Report: Solar subsidies cost $1 to $1.50/mo.

Impact on rates to peak in 2020 at 2.5 to 3.5 percent of residential customer’s bill

A consultant’s report commissioned by Massachusetts officials indicates the state’s chief solar energy subsidy will cost residential electricity ratepayers an average of $1 to $1.50 a month over the next three decades, or under a worst-case scenario, $2.50 to $3.50 a month.

The report spreads the cost impact out over 32 years to cover both the installation of solar facilities and their expected economic life of 25 years. The report suggests the rate impact of the solar subsidies will reach its peak in 2020, accounting for 2.5 to 3.5 percent of a typical residential customer’s bill, before steadily declining and generating savings in outlying years.

Dwayne Breger, the director of renewable and alternative energy development at the state Department of Energy Resources, said other sections of the report provide solid evidence that the Patrick administration’s solar subsidy program generates environmental benefits in the form of greenhouse gas reductions, jobs, and fuel diversity at relatively low cost.

“Obviously it comes at a cost,” Breger said. “I don’t want to diminish what we’re asking of ratepayers, but from our perspective it’s a worthwhile investment.”

The estimated monthly cost of the solar subsidy is roughly the same as the Patrick administration’s $1.50-per-month estimate of what Cape Wind, the proposed wind farm in Nantucket Sound, will cost ratepayers if it ever gets built.

Subsidies have helped Massachusetts become one of the hottest solar markets in the country. Still, solar accounts for only a tiny portion of electricity production in the state. Breger and other state officials are putting together a subsidy program designed to boost solar installations from the current level of about 400 megawatts of installed capacity to about 1,200 megawatts. Actual output will be far less – around 420 megawatts during peak load conditions, according to the study – because solar facilities only generate power when the sun shines. For comparison purposes, the output of a proposed natural gas plant in Salem is 700 megawatts.

A spokesman for Attorney General Martha Coakley, who has been urging Patrick administration officials to complete the cost study before moving ahead with their latest solar subsidy plan, declined comment, saying the report was still being reviewed.

Officials at NStar and National Grid, who have been raising concerns about the escalating cost of the state’s renewable energy subsidies, also declined comment.

Mike Hachey, vice president for regulatory affairs at TransCanada, which sells electricity in Massachusetts, said he believes the consultant’s report is flawed. Hachey, who has been critical of the cost of the state’s renewable energy subsidies, said the addition of more solar installations will tend to back out far less expensive onshore wind power and produce no additional environmental benefits. “There’s no way on this green earth that you can do that and show savings,” he said.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Hachey also questioned the report’s assumptions that increased deployment of solar power will significantly reduce the need for new power plants and new transmission and distribution facilities, saving ratepayers hundreds of millions of dollars.

Hachey said he believes the state’s renewable energy subsidies, along with the region’s cap on carbon emissions, expected increases in electricity transmission rates, and rising clean energy mandates, will cause Massachusetts to have the highest commercial and industrial electrical rates in the country behind Hawaii. He said he favors exempting industrial power users from the higher renewable energy costs to keep the region economically competitive with other states.

The state report was prepared by La Capra Associates, Sustainable Energy Advantage, Meister Consultant Group, and Cadmus. The consultants also prepared reports on other aspects of the state’s solar program as well.