Utilities Sing Same Old Tune on Community Solar in Maryland

 

The same week 196 nations came together in Paris to agree on a pledge to fight climate change, a gathering of a different sort in Baltimore witnessed the “we can’t do it” crowd reprise their deny, delay, and cast-doubt performance that has been going on since the start of this millennium. The gathering in Baltimore was the Public Service Commission (PSC) hearing on proposed regulations to start a community solar pilot program in Maryland. While solar has been growing rapidly in the state, bringing jobs and clean energy, not to mention reducing demand on the grid, there are some who think we need to still study solar a bit more before deciding whether it makes sense for us. Who are these star actors in the “can’t do it caucus?” Shockingly (no not really), it’s our very own utilities and a few other kindred spirits.

The utilities main message at the hearing was that Maryland isn’t quite ready to do community solar and we need more time to study solar before embarking on a program. Yes, we’ve already installed 300MW as a state, but they are apparently still learning what this new-fangled technology means. For example, it would seem to be common sense for the utilities to look at their grids and let the solar industry know where good points on the grid to build are and where are points where it should not be built. This advanced knowledge would save a lot of time and energy for solar developers. Sadly, no such maps exist. In the current system, solar developers secure a site, do some work on it, and then apply for what’s called an interconnection agreement with the utility. After months of waiting and money invested, they are told whether they can in fact affordably interconnect their system to the grid at the site they’ve chosen. The utilities need to do better.

When it comes to billing customers for this new community solar program, the utilities fall back on the line they’ve been using for any new program since I started following this stuff back at the turn of the century – ‘we can’t do it.’ These days, it would seem fairly easy to figure out an automated billing system for a few hundred new customers a year. One panelist at the PSC hearing even suggested the utilities could buy a software package off the shelf to do their billing. But no, these stalwarts of the ‘can’t do’ attitude say it’s complicated and they’re not sure they can figure it out. And if they do figure it out, they warned, they may need to raise our electric rates to pay for all the billing contractors they’ll need to hire to implement a new system.

They’re not alone in their desire to prevent solar from becoming too popular. State Senator Hershey (“I love solar as much as the next guy, but……”) and the new Director of the Maryland Energy Administration both chimed in with concerns that basically said community solar could become too successful, and then what will we do?

Thankfully, our local solar industry was well represented, as were environmental advocates and even a representative from the Montgomery County Dept. of Environmental Protection. They all forcefully demonstrated how community solar will help Maryland get more clean energy, more jobs, and more grid stability. Most importantly, they showed how community solar can finally bring the promise of solar energy to the vast majority of people in our state who have not yet had access to it, particularly the low to moderate income community. The PSC commissioners will have to decide which path they want Maryland to follow. Let’s hope they choose the path of the world at Paris in saying yes to a cleaner, greener future for us and our children.

Maryland Takes Big Step Towards Community Solar Gardens

Things are looking good for the future of community solar in Maryland. After months of stakeholder meetings and research, the Public Service Commission (PSC) staff has crafted draft regulations that will spark a robust community solar market in the state. The 26 pages of regulations cover, sometimes in detail, the structure of a pilot program to develop 300MW or more of community solar over the next three years.  For the most part, the draft regulations come out very favorable towards those like yours truly who want this market to take off.

Community solar, or “solar gardens,” is a central solar project that serves multiple customers who cannot otherwise get solar on their roof.  Likely customers include renters, small businesses, homeowners with shaded or old roofs, and low to moderate income residents. It’s this last category of potential consumer that’s the most exciting. Imagine a world where everyone, not just affluent suburbanites, can get affordable clean, renewable energy.

The way the system is shaping up in Maryland, there are a few salient points to keep in mind.

  • Subscribers to the community solar project will get credit for full retail rate for the solar they purchase, meaning they will very likely save money on their electricity bills.
  • Commercial customers can participate, but one large customer cannot account for more than 60% of the project’s output.
  • The utilities will be required to facilitate the subscription by giving customers credits on their electricity bills.
  • There are many consumer protections in the regulations, to ensure a fair market. However, some of the regulations may inadvertently dampen the market and need to be adjusted in the final regulations.

