Landscape may soon change for solar and net metering projects

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Two potential regulatory changes could soon impact the financial feasibility of municipal solar and net metering projects.
 
The Department of Public Utilities is seeking input from stakeholders regarding a “monthly minimum reliability contribution” for customers that receive net metering credits, while the Department of Energy Resources is in discussions with stakeholders as it develops a new tariff-based solar incentive program.
 
Legislation passed in April raised the net metering cap by 3 percent, allowing many solar projects to move forward after being stalled in some areas. The same law changed the reimbursement rate for net metering credits for many types of projects, but preserved the most beneficial rate, the retail rate, for municipal solar projects.
 
The legislation contained a provision allowing utility companies to submit proposals to the DPU for a monthly minimum reliability contribution to be included on electric bills for those receiving net metering credits, subject to the review and approval of the DPU. The DPU has held two technical conferences for stakeholders to gather input on the reliability contribution and what form it could take.
 
The DPU developed a conceptual proposal for comments, then asked interested parties to submit their own proposals.
 
According to the law, the DPU may approve a proposal for a monthly minimum reliability contribution only after the total capacity of installed solar generating facilities in the Commonwealth reaches 1,600 megawatts.
 
The law specifies that the DPU may exempt or modify the contribution for low-income ratepayers, and that the DPU may exempt any class or subclass of Class I, Class II or Class III net metering facilities that were in service by Dec. 31, 2016, for any period through 2020.
 
The MMA raised concerns about the monthly minimum reliability contribution during the legislative process and the DPU’s regulatory process. Calling a monthly minimum reliability contribution on existing projects “an unfair and costly burden on municipalities, who appropriately based their approvals, decision-making and budget frameworks on solar projects without consideration of a ‘minimum reliability contribution,’” the MMA urged the DPU to exempt municipal net metering from any new fees and surcharges.
 
While the DPU continues with its process, the Department of Energy Resources is heading up efforts on another aspect of solar project financing: a new solar incentive program that would be a successor to the Solar Renewable Energy Credit (SREC) II program.
 
The DOER has released a draft proposal for a new tariff-based incentive program, which the department believes would be the best mechanism to continue supporting solar generation at the lowest cost to ratepayers.
 
Under the draft proposal, projects must be interconnected on or after Jan. 1, 2017, to be eligible, with a maximum project size of 5 megawatts per parcel of land. One of the DOER’s objectives is to address land use concerns related to the siting of solar projects.
 
The incentive does not include municipal light plants, which were not mentioned in the statute. The implementation of a tariff leaves municipal light plants without access to any statewide solar incentive other than Class I renewable energy credits.
 
The DOER plans to gather input from stakeholders on the proposal during the fall. Under the planned implementation schedule, the DOER will conduct rulemaking during the winter and spring, while the DPU begins proceedings for the tariff. The program would go into effect next summer, according to the anticipated timeline.