As the legislative season heats up again in Connecticut, with a session scheduled to commence in early February, some energy industry lawyers, policymakers and leading Legislators themselves have been talking over the last few weeks about what Connecticut should do to improve the deployment of renewables generally and solar in particular. There seems to be more recognition that, for Connecticut to achieve its broad greenhouse gas emission reduction strategies and climate change mitigation goals, more needs to be done to promote investment in renewables in the state and, if green jobs can be created along the way, all the better.
A question that keeps coming up in Connecticut is how New Jersey, which has a similar climate and is not even in the top-ten list among states with respect to the intensity of sunshine, could achieve status as the state with the second largest quantity of installed solar photovoltaic capacity, second only to California. If you look at per-square-mile or per-capita statistics, New Jersey can even boast that it has the most installed solar projects in the U.S.
So what has New Jersey done to promote solar PV?
After implementing one of the more aggressive renewable portfolio standards (RPS) in the country as part of the Energy Master Plan, with its mandate that 22.5% of the energy supply be generated from renewable sources by 2021, the NJ RPS also contains a solar “carve out” of 2.12% by 2021. This is the amount of energy supply required to come from solar PV. The state also decided to wean itself from the grant-based program except for residential and small commercial on-site solar P/V installers, because the available grant funds alone would not support the growth needed to achieve the RPS and solar carve-out. And so, the New Jersey Board of Public Utilities adopted a rule that instituted a massive increase in the “alternative compliance payment,” or ACP, for solar from $350 (the amount for other renewables) to initially $711 per megawatt hour. This is the amount that has to be paid into the fund if load-serving entities do not have enough solar energy in their portfolios. And hence, the solar renewable energy certificate, or SREC, was given a massive increase in valuation. Since SRECs typically trade at 75% to 80% of the ACP, market values for SRECs rose to the $600 to $650 range.
Especially when these state incentives are combined with the federal renewable energy investment tax credit and accelerated depreciation allowed, the market signals sent in New Jersey to the solar industry have attracted business investment on a grand scale, created green jobs and market-based renewable investments along the way.
In my view, Connecticut needs to take similar steps. The following strategies would help Connecticut facilitate deployment of solar photovoltaic installations in a market-based approach that reduces the reliance on direct governmental grants, promote the creation of green jobs, and attract private capital investments. Here’s my Top-10 List:
1. Create a Solar PV Carve-out within the Class I RPS to mandate separate solar RPS.
2. Create separately-recognized solar renewable energy certificates, or SRECs.
3. Substantially increase the alternative compliance payment amount for solar PV.
4. Allow electric distribution companys (EDCs) to conduct auctions or otherwise conduct a process to acquire long-term SREC contracts (+/- 15 years), but mandate transparent pricing to send market signals in real time.
5. Allow EDCs and capacity and peaking generation contractors to install on-site solar (with reasonable size limits to protect viability of non-utility market for projects) and recover project costs through rate base. (For private wholesale generation sites, this can be done through a cost of service contract for differences with an EDC.)
6. Establish one-stop-shopping with the Connecticut Department of Public Utility Control or other capable agency to certify completion and verify qualifying amounts of SRECs generated by a solar project installed in Connecticut with transparent market prices to facilitate open trading of SRECs.
7. Authorize Connecticut to negotiate a compact or memorandum of understanding with New Jersey and other states with similar programs to allow for the cross-border recognition and free trade of SRECs (at least through other states that comprise the Regional Greenhouse Gas Initiative (RGGI) or Northeast regional transmission organizations (i.e., ISO New England, ISO-NY, and PJM) with comparable GIS tracking systems).
8. Adjust real and personal property tax law to ensure that solar improvements are not taxed.
9. Revise zoning law to define solar as a beneficial use such that solar projects cannot be denied without substantial evidence in a written record finding that a solar project is not a beneficial use in a specific case. Consider establishing exclusive jurisdiction for larger scale solar PV projects with the Connecticut Siting Council for projects equal to or greater than 1MW to expedite siting by petition for declaratory ruling.
10. Allow for unlimited size of net metered solar projects behind customer meters provided that system size cannot be greater than customer’s on-site electricity requirements, subject to standard interconnection agreement with EDC following EDC confirmation of no adverse impact on distribution system.
Please write in on this blog and let me know what would be on your wish list to help facilitate the deployment of solar and other renewables in Connecticut.