Deeper Green is gearing up to become a big player in the Maryland community solar market. Our aim is to bring solar to the communities that have not had it before.  Stay tuned for more news on that front.

 

 

 

Maryland on the Road to Solar Gardens

Maryland could be taking a big step towards joining the leading solar states in allowing community solar or solar garden projects. The General Assembly passed a bill that instructs the Public Service Commission (PSC) to create a pilot program and set the rules for it by early next year. Once in place, companies will be able to build large solar arrays that can produce power sold to consumers who are not directly connected to the array. The bill still has to be signed by the Governor, but with widespread bi-partisan support, that should not be a problem.

There are many variants to community solar, but in essence it is the only way for the vast majority of the public to gain access to the benefits of solar power. It works like this – a company builds a large solar array and then sells the power that array produces to many different customers (commercial and residential). The power from the array flows into the grid, but the customer gets credit for his/her portion by the process of virtual net metering. Virtual net metering is a process whereby the utility virtually spins a customer’s meter backwards to give credit for energy produced off sight. For example, if my home uses 1,000 kWh of electricity in a month, but I’m buying 700 kWh a month from a community solar project down the road, my meter would get virtually spun backwards and I would only be shown to be using 300 kWh in that month. Because the solar power I’m buying will be cheaper, I’ll be saving money while helping promote clean energy.

Community solar opens the door to solar for the 80% of the market that can’t currently get solar. This would be renters, small businesses that lease their spaces, and homes with shading or poor roofs. It’s an exciting time for Maryland, but the deal is not done. Solar advocates have to participate in the PSC process to ensure that the regulations for the pilot program are fair and enhance rather than preclude solar development.

The Rise of Solar Gardens

At this point, it’s impossible for even the most ardent old school energy guys to hide from the bright sunny truth that solar energy is blazing a new path in the U.S.  It’s easy to choose from a multitude of statistics that support this point. For example, as of the third quarter of last year, solar had made up more than 1/3rd of all new generating capacity built in the country. That would have been unimaginable just a few short years back. Here’s another – 6,500 MW of solar was expected online for 2014, a 36% growth over the previous year.  And one more – the industry is 3x as big as it was just three years ago and growth is only expected to accelerate.

Solar’s growth has been fueled by on-site installations on commercial, government and residential properties as well as utility scale projects. These two drivers will continue to fuel growth, but there’s a third driver that could open up the market to an even broader consumer base. I’m talking about something that’s typically referred to as “Community Solar” or “Solar Gardens.” Simply, a Solar Garden is a solar project that feeds its energy to the grid and is sold to a group of subscribers. In the residential space, a homeowner may take a 5 KW subscription, which would be the size of an average home installation. The beauty of a Solar Garden is that it opens solar to people who live in apartments, don’t have a good roof for solar (ie. too much shade), and maybe don’t have a high enough credit score for a 20 year lease on their own roof. It also opens solar for businesses, faith institutions, and other organizations that don’t directly pay their electricity bills, or are in a lease situation.

It’s a really exciting new development and it doesn’t take new technology to make it happen. It’s just a matter of changing a state’s law to allow virtual net metering, which is a cousin of net metering, one of the key regulations that allows solar to flourish. That’s the process whereby you are able to get credit for excess solar production at your site, meaning that you are figuratively spinning your meter backwards. Virtual net metering works the same except that the solar you are getting is off site. When you use less power than your subscription, you would be credited for the excess power.

If you don’t think this could be a big deal, just think of all those apartment dwellers in New York, Washington, DC, San Francisco and other cities. Combined with the non-residential space, this would millions of new potential consumers to the solar market. And it’s not just wishful thinking. Colorado, Massachusetts, and Minnesota already have Solar Gardens or Community Solar laws, and the market is hot, as one recent headline noted, “In Minnesota, community solar market starting to take off.” Maryland has a chance to adopt an authorizing bill for Community Solar this year.  Other states are also considering action.

The momentum for Solar Gardens is going to build over the next couple of years. It just makes too much sense from a policy and consumer perspective. A simple change of net metering to include virtual net metering is all it takes in a state that already is favorable to solar. The bright sunny truth of a rapidly growing solar market is about to get even brighter and sunnier as Community Solar opens the door to millions of new solar consumers.

