Is Solar Industry At Risk?
Climate change and the need for eco-friendliness have triggered demand for sources of alternative sources of energy. One such source is the sun. Without a doubt, solar energy is becoming more popular among people.
Unfortunately, solar energy is facing one major challenge; the complexity associated with installing solar panels on the house’s roof. Many times, people do not even have the option of installing solar panels on their roofs simply because of three reasons; wrong direction, too old or too much tree shading.
Several studies have indicated that the percentage of residential buildings that can host solar panels stands low at between 22% and 27%.
Luckily, experts have been able to come up with a solution – community solar. This solution advocates for the building of off-site solar arrays that are capable of producing enough energy to supply hundreds of users (including households and small businesses) within a radius of 30 miles. Community solar is not only affordable, but it is also more accessible to the ordinary citizen.
The best thing about community policing has been the fact that even customers whose roofs cannot host a solar panel now have access to a way of saving on their energy bills by using solar energy from offsite solar arrays. Massachusetts has been the lead-light in successfully implementing the community solar initiative.
According to reports, by the end of 2015, the state was ranked 6th regarding installed capacity and was producing enough solar power for 191,000. The Massachusetts solar power industry has been so successful that there are now at least 448 solar companies in the state with employees being more than 15,000. In addition to that, the Massachusetts solar industry grew by 10% in 2015 with investments hitting $803 million.
However, the Massachusetts solar industry legislation has three major short-comings that are threatening to not only slow down, but also curtail the progress of the solar industry in the state.
First and foremost is the net metering initiative that the state has been using since the 1980’s. Net metering allows households and other customers to generate their power for getting credits for the excess energy produced and saving on their electricity bills.
One limit of this initiative, however, is that Massachusetts has set caps on the amount of energy that is legible for net metering for both the public and the private sector. As at April 2016, this stands at 7% for the public industry and 8% for the private industry.
Once a distribution company has reached its cap limit, it is forbidden from allowing any more customers to join the net metering tariff plan.
Community solar has been particularly hard hit by this rule and it has had the effect of stalling at least 500 new community solar projects worth millions of dollars.
In fact, Massachusetts has had to increase the net metering caps three times with the latest being in April 2016. Surprisingly, the Massachusetts solar industry has been growing so fast that the cap limits have already been reached again meaning even more stalled projects.
For the solar industry in Massachusetts to continue with its impressive growth, there is the need to raise these caps with the long term in mind. Experts suggest that the state should consider doing away with the net metering caps completely.
This would be a long-term solution that would encourage the development of a diverse and competitive solar industry in Massachusetts.
Secondly, one of the legislator changes made in April 2016 was that the net metering credits for the excess power generated would be cut by 40%. This change does not impact residential and municipal markets in any way. However, it does impact off-site projects such as those of the community solar initiative.
According to this change, any new private solar net metering facilities that come up after Massachusetts solar power production has reached 1,600MW will be eligible to market net metering credits that are worth only 60% of ordinary net metering credits.
Nevertheless, the method of calculation has remained the same. While this will not affect existing community solar facilities immediately, it will eventually affect them 25 years to the date of receiving the authorization to interconnect.
One of the programs that Massachusetts has implemented is the Solar Renewable Energy Certificates (SREC) plan. This is a form of financial incentive to foster and encourage the development of solar projects.
In this program, solar system owners are allowed to sell credits to electricity suppliers who have not met the legal requirements for renewable energy production. The problem is that the SREC-II reached its cap limit earlier on in February 2016 and although the Department of Energy Resources (DOER) approved an extension for particular projects, it still hasn’t developed a new SREC program to replace the outdated one. The effect of this is that numerous solar power projects have stalled.
DOER has a responsibility to design and implement a new program that will replace SREC-II program that reached its cap in February 2016. The only way DOER can ensure that investments continue pouring into the solar power industry in Massachusetts is to develop this new SREC program in good time and with the community solar initiative in mind as it represents the larger market. It is crucial for DOER to appreciate the fact that community solar has numerous benefits to its name and has the potential for enormous economic gains that are way above the rooftop solar sector.
Policymakers must also warm up to the community solar initiative especially during this time when Massachusetts is struggling with making energy more affordable and more accessible to the masses while meeting the legal threshold for emission reduction.
Legislators must particularly shift from focusing on incentives meant to encourage the installation of on-site residential solar panels and instead pay more attention to incentives that will open up the community solar industry and encourage its growth.
It would also be important for the state of Massachusetts to put in place an awareness creation program that would enlighten the masses on the benefits that they stand to gain from community solar and solar power in general. If Massachusetts fails to curb these shortcomings in its solar industry legislation, it risks crippling an industry that has so far, grown in leaps and bounds.