The Solar Northeast is heating up. To stay current this summer we’ll be giving updates on Wednesdays, covering what is new and exciting from various markets found in the Northeast. We think solar makes excellent beach reading.
First up: Connecticut
Connecticut – A hard earned win
The Background: With the highest electricity rates in the country, new generation and transmission being hard to site, and very few other instate renewable choices, solar was always a nice fit for the nutmeg state.
In 2008 a group of stakeholders, of which Vote Solar was a member, convened to get recommendations for costs, benefits and best approaches for the future. We even got a study out of it. (Sound familiar?)
By the close of the next session in 2009 we had a bill that called for approx ~ 300 MW of solar. Unanimous passage in the House, but stalled in the Senate.
In 2010 we had unified support in both the House and the Senate and very similar bill structure. Late hour votes in both houses passed the bill. Unfortunately, it was vetoed by the Governor. We are told largely because of matters not related to the solar provisions.
Which brings us to this session. With a new governor set to make energy a big priority, advocates felt optimistic.
The Bill: SB1243 passed. And it is a doozy. Have a look for yourself (pdf, and hefty one at 180+ pages).
There are some important provisions and issues related to solar. Everything will hinge on the implementation process, and Vote Solar aims to be at the table.
* Residential Market: provides for 30 MW by 2022. It should turn out to be a nice steady market, but consistency will be important.
– The is a call for CSI style installation block program. That is, as certain megawatt targets are met, the incentives drop down. This is a responsible approach to building this market segment. However, the entity known as the Connecticut Clean Energy Fund (which will merge with other agencies as a result of the bill) has the ability to monitor and change this on an annual basis. We feel pretty strongly that too much tinkering with any market leads to disruption.
– Residential solar customers have a choice:
A) Participate in the rec market
B) Take an upfront rebate
But they can’t take both. Local installers are unclear so far as to which is preferred and this will be something to watch.
* The so called Z-REC Market (Zero Emissions)
Here is where things get tricky. First of all you have to understand this: legislators in Connecticut – as so many states – are extremely concerned with solar’s ability to meet goals and targets in a least cost fashion. (Despite having shown this here, here, and well you get the point).
So what the meat of this boils down to is the legislature saying, “Put your money where your mouth is.”
– RECs have a two-year life
– Price cap of $350/REC in 2012; regulators can lower price cap by 3% to 7% annually between 2013 and 2017
– Spending requirements for companies (essentially $8 million a year)
* 2012 – $8 million
* 2013 – $16 million
* 2014 – $24 million
* 2015 – $32 million
* After year 4, regulators will consider several factors to determine future spending requirements (stipulated guidelines are provided)
– Procurement solicitations
* Up to 100 kW
* 100 to 250 kW
* 250 to 1,000 kW
– Preference given to competitive bidding for systems above 50 kW ranked in terms of NPV
– Systems up to 50 kW are eligible to receive REC price equal to the weighted average accepted bid price in most recent solicitation for systems between 50 and 200 kW, plus an additional 10%
– Noncompliance fees in effect
Here’s the rub. First, we expect the RECs to trend very closely to the compliance payment price. Second, with a fixed price set to spend each year to procure solar, essentially the only growth in the market will occur with price declinations in solar.
Our conservative estimates paint this as — at least — a 20 mw per year market. But two things could blow that estimate way out of the water.
1. Connecticut will be one of the first states to reach retail grid parity.
2. Solar will have to continue to get cheaper in order for this to work.
Like we said, the solar northeast is heating up.
Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.