Purchasing Clean Energy without Getting Burned

Environmentally conscious consumers know that they can “vote with their wallet” by purchasing green goods and services, and by supporting socially conscious businesses. What many don’t know, unfortunately, is how to best choose their options. This is especially true in the clean energy space where a company’s marketing efforts, and the confusion of the marketplace may cause them to make unwise choices.

Presently, there are four ways that are most common for buying clean energy. You can install a solar system on your roof or property, purchase green electricity, purchase Renewable Energy Certificates (RECs), or invest in energy efficiency upgrades (“negawatts”).  Each option comes with its own benefits and costs.  I’ll start by looking at purchasing green electricity.

There are a few pitfalls to avoid when deciding to buy green electricity from a retail electricity supplier. I’ve highlighted a few right here:

Certification and Verification

When you switch to green electricity for your home or business, nothing material will change for you and there’s no physical evidence of your purchase such as a piece of equipment. Sure, you have a contract that promises you green electricity, but that is not enough assurance for many people. One good way to know that you are actually getting the green power you are paying for is by making sure you buy green power that is certified and verified by Green-e. The folks who run Green-e require suppliers to demonstrate that the green energy they are selling matches the green energy they are buying. This is done through a third party audit. I know of no other certification and verification processes that meet the high standards set by Green-e , though they may exist.

Teaser Rates

I heard one clean energy company executive on the radio telling the audience that switching to wind power from them would cost $8-$12 a month. That sounds reasonable until you dig a little deeper and learn that they are offering a three month “teaser” rate. The affordable teaser rate of 9.7 cents/kwh or so expires after three months, at which point the consumer is subject to incredible price spikes through a variable rate. What might those spikes look like? The company’s fixed price deal, which tells you the kind of rate they think they need to make off their customers over the course of a year, ranges from  12-13.5 cents/kwh. That’s the difference between paying $8-$12 a month or $40-$50 a month. When you put it in annual terms, you really get the picture. With the higher rates, you could be facing an electricity bill that is as much as $600 more than you would otherwise pay. That’s for an average home. If you are a bit wealthier than average and have a larger home, chances are your annual bill could hit close to $1,000.

Avoid “teaser” rates at all cost. Despite the pleasant-sounding rationale you may hear from the energy company, it will end up being a bad deal for most of you. Why? Because as an executive at one of these companies told me, they really offer the teaser rate for one reason – they know that 80% of their customers will forget to keep checking their energy rate after three months. That’s right. They have it down to a science. They know that you will sign up thinking that after the teaser is over you’ll just switch elsewhere, but that 80% of you never do.

Dig Deeper

Another aspect of disingenuous marketing you may see is a company that purports to be the little guy fighting the rest of the “big greedy” energy world. Like all deception, there’s probably a grain of truth to it. But do consumers know the fat profit margin these guys are getting for the energy they are selling you? In order to understand this, you have to understand the main components that make up the cost of green energy. Back to that 13.5 cent wind power example. In this case, the green part of that power, the part of that rate that actually goes to the wind farm is likely around 1.5 cents.  Yup, that means you are paying 12 cents/kwh for brown power, which is the exact same power your utility offers at rates as low as 8.5 cents/kwh.  So why such a huge discrepancy? Two words – Profit Margin. The company probably makes in the range of 50%-%70 margin on the product they sell you. I say probably because I’m making an educated guess based on market conditions. I have not seen their books. There are other smaller factors as well, such as cost of capital, but I believe margin makes up the largest chunk of the difference.

Don’t get me wrong, I’m all for profit and the competitive free market. What I think is morally and ethically unjust is sticking your customers with exorbitant rates in order to feed the profit margin needs of your investors all under the guise of being progressive. A company is either a consumer friendly, 100% honest and transparent company that offers the most competitive rates it possibly can or it isn’t. I think in order to be the former, a clean energy company has to choose steady organic growth over VC -backed hyper growth. This means they should not try to make exorbitant profits on the backs of their customers.

