Let’s boost solar with smaller subsidies

Cost of incentives falls disproportionately on the poor

LEGISLATORS ARE HAVING A HEATED DEBATE over the subsidies that flow to those who install solar photovoltaic (PV) systems. That debate has been largely portrayed as dividing environmentalists and solar companies versus utilities and some business leaders.  Solar advocates seek an immediate lifting of the “net metering caps” that limit the number of PV systems that can contact to the grid and enjoy net metering credits.  But the important preliminary question is whether ratepayers – especially low-income ones − are being unfairly burdened by the current solar subsidies established by the Legislature and state agencies. If so, we first must reduce the cost of existing subsidies, especially the “solar renewable energy credits” (SRECs). There are much less expensive ways to obtain the solar generation we absolutely need to address the ill effects of climate change.

I was on the Commonwealth’s Solar Net Metering Task Force that looked at the benefits and costs of solar PV. While the environmental benefits are obvious and important, what we learned about costs was eye-opening. As a result of the current solar legislation and policies, National Grid and Eversource utilities, which serve about 90 percent of the state, will spend almost  $600 million combined in 2015 due to net metering and SRECs (the latter causing the lion’s share of the cost), and charge those costs to ratepayers. Yet that $600 million procures for Massachusetts only about 2 percent of the kilowatt hours we use.  Translated into real world impact, the average residential electric customer pays about $10 a month more for that 2 percent of electricity coming from solar.

Harak Charlie

The troubling irony is that there are much cheaper ways to procure clean solar energy. In Connecticut, Eversource and United Illuminating have competitively procured solar for 7-11 cents/kWh, compared to paying 45 cents and more in Massachusetts. We have by far the most expensive solar program in the Northeast. Why pay 4 or 6 times more for the very same clean energy?

As I spoke with others on the Net Metering Task Force, I was surprised that virtually everyone, solar proponents included, agreed that the current solar subsidies are too high.  I am troubled that low-income families are disproportionately picking up the tab. To install rooftop solar, one needs to own a roof (most low-income households are renters) and usually have up-front capital to purchase the equipment, or strong enough credit to borrow. “Community solar” projects, which involve having multiple households share in the output of a larger PV system, can serve low-income families, and are a great idea.  But they will never reach more than a sliver of these families.  Instead, most will simply bear the subsidy costs.

There is a general consensus that the current subsidies are too high – both the Senate solar bill and Gov. Charlie Baker’s proposal imply strong agreement with this, by directing the relevant state agencies to reduce the current rich subsidies over the next few years. In fact, net metering caps – which tend to limit the amount of solar eligible for subsidies – were originally adopted precisely because the solar subsidies were seen as potentially too much for ratepayers to bear if a large number of PV systems were installed.

But both the Senate and governor’s bills would lift the current net metering caps before the subsidy problem is fixed. Under either bill, 700 megawatts (roughly equal to the size of a large central power plant) of additional solar would be added under the current, expensive net metering and SREC rules. With that much more solar PV connected to the grid, a customer with average consumption could pay $15 and more monthly for solar subsidies, yet solar PV would still only provide a very small fraction of the electricity we use.  This would make bills for low-income customers even less affordable.

Meet the Author

Charlie Harak

Senior energy attorney, National Consumer Law Center
While the pending solar bills move in the direction of setting fair and reasonable prices for PV-generated electricity two or more years down the road, the legislature needs to reduce the price we pay for solar before letting hundreds of megawatts of additional PV systems connect to the grid under the current high subsidy rules.  If we did that, we wouldn’t have to worry about net metering caps because we’d be paying the right price for solar. Why pay more?

Charlie Harak is senior energy attorney at the National Consumer Law Center in Boston.