In a decade, solar power has grown from a virtual nonentity in Vermont to an industry employing hundreds that currently has capacity to power thousands of homes, businesses, non-profits and municipalities statewide.
Solar customers are attracted by the renewable, pollution-free energy source; by the tax credits and financing schemes that have vastly reduced the cost of installation and ownership; and by the upsides of generating power as close as possible to where it is consumed.
The latest sign that Vermont is on a solar roll came this week from the Environmental America Research and Policy Center and the Vermont Public Interest Research Group, which teamed up in a study ranking cloudy Vermont among the nation’s top 12 solar-producing states.
The report, “What We Can Learn from America’s Top 12 Solar States,” is pegged on a solar energy boom nationwide. Solar capacity has tripled in Vermont in a year and nationally in three years.
The top 12 didn’t get there by chance. Vermont grabbed a spot to the list partly for its simple and generous approach to net metering. Net metering allows customers to offset their electric bills with power from onsite solar, and receive credit for any excess they put into the power grid.
It is working. Last week, when we boiled in the heat and utilities struggled to keep us cool, cheap local sun power helped avoid brownouts. We need more, not less solar net metering, for that and other reasons.
But, as with any fast-growing business with surging demand, there are problems. Net metering is actually one of them. Under the state’s rules, Vermont utility companies can deny new net-metering customers when a utility has reached 4 percent of its capacity factor at peak demand with net-metered solar energy. Three small Vermont utilities reportedly have reached the cap, and at least two have said, “no more net metering.”
Why? Because solar power is of no use for meeting peak demand in most rural areas in the state where it comes on dark, cold winter nights. Additionally, net-metering customers can use their credits to offset customer charges that partly pay for small, struggling utilities’ fixed costs, such as infrastructure and administration. Those costs are fairly constant no matter how much power customers use.
In other words, the state’s accolade-winning net-metering policies need tweaking. What’s good for Green Mountain Power isn’t necessarily good for the Hardwick Electric Department. The Legislature must tackle this issue next winter, with the delicate aim of preserving solar as a growing power source without crippling the state’s stellar network of little power companies.
The other thorn is property taxes — both state and local portions. How to tax solar has been a murky question. Until last year, solar was largely calculated based on the perceived value a solar installation added to a property. The state and most towns didn’t account for solar installations at all.
Driven in part by the solar industry, which wanted operating-cost clarity, the Legislature in 2012 decided that small systems — under 10 kilowatts — would be exempt from taxes altogether. Anything bigger would pay a nominal statewide tax rate based on capacity: $4 per kilowatt. Fair enough.
For municipal property tax purposes, the Legislature allowed towns to impose a levy based on a convoluted fair-market-value formula. Ugh. The formula takes several pages and charts to explain, and experts to calculate. Waterbury officials last week struggled with all this and decided to take it to the voters. Instead, they should reasonably demand that the Legislature go back at the solar tax question — which it should solve in one page or less, while preserving Vermont as a solar magnet.
Meanwhile, the exemption threshold — 10 kilowatts — is so low that many small businesses, farms and residences easily exceed it and will have to pay for doing the right thing. That’s bad policy.
Raise the exemption to 100 kilowatts or more. Then establish a nominal municipal rate, like the statewide rate, and if a town wants to waive the fee, lovely: such solar towns will reap the benefits.