MONTPELIER — The Department of Public Service in December announced it will make changes to the state’s renewable energy program in an attempt to encourage solar growth while protecting ratepayers.
With the Legislature in its upcoming session also likely to update laws that encourage more renewable energy in the Green Mountain State, Vermonters can expect to see continuing efforts to nurture solar power in 2015, though with a slightly different flavor.
Renewable energy industry insiders are hopeful that lawmakers, who last year raised the cap on the state’s net metering program, will develop a comprehensive renewable energy policy that serves the state’s renewable energy goals.
“I think legislators are coming to understand the renewables industry in Vermont is providing enormous benefits, such as jobs and keeping rates low,” said Andrew Savage of Williston solar firm AllEarth Renewables.
In a Dec. 15 report to the Legislature, the Department of Public Service said the state should not sunset its Sustainably Priced Energy Development program, known as SPEED, but instead transition that initiative into a new policy that will “drive innovation, offer economic benefits and advance Vermont’s leadership on renewable energy.”
In place of the SPEED program, the department said it will recommend a new set of policies in the coming months.
“It will help grow the amount of renewable energy utilized in Vermont for Vermont ratepayers as well as support cost effective efforts to transition to renewable energy in other sectors,” the department stated in its report.
The Legislature has considered retiring projects enrolled in the program that were built after April 1, 2014. The department argued that was “not the most cost-effective manner in which to achieve Vermont’s energy goals.”
That’s because retiring projects built after April 2014 would mean retiring the renewable energy credits associated with them.
Projects enrolled in the SPEED program produce about 870 gigawatt hours of electricity annually, about 15 percent of total retail sales in the state. In order to meet the SPEED program’s 2017 capacity goal, enrolled projects would have to produce a combined total of 1,127 gigawatt hours.
A gigawatt is 1,000 megawatts.
Using an average renewable energy credit price of $55 per megawatt hour, it would cost ratepayers $14.1 million per year to reach the 2017 goal.
Public Service Deputy Commissioner Darren Springer said he does not oppose the idea of retiring renewable energy credits, but said that giving regulators the leeway to do that gradually, rather than all at once, would be a more responsible policy.
“Retiring (renewable energy credits) is not necessarily a bad idea, but it can be done in a more flexible way that is better for ratepayers,” he said.
If adopted by the Legislature, the department’s recommendations would also bring Vermont’s renewable energy statutes more in line with those in other states, officials said.
“The SPEED program has facilitated the development of renewable energy projects in Vermont, but is distinctly different from the renewable energy programs in use in the other states in New England,” the report notes.
The report also points out that more than 30 states set electric utility portfolio standards, meaning utilities are required to purchase a percentage of their power from renewable means. Vermont’s SPEED program is presently voluntary.
When they return to the capitol next week for the new session, state lawmakers will have to begin hashing out exactly what the new energy program should look like, using both the Public Service Board and Department of Public Service as resources. The Department of Public Service will deliver more in-depth recommendations to legislators early in the session.
The Public Service Board has authored two studies on what the state’s renewable energy portfolio standards should look like. According the Dec. 15 report, the state’s energy regulators are trying to draft a plan that addresses a litany of goals, including: reducing Vermont’s reliance on both fossil fuels and centralized power plans, decreasing volatility in energy prices, improving air and water quality, slowing global warming, maximizing economic benefits of renewable energy and making the state a national leader in clean energy technology.
Any future plan approved by the Legislature will undoubtedly be tailored to shepherd the state toward its goal of sourcing 90 percent of its energy from renewable sources by 2050. The Department of Public Service, in a report published a week before its SPEED program recommendations, stated that the state will not meet that goal without developing new and more ambitious policies to spur renewable energy growth.
Springer said that in order for the state to meet that long-term goal, agencies have to start thinking about what future programs to enact after the SPEED program expires in 2017.
“It’s time to have that conversation,” Springer said. “We have ways where we can have more progress in a more cost-effective way.”
Springer said an ideal renewable energy program would permit regulators to tweak subsidies, tax credits and regulations on an as-needed basis. This would prevent statutes from becoming obsolete in the rapidly changing renewables industry, since the Legislature meets just five months a year, and may not always have the opportunity to address solar legislation.
“In technology broadly, not just with solar, there continue to be evolutions, innovations and market changes,” Springer explained. “You want programs that can respond dynamically.”
Right now, half of Vermont’s greenhouse gas emissions are due to transportation, and another third are due to fuel used for heat and industry. The report stated that electricity is still the state’s cleanest energy source, though it can be cleaner as utilities shift away from coal.
While both the SPEED program and other state renewable energy initiatives promote the growth of many renewable energies, such as a wind and biomethane, Vermont in recent years has seen a rapid expansion of solar projects.
As of December 2014, the Public Service approved 138 solar projects larger than 15 megawatts, 26 of which are located in Addison County. According to an October report by the Department of Public Service, the state was on track to see a record number of applications for its net metering program.
When the department briefs the Legislature during the session, Springer said it will tout the success of the renewable energy industry in Vermont, and the potential for growth in the future. Springer cited Vermont’s high number of solar jobs per capita, which currently employs about 15,000 people and is projected to grow in the future.
“We see a really bright future for community scale renewable projects,” Springer said. “The price of solar has come down, and it offers peak demand and greenhouse gas benefits.”
Springer added that most Vermonters support the expansion of renewable energy in place of fossil fuels, and just as in agriculture, support sourcing in-state when possible.
“From an economic and environmental standpoint, we produce energy locally, and those are things that people value,” Springer said.
INDUSTRY WATCHING
Savage at AllEarth Renewables said the renewable energy industry will be keeping a close eye on the Legislature as it formulates new policy.
“It’s an industry that has grown a lot in the last several years, and any time there’s a change in the policy, there’s a risk and concern that comes with that,” Savage said. “We’re open to the discussion, and everyone is waiting for the details.”
Savage agreed with Springer that a sound renewable energy policy would protect ratepayers while attracting renewable energy firms to Vermont. He said it is possible to meet both of those goals simultaneously.
“We’ve seen at least the general framework from the department, and the modeling shows that it’s a benefit to ratepayers and it generates instate renewables,” Savage said.
Savage said renewables have helped bring down the cost of electricity in Vermont. According to data compiled by the U.S. Energy Administration, Vermont has the second-lowest cost of electricity per kilowatt hour in New England, after Maine.
One of the key things solar firms seek in the volatile energy industry, Savage said, is predictability. He hopes the new policy will achieve that.
“I think everyone at the table will be cognizant of a policy that achieves instate renewable development and stability.”
Savage said it is not necessary for the state to prop up renewable energy firms with subsidies and tax breaks. He explained that government aid may be needed to get projects off the ground, but once firms are successful, the training wheels come off.
“We’re living up to our end of the bargain that when we create industry and provide stability, then we roll back on the incentives,” Savage said, noting that the state standard offer program — money paid to renewable energy producers to get them off the ground — started out at paying 30 cents per kilowatt hour to renewable generators, but now pays just 11 cents.
Savage said he is hopeful that legislators, who last year raised the cap on the state’s net metering program, will develop a comprehensive renewable energy policy that serves the state’s renewable energy goals.
“I think legislators are coming to understand the renewables industry in Vermont is providing enormous benefits, such as jobs and keeping rates low,” he said.