and developers when it comes to valuing solar energy. But advocates of additional net metering say the problem goes beyond dollars and cents; they say smaller utilities in particular need to start reenvisioning their business models.
“We’ve been doing things pretty much the same way since Edison,” says Gabrielle Stebbins, the director of Renewable Energy Vermont. But a proliferation of solar panels, farm methane digesters and small wind turbines requires utilities to think and act differently than if they’re simply purchasing power from a few large generating sources.
“They’re stuck in a 100-year-old mindset,” says Klein.
Notably, no one is pointing fingers at the state’s largest utility, Green Mountain Power. In fact, GMP pays a slightly higher premium to its net-metering customers for solar power than is currently required under state statute.
GMP hasn’t yet hit the 4 percent cap that other, smaller utilities are grappling with, but spokesperson Dorothy Schnure says it expects to within the next year and a half. So far, GMP has no plans to curtail net metering at that point. Schnure says that since GMP’s peak load hits during the hottest days of the summer — just when the sun is shining the longest — solar plays an important role in “shaving” the utility’s peak energy demand. (In contrast, both VEC and Hardwick Electric say their peak loads hit on cold winter nights, when local solar arrays add little benefit.)
“People want more local renewable generation on our system,” says Schnure. “We see this as the new norm. This is where the future is going. We need to embrace it.”
Predictably, that’s also the party line from solar installers, who are frustrated that customers in some parts of the state are stuck in limbo until the net-metering debate plays out.
“This is a technology that’s mature and ready for deployment on a wide scale,” says Nik Ponzio, who heads the solar division at Williston-based Building Energy, “but these kinds of roadblocks from small-minded utilities make it all that much more difficult for people who are trying to do the right thing.”
Of course, customers have an alternative: going off the grid entirely. Ponzio has one customer who is considering just that.
“That’s unfortunate, because he’ll have excess energy that could be used by other people on the grid,” he says. But that’s only if and when his utility begins taking on new projects.