Today, I attended the Energy Bar Association‘s “East Coast Solar Infrastructure Development: Incentives and Barriers – What is Working and What is Not: An examination of Incentives, Finance, Technologies and Interregional compatibility of RECs Driving Solar development in the Northeast” hosted by Day Pitney in three cities: New York, Boston, and Washington, D.C. The event was led by Roni Epstein, Counsel, Legislative and Regulatory Affairs, New York Power Authority.
Carrie Cullen Hitt, SVP State Affairs, Energy Bar Association
The solar energy market varies by state. The leader in total cumulative installed solar electric capacity is California (which is not a surprise), followed by New Jersey (which might be a surprise to readers). New Jersey is second because it supports solar energy with an incentive system that worked for a time but is now threatened.
For now, though, the news nationwide is good. Solar panels are getting cheaper, and Concentrated Solar Power (CSP) projects worth several gigawatts will soon come online.
On the other hand, prices will stop declining unless manufacturers can lower “soft costs” such as labor.
Upcoming regulatory developments of interest include the FERC Small Generator Interconnection Agreements and Procedures (.pdf), Docket No. RM13-2-000.
Brian Farnen, General Counsel, Connecticut Clean Energy Finance and Investment Authority
Connecticut has been funding renewables with a dollar for dollar match, but right now everything in government is being cut. In the future, green banks will fund 1/3 the cost of green projects, commercial lenders will fund 1/3, and the remaining third will be in tax equity.
(However, there are few companies that are able to make tax equity investments.)
On the other hand, as prices for panels decline, the same amount of equity can fund a larger amount of solar generating capacity. The Authority is investigating a number of different initiatives to help solar buildouts, and also to help buildouts in poor areas. Since tax incentives have played a large role in many residential solar energy buildouts, rich areas rather than poor areas get the government-funded solar energy.
Even though the buildouts are mainstream, banks seem to still be unwilling to lend to the builders and installers.
Ryan Scerbo, DeCotiis, FitzPatrick & Cole
Mr. Scerbo explained why New Jersey has installed such a large quantity of solar energy capacity. It’s the Solar Renewable Energy Certificate (SREC) (pronounced ess-rec) program. When the market was created, SRECs initially sold at $600 each. This created a glut of supply, and SRECs now sell at around $60.
In Energy Year 2012, there were 260,000 surplus SRECs, and in Energy Year 2013, there were 770,000 surplus SRECs (energy years run from June 1 of the previous year to May 31 of the current year). Power companies in New Jersey purchase SRECs in order to meet renewable requirements, but their need is limited. Some argue that the power companies should be required to purchase more SRECs, but they would pass the costs on to ratepayers, which would do more harm than good.
The state will limit the types of projects that can qualify for SRECs, thus limiting supply and restoring the price. Since energy regulators have a duty to attract capital investment, they have a duty to create a market with a relatively stable price that investors can use in order to plan their solar projects. Even with new legislation, the SREC surplus will stay at around Energy Year 2012 levels, and SRECs will rise in price only to about $300 or a little more.
SREC registration allows utilities to foresee the rate of growth of solar power in the state, but several attendees seemed skeptical that all of the projects in the pipeline would be built. The government may consider intervening to ensure that SREC registrations provide the information that the market needs. Options include limiting SRECs to more desired projects, limiting SRECs awarded to projects on farmland, and requiring a down payment, escrow, or proof of financing in order for registration.
Terry Moran, Director of Market Strategy & Development, PSE&G
PSE&G in New Jersey has several fascinating solar energy initiatives.
The company has received praise for installing solar energy farms in brownfield sites and on landfills that have been closed. Such projects have extra costs beyond the usual solar energy installation, such as cleanup in brownfields and capping landfills.
The company is installing solar panels on its “vertical assets” (utility poles). Each solar panel provides about 235 watts of DC power (maximum). The company has installed 160,000 of them.
PSE&G is in the midst of a ratemaking proceeding.
Richard Fioravanti, DNV KEMA Energy & Sustainability
Mr. Fioravanti spoke about energy storage. Storage can: 1) smooth the output of an intermittent power source, 2) time shift the power generated (if solar generates power during the day and people are home in the evening, then the power generated during the day can be used in the evening), and it can 3) provide capacity firming in order to provide energy output during periods of forecast intermittency.
He warned, however, that many residential users are surprised when their solar power installation does not generate power during a blackout. To operate during a blackout, a photovoltaic installation needs a “black start” capability — which usually means a generator. A diesel generator is ideal in engineering terms, but usually not practical, and the emissions can be harmful in a home.
The Future
Ms. Cullen Hitt concluded by discussing potential breakthroughs and setbacks across the U.S. She said that:
Texas is considering changing the rules completely, which would be very important because “it is one of the only markets where the load is growing.”
Georgia Power had an RFP on solar and may grow their program.
States that have announced focused initiatives include Colorado, Illinois, Wisconsin, and New York.
Some states, including Arizona, may cut back their funding for solar power.
Attending the Energy Bar Association as a law student was a great experience. There is simply no other way to learn about the current concerns of industry practitioners. And of course, everyone was nice.