As sticker shock for solar power looms, Maine lawmakers consider options

Two bills under consideration seek to balance the desire for solar incentives with the burden of high electricity bills.

By Tux Turkel

Staff Writer

Two bills now before the Legislature are aimed at reducing future sticker shock for electricity customers, without completely eroding the incentives that have attracted hundreds of millions of dollars in solar investment from across the world in the past few years.

If passed, the bills, L.D. 634 and L.D. 1026, would amend Maine’s net energy billing rules, which dictate how certain classes of solar developers are paid for the power generated by their projects.

“The administration is trying to thread the needle to reduce the impact on ratepayers,” said Maine’s Public Advocate William Harwood, “without doing too much harm to the solar industry.”

Nailing down the precise impact on ratepayers isn’t easy because of the complicated formula that underpins the program and uncertainty about the number of projects that ultimately will get built.

One estimate from the Public Utilities Commission calculated that delivery rates could rise more than 44 percent by 2025, if projects totaling 1,667 megawatts of capacity come online. But if solar reimbursements are trimmed as proposed in L.D. 634 and all proposed projects are built, delivery rates could still rise 35 percent or so, according to Harwood’s estimates.

Delivery rates make up roughly half a total electric bill. Most of the impact won’t come until 2023 or 2024, however, when more projects are in operation.

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“Costs associated with this program are significant,” said Susan Faloon, a PUC spokeswoman. “L.D. 634 could potentially result in savings, but the magnitude is difficult to predict.”

Also in play is L.D. 1350, which would direct the PUC to conduct a new round of competitive bids for clean-energy contracts. This would add to the state’s renewable portfolio standard law, which requires that utilities buy certain percentages of power from sources such as solar and wind. Environmental groups made a pitch for the bill Tuesday at a news conference outside the State House. They were joined by construction interests, highlighting the jobs that could be created by building these projects.

To battle climate change, Maine passed laws in 2019 that featured generous financial incentives meant to lure more renewable energy development. One element directed utilities to buy power from projects with under 5 megawatts of capacity at fixed rates.

This provision proved wildly successful. Hundreds of projects with a combined capacity of more than 1,600 megawatts – more than the output of the Seabrook nuclear power plant – announced plans to build. Today, roughly 160 megawatts have come on line, but many others projects are in various stages of permitting and development. These are a combination of community solar farms supported largely by residential subscribers and projects built for commercial and institutional customers.

But there’s a problem.

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Reimbursement for the commercial projects is tied to the so-called standard offer, the annual default rate that most homeowners and small businesses pay for their electricity supply. Global spikes in energy prices, notably for the natural gas that fires half of the power generation in New England, sent standard offer rates up by more than 80 percent this year.

That created a windfall for solar developers, but a mounting burden for electric customers. Roughly 65 percent of all the projects currently online are commercial and institutional, and the net cost of their power ultimately is recovered from ratepayers.

At today’s wholesale energy costs, utilities such as Central Maine Power and Versant Power have to pay solar developers for the price of the power, which now is in the 20-cents per-kilowatt-hour range. It’s galling for consumer advocates, as well as large businesses that use a lot of electricity, because solar power from larger-scale projects that win contracts under a separate program run by the PUC have been signed at closer to 5 cents per kWh.

“Why pay 20 cents for renewable power when we know we can get it for five?” Harwood said.

Recognizing the growing disparity, lawmakers last year reined in some incentives. They reduced the eligible capacity limit for projects, from 5 megawatts to 2 megawatts. They also set up a working group to hammer out longer-range changes to net energy billing and to make recommendations for the 2023 legislative session.

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But with Mainers facing high energy prices right now, lawmakers are under pressure to take more immediate action – not without controversy.

Net energy billing debate

Community solar has proven popular with Mainers. Thousands have signed up for the growing number of projects, and get credits worth 10 to 15 percent of their bills for subscribing. But other customers have to make up the cost, which is higher now than anticipated and is expected to remain high over the next few years, when the bulk of pending projects are due to start operating.

The Mills administration has been negotiating with the solar industry to lower the impact. A key element in the amended version of L.D. 634 would reduce the reimbursement for projects that haven’t “commenced physical work of a significant nature” by Sept. 1, to rates that were in effect in 2020. That was before the big run-up in energy prices.

According to the Governor’s Energy Office, this measure would have the effect of reducing the cost of the commercial net energy billing program from roughly 21 cents per kWh to 13 cents, a number in line with the value in other New England states.

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Lobbyists are doing their best to influence the final outcome.

Paper mills and factories that use a lot of power dislike the net energy billing program. Tony Buxton, a lawyer who represents the Industrial Energy Consumer Group (IECG), calls the program poorly designed and a mistake. Even before the standard offer rate increases, he said, it would cost customers $2 billion over 20 years.

