March 9, 2014

Rhode Island Lawmakers Look to Expand Renewable-Energy Program

State lawmakers have filed legislation to expand the program that has been most effective in spurring the development of renewable energy in Rhode Island.

The bill proposes a five-fold increase by 2020 of the program that awards long-term power contracts to solar arrays, wind turbines and other types of clean energy, from the current 40 megawatts in nameplate capacity to 200 megawatts.

The increased size would equate to about 11 percent of the total electric generation capacity in Rhode Island. By comparison, about 8 percent of capacity in Massachusetts, a clean-energy leader, currently comes from renewable sources, while the share in Connecticut is about 4 percent. Those states will continue to increase their supply of power from renewable sources as well, but the proposed new target demonstrates Rhode Island’s ambition.

“In reality, we need to step forward,” said Rep. Arthur Handy, chairman of the House Environment and Natural Resources Committee and a lead sponsor of the legislation.

He argued that the expansion of the “distributed generation” program is hardly aggressive, but will instead allow Rhode Island to catch up with other states that have moved earlier and faster to develop renewable power.

“I think it’s a reasonable, steady increase,” the Cranston Democrat said.

Since Governor Chafee took office, the state has changed strategy in developing new sources of energy in Rhode Island, moving from a previous focus on big offshore wind farms to a policy of also supporting many smaller renewable-energy projects. While renewable-energy prices are generally high, supporters say that the industry will generate local jobs and can act as a hedge against increases in prices for power from fossil fuels.

The new bill was introduced last Thursday in the House by Handy and Rep. Deborah Ruggiero, the lead sponsor of the legislation that created the program as a pilot initiative in 2011. It has the support of National Grid, the state’s dominant utility, as well as environmental groups and clean-energy developers.

It not only extends the lifetime of a program that is set to expire at the end of 2014 and dramatically increases its size; it also opens it up for the first time to the residential market. Architects of the bill believe this could lead to a surge in new installations on homes akin to what has occurred in solar hotbeds such as Massachusetts and New Jersey.

“We really believe that is going to launch the smaller market,” said Ronald Gerwatowski, attorney for National Grid.

The distributed generation program takes its name from its goal: to distribute sources of energy throughout the state. Unlike programs in other states, a board sets ceiling prices that developers can charge for renewable energy. The prices vary based on the type of system and its size by taking into consideration the costs of individual technologies, returns on investment and economies of scale. Projects bid within their classes with prices that come under the ceiling. The winning bids are rewarded with 15-year contracts with National Grid that are key because they help developers get financing.

While the program aims to support a variety of projects, the state’s once-moribund solar power sector has been the main beneficiary. By the end of 2011, Rhode Island had a meager 1.2 megawatts of installed solar capacity. At the end of 2012, the state had doubled that number. As of today, 29 solar projects totaling 21.65 megawatts have either been built or are under contract.

Rhode Island now ranks 29th in terms of solar capacity compared with other states in the nation, according to the U.S. government’s National Renewable Energy Laboratory. And jobs in Rhode Island’s solar industry have increased, rising from 210 in 2012 to 360 last year, according to a survey released by The Solar Foundation, a Washington, D.C.-based nonprofit.

Frank Epps, the head of Middletown-based rTerra, which has won three contracts for solar arrays, said that none of his proposals would have gone forward without the program. Hunter Strader, the regional representative for Colorado’s Bella Energy, said the company opened an office in Providence in part because of the Rhode Island program.

The most common complaint from developers is that the program is simply too small. Every application round has been oversubscribed.

“I’m entering the lottery, so to speak,” said Paul Raducha, a partner in Newport Renewables. “It’s hard to get someone committed to fund. Their attitude is ‘Why am I going to take a shot in Rhode Island if I don’t know if the project is going forward? I’ll put my money in Massachusetts.’”

But competition has been good for the state’s electric ratepayers. The rates paid to solar projects are still higher than those paid to fossil fuel-powered generators, but they have dropped in half to 14.8 cents a kilowatt hour in 2011 from 31.6 cents in 2013, according to the state Office of Energy Resources. Additionally, Rhode Island’s rates are nearly half what they are in Massachusetts.

The legislation was crafted by National Grid’s Gerwatowski; Jerry Elmer, staff attorney with the Conservation Law Foundation, a regional environmental group; and Janet Besser, vice president for policy and government relations for the New England Clean Energy Council, a Boston-based industry group.

“The bill is a product of a long effort by disparate stakeholders who don’t always work together so cooperatively,” said Elmer, who has been contacted by energy officials in California, New York and other states about Rhode Island’s program.

The bill proposes technical changes, such as a switch from contracts to guaranteed tariffs of 15 or 20 years. The result is the same, but the amendment would allow National Grid to no longer categorize the contracts as a liability in its bookkeeping.

But the key provision is a gradual growth in size from the current 40 megawatts, with an additional 25 megawatts in the first year, 40 megawatts in each of the next three years and whatever remains of the target capacity in the fifth year.

“Right now we have companies in Rhode Island that are doing all their business in Connecticut and Massachusetts,” Besser said. “At the new scale, we can really see development taking off in Rhode Island.”

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