Solar hits land use, cost troubles in Northeast

Source: By David Iaconangelo, E&E News reporter • Posted: Monday, March 16, 2020

Northeastern states are pushing to develop solar energy to meet climate targets, but the transition may prove tricky to pull off, analysts say.

The cost of clean energy subsidies is mounting, and after years of growth fueled by early adopters, solar developers are facing the challenge of selling their power to a broader swath of the public.

In the Solar Energy Industries Association’s last quarterly report, for example, there were no Northeastern states ranked in the top five for residential installations — a first for the region.

“A lot of the Northeast states have been pretty strong drivers for the U.S. solar market. Because of that, they have a pretty good saturation in certain places. They’re just facing problems earlier than other parts of the country,” said David Feldman, a senior analyst for solar at the National Renewable Energy Laboratory.

Unlike with wind energy, for which states favor build-outs of massive wind farms to reach climate goals, many officials in the Northeast are pushing for a proliferation of modestly sized solar installations located on parking lots, landfills, and rooftops of residences and small businesses.

That “distributed” model makes more sense in states where land is scarce, communities are divided among a large number of owners, and towns can refuse permits for huge, unsightly panel developments, say analysts. Plus, the Northeast’s rates for utility electricity are already among the highest in the country.

But space is also expensive and in high demand, meaning developers have sometimes still preferred to pursue projects on farmland or other “greenfield” sites that haven’t hosted industry.

In New York, the state’s permitting pipeline has filled with projects that would produce hundreds of megawatts. That’s despite the enactment of last summer’s landmark climate law, which doubled the goal for distributed solar to 6,000 MW by 2025.

“We’ve seen less uptake of the incentives for distributed solar,” which are limited to projects of 5 MW or less, Alicia Barton, president of the New York State Energy Research and Development Authority, said at a Greentech Media forum on solar and storage in New York City yesterday.

In Massachusetts, by contrast, developers responded to the 2018 introduction of the state’s Solar Massachusetts Renewable Target incentive program for small-scale solar with a flood of applications amounting to 40% of the target capacity within the first two weeks. The bulk of projects have emerged, however, in the more rural western and central parts of the state, rather than near Boston and other eastern cities.

“I think we’re going to continue to struggle with the divide in the region,” said Ben Downing, a former Democratic state senator and current vice president for new market development at renewable solutions firm Nexamp. “Anyone with a parking lot or a halfway decent roof wants to build more housing there” rather than solar panels.

Officials are taking comment on a proposal to expand the solar program’s subsidies from 800 MW to 2.4 gigawatts of projects, and make it less lucrative for developers to build on greenfield sites instead of rooftops, landfills and shared-use areas.

Industry representatives and solar analysts have said that uncertainty over the shape of the expanded program is partly to blame for the collapse of growth.

An ongoing study by National Grid into what the influx of new solar will require from its transmission system is also holding up several hundred megawatts’ worth of projects — posing what Wood Mackenzie analyst Austin Perea described as an “existential threat” to the industry.

“We’re hoping for more clarity in this space in the next month or two, when the study’s done,” said Perea.

Energy officials are also expected to soon unveil the nation’s first “clean peak standard,” a sophisticated suite of new incentives for solar-and-storage projects that can deliver clean power at night and during cloudy periods — although some critics have warned that the storage rules could actually increase emissions (Energywire, Jan. 2).

Incentives, targets and carve-outs

As the industry experiences growing pains, states are grappling with how to direct policy.

In Massachusetts and New Jersey, for example, regulators are contemplating reshaping solar incentives.

Under consideration are common questions: How large of a subsidy is too large? Which kinds of solar power installations should they reward, and for which consumers? How can they make solar power blend into the grid?

New York has doubled its targets for distributed solar generation, tweaked programs to encourage delivery during peak hours and unveiled some $280 million in energy storage incentives, including for projects paired with solar.

“It’s an interesting time, because each of these states have established aggressive clean energy and climate goals, and each are dealing with the same policy issues,” said Dave Gahl, senior director for Northeastern state affairs for the Solar Energy Industries Association.

Climate goals are on the line, too.

In New Jersey, for instance, decarbonizing all power supplies by 2050 could require 34% of energy to come from solar, according to the state’s energy master plan. That would make solar the largest source of power.

“If you want to get to these aggressive targets that these states are planning, like totally decarbonized electricity, solar is pretty essential,” said Feldman.

What the three states do might echo across the East Coast.

Maryland, for instance, enacted a law last year requiring 14.5% of the state’s power to come from solar by 2030, up from its existing 2% mandate for 2020. Maine’s Legislature included fresh incentives for its own fledgling industry in an 80% clean power law last summer. And a climate bill approved in Virginia last week by legislators would force its biggest utility, Dominion Energy Inc., to increase its solar portfolio by tenfold.

The New Jersey model

New Jersey, another state cited by analysts as a regional leader for solar planning, doesn’t have an incentive for storage, although officials at the utility regulator say it’s studying what other states have developed.

The state’s Board of Public Utilities touts itself as a pioneer of solar programs for low- and moderate-income residents. One pilot program for community solar, for instance, sets aside 40% of all capacity for projects in which more than half of the participants are lower-income.

“I have watched this debate rage in California for years,” said Abraham Silverman, general counsel for the BPU. “It was rich people putting solar on their roofs.”

“Making it focused on the [low- and moderate-income] community, I think, is unique for anywhere in the country and should be a model,” he added.

The agency is undertaking a broader remodeling of incentives for solar aimed at reducing the cost of subsidies, motivated by a new cap on renewable costs instituted in a 2018 clean energy law.

Late last year, it approved a transition program that sliced the initial value of solar certificates by almost a third, causing an outcry from developers. Last week, it announced it had revised the program to allow companies to claim a larger subsidy earlier on.

It’s also designing a more permanent successor program that will kick in once solar accounts for 5.1% of the state’s power. It expects to unveil the program as early as June.

“We have a cap in New Jersey on the amount of money we can spend on renewables,” said Silverman. “So we’ve been trying hard to decarbonize … at a price that consumers can afford. That’s a key goal of ours.”