“IECG has fought against uncontrolled net energy billing for three years,” Buxton said. “This is the only energy purchase legislatively mandated in Maine history over which the PUC has no control whatsoever.”

Buxton has been skeptical of the Governor’s Energy Office compromise, which he said has been worked out behind closed doors with little public input.

“I think the administration does want to lower NEB costs,” Buxton said, “but believes it cannot overcome the national solar lobby and its wealthy Maine beneficiaries.”

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Mid-game rule changes

But from the solar industry’s perspective, Maine seems to be changing the rules in mid-game. Companies have made major investments based on the policies articulated in 2019, and expected them to remain in effect as projects went from conception to development.

“This is something we did not want and do not like,” said Jeremy Payne, executive director of the Maine Renewable Energy Association. “We’re watching this very closely.”

Payne said the industry already has accepted project size eligibility being cut from 5 to 2 megawatts. Now Maine is contemplating more “retroactive changes to policy,” he said, unwelcome and unexpected adjustments that could make solar developers think twice about the stability of Maine’s renewable energy business climate.

“Is Maine a reasonable place to invest?” Payne said they are asking.

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How this will play out in the Legislature is uncertain. The two solar bills garnered divided reports in the legislative committee that handles energy and utility matters. And it’s not a simple ideological split among Democrats, Mills and Republicans. Rather, some Democrats disagree about the best path forward to both protect consumers and encourage renewable energy development.

Please continue reading at:

https://www.pressherald.com/2022/04/12/costs-of-solar-policy-under-...

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Comment by Willem Post on April 17, 2022 at 6:08am

EXCERPT from:

BATTERY SYSTEM CAPITAL COSTS, ENERGY LOSSES, AND AGING

https://www.windtaskforce.org/profiles/blogs/battery-system-capital...

APPENDIX 1

The various costs of making wind turbines have gone up, especially in Europe, due to increases in energy, materials, and transport prices

The cost of financing has increased, i.e., higher interest rates, because of the consumer price index, CPI, increasing at 8.5%/y, and the producer price index, PPI, increasing at 11.5%/y

 

Owners typically put up 50% of the turnkey capital cost of a wind, solar, or battery project, the rest is financed.

Owners typically make 9%/y on their investment, when bank interest rates are low, say 3.5%/y.

Owners may want to make a higher %/y, when bank interest rates are high.

 

All this translates in Owners having to sell their wind electricity at much higher prices, i.e., wind suddenly is not competitive with existing low-cost, domestic coal, natural gas, nuclear and hydro.

 

The same is happening due to re-pricing of:

 

1) Solar electricity

 http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

 

2) Grid-scale battery system services

https://www.windtaskforce.org/profiles/blogs/battery-system-capital...

 

3) EVs, and EV chargers, and EV charging

 

https://www.windtaskforce.org/profiles/blogs/poor-economics-of-elec...

https://www.windtaskforce.org/profiles/blogs/electric-bus-systems-l...

 

All that will make it much more expensive to reduce CO2 to “save the world from climate change” (if that were actually possible).

 

However, reducing fossil CO2 reduces biomass growth (which absorbs CO2)

The growing of crops for food has already been reduced, due to a shortage of fertilizer and phosphate from Belarus and Russia; their prices have become stratospheric. A world recession, or worse, may be in the offing.

 

Remember, all this is due to the US relentlessly pushing to expand NATO infrastructures and personnel beyond East Germany, which it had promised not to do in 1990. The USSR and the Warsaw Pact collapsed in 1991. NATO had become superfluous.

 

After the US-instigated color revolution in 2014, the US turned impoverished, corrupt, oligarchic Ukraine into a NATO-armed battering ram to reduce the security of Russia. See URL

https://www.windtaskforce.org/profiles/blogs/the-plot-is-thickening...

 

APPENDIX 2

EXCERPT from:

 

COST SHIFTING IS THE NAME OF THE GAME REGARDING WIND AND SOLAR

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

 

EXHORBITANT REAL COST OF WIND AND SOLAR ELECTRICITY

 

“All-in” Electricity Cost of Wind and Solar in New England

 

https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-sol...

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

 

Pro RE folks point to the “price paid to owner” as the cost of wind and solar, purposely ignoring the other cost categories. The all-in cost of wind and solar, c/kWh, includes:

 

1) Above-market-price paid to Owners 

2) Subsidies paid to Owners

3) Owner return on invested capital at about 9%/y

4) Grid extension/augmentation

5) Grid support services

6) Future battery systems

 

Comments on table 1

   

- Vermont legacy Standard Offer solar systems had greater subsidies paid to owner, than newer systems

 

- Wind prices paid to owner did not have the drastic reductions as solar prices.