Another example of a questionable marketing practice is a company that sells green power among a suite of products, but then works to prevent clean energy laws from passing at the state or federal level. Their green power products are probably legitimate, I’m not questioning that. But if your intention is to “vote with your wallet,” than you may be voting for the wrong candidate. A portion of the dollars you spend with them goes to lobby against the very thing you are trying to promote.

Conclusion

The thing all of these practices have in common is their reliance on uneducated and/or overstretched consumers. It takes a little homework and a little more time to find out the truth behind these marketing efforts. Or it takes the ability to say “no” to certain products that you know are designed to take advantage of your lack of attention (ie. variable rate or “teasers”). Even in this case, I don’t want to paint too broad a stroke here. There are some variable products that are tied to the variability of the utility standard rates. Those are fine because they are actually market responsive, and you know the premium you are paying every month. But this last point just serves to prove once again how much a consumer needs to be educated before venturing into the clean energy field by purchasing green power from a retail electricity supplier.

Food as the New and Improved Pharma

The old saying “you are what you eat,” seems to have more often gone in one ear and out the other for most Americans. In modern society, there has been a serious disconnect between the quality and nutritional value of the food we eat and our health. That may finally be changing. A new branch of medicine known simply as “culinary medicine” seeks to put diet right at the heart of standard medical care. Tulane University even has a Center for Culinary Medicine. While it focuses on the traditional nexus of food and medicine (diabetes, obesity, heart disease), I’m hopeful that this is the start of a much broader look at this issue. That seems to be the approach of a new web site called “Dining with a Doc” that “celebrates food as medicine.”

Beyond connecting our diet to our health, we need to connect our diet to our planet. The impact of our meat-centric American diet on the environment is astounding. Studies show that more greenhouse gas emissions are produced from our industrial food chain than from the entire transportation sector combined. The optimal food choice for the planet is a plant-based choice. However, we don’t all have to become vegans overnight to make a difference. Just as switching to 25% wind power is better than nothing, reducing your consumption of meat and animal products by 25% is a great start.  Instead of a vegan diet, we can call this an “Eco Diet.”

Once you get it, you’ll get it. Making smart food choices is good for you and the planet you live on.  An Eco Diet cleans up your body and cleans the environment.  Need help? Just find a good nutritionist or a culinary doctor and you’ll be on the right path.

Cleaning Our Air and Supporting Our Economy

ALA PA LogoChoose PA Wind Logo

Pennsylvanians hear a lot about energy choices, especially when it comes to offers to save money. But perhaps a more important message is getting lost in the marketing noise of the energy world. Pennsylvanians have the option of choosing energy that cleans our air and brings economic development right here in the commonwealth. Through a new campaign called ChoosePAWind, consumers in the PECO territory can sign up for Pennsylvania wind power at affordable rates.

The program is not only promoting local clean, renewable wind power, it seeks to build community support for green initiatives. Participating organizations earn donations to their groups for every enrollment they get. The double benefit of this is the ability to directly support energy sources that clean our air and help the local economy while also galvanizing your own community into action.

At the American Lung Association, we know that there’s a direct link between the pollution coming out of fossil-fueled power plants and lung disease. Decreasing pollution from these power plants means lowering the amount of nitrogen-oxide, sulfur dioxide and particulate matter that we all breathe. Doing this will lower incidents of pre-mature death, asthma, and other chronic conditions related to poor air quality. There are several ways to make this happen, from federal or state legislation, to simple voluntary actions such as switching to wind power. The more people that choose Pennsylvania wind, the better our air will be.

According to the American Wind Energy Association (AWEA), Pennsylvania has 25 wind energy projects, totaling more than 1,300 megawatts of production, ranking us 15th in the nation.  They produce enough energy to power 330,000 Pennsylvania homes. The wind industry has put more than $2.7 billion in capital investment into our state and pays landowners $3.6 million annually in lease payments. The tax dollars from wind contributes to the public coffers, while attracting new manufacturing facilities as well.

Keeping your energy dollars local, cleaning up the air you and your family breathes, working with your community to promote sustainability – these are the key benefits of simply choosing Pennsylvania wind.

Deb Brown

President & CEO

American Lung Association Mid Atlantic

Jim Spencer

EverPower CEO and ChoosePAWind Founder