Demand charges, storage, co-ops, deregulation and more!
It's been another year on the solar coaster, and Vote Solar
has been following every twist and turn.
Here’s our view of the 10 top solar trends of 2016.
1) Utilities are losing on demand charges and fixed charges
when advocates fight back
It’s not news that utilities around the country have been
trying to change tariff structures in ways that undercut the economics of
rooftop solar. What you might not know is that they are largely losing in this
effort -- especially when solar and consumer advocates fight back.
In Arizona, every utility filed general rate cases
requesting mandatory demand charges for residential ratepayers. The judge in
the first case, brought by UNS Electric, was persuaded by our testimony
that mandatory demand charges are unjustified and bad public policy. We expect
similar outcomes for Arizona Public Service and Tucson Electric Power, which
will go a long way toward saving one of the country’s most important solar
markets.
We also intervened in Massachusetts with Earthjustice when
National Grid tried to increase fixed charges. The judge ruled that “the
Department is not persuaded that a cost-shift from DG customers to non-DG
customers, in fact, exists.” And in Illinois, Exelon and ComEd tried to pass a
bill with mandatory demand charges for residential customers, only to drop that
element after overwhelming pushback -- and the governor’s spokesperson calling
it “insane.”
The battle is far from over, and demand charges have had
severe consequences for both solar progress and consumers in places where
they’ve succeeded. In Kentucky, the state attorney general called Glasgow
Electric Plant Board’s demand charges “harmful,” with the potential of forcing seniors to leave their homes and taking a toll on small businesses.
2) Nevada comes back from the ashes
Last year, the solar industry suffered its biggest loss ever
when the Nevada Public Utilities Commission axed the state’s net metering
program, leaving 32,000 solar owners underwater on their investments and
triggering widespread layoffs in the state’s rooftop solar industry. Since
then, we’ve made steady progress getting the Silver State’s solar back on
track. After months of rallies, organizing and outraged headlines, the PUC
agreed to a settlement reversing their decision and grandfathering existing
solar owners onto net metering rates.
The next step is the 2017 legislative session, where the
legislature has flipped and clean energy advocates are in leadership positions,
the governor has agreed to sponsor legislation restoring net metering, and
advocates will be pursuing community solar programs and a large increase to the
state’s renewable energy standard.
3) Storage is the new solar
Similar to solar’s arc over the past decade, storage is
moving from pilot programs to the business-model stage. Utilities in California
are now procuring storage as part of meeting local capacity requirements.
Massachusetts has stepped up in a big way, first with a report showing that the
top 10 percent of hours made up 40 percent of electricity costs (which
translates into a huge opportunity for ratepayer savings), then with a new 600-megawatt storage mandate. And FERC is getting in on the
action too, with a recent proposal to guide how storage can participate
in wholesale markets.
While EVs are helping bring down the cost of lithium-ion
batteries, there’s a lot of interest in other storage technologies, especially
as policies drill down on the question of what problems storage is meant to
solve. Effective policy creates a transactive space connecting customer and
utility problems with clean and effective solutions, and while that effort is
still nascent, the potential is huge and it is happening now.
4) Rural co-ops come into the fold
Rural co-ops cover about 70 percent of America’s geography
and serve 12 percent of ratepayers. That’s why it was such a big deal when a June ruling from the Federal Energy Regulatory Commission opened
the door for member-owned co-operatives to buy local renewables instead of
being forced to buy fossil power -- according to the Rocky Mountain Institute,
a potential 400-gigawatt market. Investor-owned utilities are driven by
profit prerogatives, while co-ops answer to member-owners, which is one reason
we’ve seen leadership with community solar, from Wisconsin to Texas. For bonus creativity and consumer-friendly points,
check out Minnesota's Steele-Waseca co-op,
which gives customers an 85 percent discount on solar if they participate in
the co-op's hot-water-heating demand management program.
5) Sun rises in Florida
The Sunshine State has been a chronic underperformer when it
comes to solar. But that may be about to change. One of the longstanding
roadblocks in the state has been the fact that third-party PPAs, one of the
most popular financing mechanisms, are banned. But there are other ways of
financing solar, and they are coming to Florida. Rooftop heavyweights SolarCity
and Vivint have both entered the state with loan products. And
property-assessed clean energy (PACE) financing providers are launching
programs -- Renew Financial is open
statewide, and Renovate America is in Leon County now, with availability in
the whole state coming soon.
PACE financing programs have taken time to deliver on their
promise, but in the past few years, they have funded ~$2 billion in residential
clean energy upgrades in California. Florida is experiencing a sea change in
finance options, making it easier for customers to invest in solar and energy
efficiency.
There are some very interesting political developments, too.