 

- Vermont utilities are paid about 3.5 c/kWh for various costs they incur regarding net-metered solar systems

 

- "Added to rate base" is the cost wind and solar are added to the utility rate base, used to set electric rates.

 

- “Total cost”, including subsidies to owner and grid support, is the cost at which wind/solar are added to the utility rate base

 

- “NE utility cost” is the annual average cost of purchased electricity, about 6 c/kWh, plus NE grid operator charges, about 1.6 c/kWh

for a total of 7.6 c/kWh.

 

- “Grid support costs” would increase with increased use of battery systems to counteract the variability and intermittency of increased build-outs of wind and solar systems. See URL

https://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reduction...

 

NOTES:

1) NE wholesale grid price averaged about 5 c/kWh, starting in 2009, due to low-cost CCGT and nuclear plants providing at least 65% of all electricity loaded onto the NE grid, in 2019.

 

https://www.iso-ne.com/about/key-stats/resource-mix/

https://nepool.com/uploads/NPC_20200305_Composite4.pdf


2) There are Owning costs, and Operating and Maintenance costs, of the NE grid

ISO-NE charges these costs to utilities at about 1.6 c/kWh. The ISO-NE charges include: 

 
Regional network services, RNS, based on the utility peak demand occurring during a month

Forward capacity market, FCM, based on the utility peak demand occurring during a year.

 

Table 1/VT & NE sources

Paid to

Subsidy

Grid

GMP

 Added

ISO-NE

Total

NE

Times

 

 

paid to

support

 

to rate

RNS+

 

utility

 

owner

towner

cost

adder

base

FCM

cost

cost

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

Solar, rooftop, net-metered, new

17.4

5.2

2.1

3.5

20.9

1.6

29.8

7.6

3.92

Solar, rooftop, net-metered, legacy

18.2

5.4

2.1

3.5

21.7

1.6

30.8

7.6

4.05

Solar, standard offer, combo

11.0

6.74

2.1

11.0

1.6

21.44

7.6

2.82

Solar, standard offer, legacy

21.7

10.5

2.1

21.7

1.6

35.9

7.6

4.72

Wind, ridge line, new

8.5

3.9

2.4

8.5

1.6

16.4

7.6

2.15

Wind, offshore, new

9.0

4.1

2.4

9.0

1.6

17.1

7.6

2.25

 

Sample calculation; NE utility cost = 6, Purchased + 1.6, (RNS + FCM) = 7.6 c/kWh

Sample calculation; added to utility base = 17.4 + 3.5 = 20.9 c/kWh

Sample calculation; total cost = 17.4 + 5.2 + 2.1 + 3.5 + 1.6 = 29.8 c/kWh

 

Excludes costs for very expensive battery systems

Excludes costs for very expensive floating, offshore wind systems

Excludes cost for dealing with shortfalls during multi-day wind/solar lulls. See URL

https://www.windtaskforce.org/profiles/blogs/wind-and-solar-provide...

 

“Added to rate base” is for recent 20-y electricity supply contracts awarded by competitive bidding in NE.

“Added to rate base” would be much higher without subsidies and cost shifting.

Areas with better wind and solar conditions, and lower construction costs/MW have lower c/MWh, than NE

New England has average winds, has highest on-shore turnkey costs ($2,400/kW in 2020), has highest PPA c/kWh

See page 39 of URL

https://www.energy.gov/sites/default/files/2021-08/Land-Based%20Win...

 

Comment by Lynn Oleum on April 14, 2022 at 12:38pm

Hiding the cost of solar (or wind) in your tax bill doesn't make it go away.

Comment by Willem Post on April 13, 2022 at 4:30pm

Tux Turkey,

Seabrook nuclear plant has a capacity factor of about 0.90

That means 1000 MW of plant produces 1000 MW x 8766 h/y x 0.9 MWh/y; MOSTLY ON A STEADY BASIS, regardless of rain, snow, sunshine, or wind

Solar in Maine has a CF of about 0.125

That means 1000 MW of solar systems produce 1000 MW x 8766 h/y x 0.125 MWh/y, MOSTLY DURING MIDDAY, if the sun is shining, if no snow on panels

Next time you write about solar and nuclear, keep the above in mind, so you will increase your reputation as a serious person.

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

Not yet a member?

Sign up today and lend your voice and presence to the steadily rising tide that will soon sweep the scourge of useless and wretched turbines from our beloved Maine countryside. For many of us, our little pieces of paradise have been hard won. Did the carpetbaggers think they could simply steal them from us?

We have the facts on our side. We have the truth on our side. All we need now is YOU.

“First they ignore you, then they laugh at you, then they fight you, then you win.”

 -- Mahatma Gandhi

"It's not whether you get knocked down: it's whether you get up."
Vince Lombardi 

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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