In August, voters passed
a ballot initiative, by a 73 percent margin, in favor of property tax
abatement for solar. It now goes to the legislature for implementation, and
when it is in effect, it will mean about a 20 percent reduction in solar costs.
And in November, voters defeated
a deceptive anti-solar ballot initiative that utilities had spent $25
million promoting. It’s hard to overstate the impact of that victory -- in a
major expose, utility front groups were caught on tape bragging about fooling
voters, and in the run-up to the vote, nearly every newspaper in the state
editorialized against the utilities' shady practices. In a state where
utilities are used to having their way, solar has established itself as a real
political issue.
6) Solar becomes a real electoral force
Did you know that solar helped determine the outcome of
Nevada’s Senate race? Polling
shows that Nevada voters found that Joe Heck’s anti-solar views were a
reason to vote against him. In two ballot initiatives in Florida, despite being
massively outspent, solar came out the big winner. Supermajorities of Americans
want to see more solar, and as state battles heat up, smart politicians are
figuring out that solar is a winning issue.
7) Mega-solar for large corporates
Google. Facebook. Amazon. What do these companies have in
common? They are some of the most admired and profitable companies in the
world, they are massive energy users, and they all have commitments to 100
percent renewable energy. Increasingly, these companies are subverting the
utility mix to access power from off-site solar farms via green tariffs. Amazon recently
signed a 120-megawatt deal in Virginia. Facebook’s new data
center in New Mexico will be served by three new solar farms. Google announced it will hit
100 percent in 2017.
This trend has major consequences for the industry, in terms
of new sources of demand, and for regulatory structures, which are increasingly
being reconfigured to accommodate energy choice.
After all, what’s good for the Google is good for the gander
-- why shouldn’t everyone be able to access 100 percent renewables?
8) De-reg and re-reg
There was a time when the proponents of deregulation
included companies with a lot of fully amortized coal and nuclear assets, and
renewable supporters preferred regulated markets where long-term public
benefits could be considered by policymakers. This year, in a turnabout, we’ve
seen coal and nuclear interests in previously competitive markets demand
bailouts -- and a return to regulated markets. The FirstEnergy CEO said: “We will exit competitive
generation and become fully regulated."
Meanwhile, wind is thriving in deregulated Texas. ERCOT expects as much of 27 gigawatts of solar over
the next 15 years, and retail electricity suppliers who really understand (and
are exposed to) volatility are voluntarily offering full retail net metering. In Nevada,
casinos paid $127 million to divorce their utility and buy
power competitively for the express purpose of accessing more renewables, and
now other casinos and data centers are following suit. In November, Nevada
voters overwhelmingly approved a ballot initiative to break
up the monopoly utility (notably, the one that led the charge to shut down the
rooftop solar industry in the state) in favor of retail choice. The times, they
are a-changin'.
9) PURPA takes a few punches
There’s an emerging trend among utilities across the country
to try to undermine a decades-old law called the Public Utility Regulatory
Policies Act, or PURPA -- a law that has paved the way for policies that have
brought renewable energy into the mainstream in the U.S. PURPA was created to
encourage states to reduce dependence on fossil fuels by requiring that utilities
purchase renewable energy generation and efficient co-generation when those are
equal to or cheaper than the cost of building a new power plant. As solar and
wind have become increasingly cost-competitive with conventional fuels, PURPA
is more relevant than ever. To date, PURPA has driven a
whopping 16 gigawatts of new power capacity from qualified renewable
and co-generation projects. Now that the law is working as intended, we’re
seeing a lot of efforts to undermine it at the state level, such as reducing
contracts to unfinanceable terms, suspending tariffs and denying contracts, and
creating unnecessary interconnection hurdles. We’re gearing up to fight for PURPA’s principle, and the
promising market it provides.
10) Trump
In a nation that’s growing more and more divided, the issue
of expanding solar might well have the most overlap of support between Clinton
and Trump supporters, polling at 91 percent and 84 percent, respectively. While Trump’s
cabinet picks clearly don’t share the same outlook, this popular support does
matter in the venues where most electricity policy is set: the states. If solar
survives the upcoming comprehensive tax reform with the deal Congress struck
last year to gradually reduce the ITC still intact, then the industry will be
in good shape, with overwhelming popular support and very favorable economics
and job-creating possibilities. But the industry will have to duke it out in
statehouses and public utility commissions around the country. Trump’s
election, then, means that state-level policies become even more important in
2017 and beyond.
The apocryphal Chinese curse "May you live in
interesting times" seems particularly apt for the solar industry as we
head into 2017. But really, is there anything else you’d rather be doing than
this? We’re at the epicenter of radical changes in one of the biggest and most
important industries on the globe, and there’s no other place we’d rather be.
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