National Grid wants to enlist developers to build enough projects to serve 20,000 low-income customers, but the industry says the arrangement benefits the utility too much.
Massachusetts solar developers say a proposed National Grid solar program would shortchange them and the low-income customers it’s meant to serve.
The utility is proposing a community solar program that would provide power to as many as 20,000 low-income customers, each of whom would receive monthly solar credits of about $20 on their electric bills.
“This is specifically addressing a market gap we saw, enrolling low-income customers into solar projects,” said Jayson Uppal, manager of solar and storage for National Grid.
The savings for customers would come from offering a lower price for power from solar developers, which would not need to spend money on marketing or recruiting customers as National Grid would enroll its customers. Financing costs could also be lower for developers because the utility would guarantee payment for all power generated, making it a low-risk deal for lenders.
Many in the solar industry, however, are skeptical of the plan, arguing that it takes away opportunities from the private market.
“It’s kind of misguided,” said Jonathan Abe, chief executive of clean energy investment firm Sunwealth, which focuses on financing low-income solar projects.
Massachusetts is one of 20 states, along with Washington, D.C., that allow community solar developments. These projects are generally bigger than residential arrays but smaller than utility-scale developments, and they sell power to subscribers who can’t or choose not to install their own solar.
Community solar is considered a particularly important strategy for allowing low-income households to participate in the financial and environmental benefits of renewable energy. Installing rooftop solar can be particularly difficult for lower-income residents who can’t afford the upfront price, live in rental units, or have older roofs that can’t support solar panels without significant, costly work. Community solar, therefore, is often the best chance for these consumers to take advantage of the lower, more stable prices solar energy can provide.
When Massachusetts launched the Solar Massachusetts Renewable Target incentive program (SMART) in November 2018, it included provisions intended to encourage more development of community solar for low-income customers. As of February, however, community solar built for low-income consumers made up only about 4.7% of the capacity in the program.
National Grid is proposing to enroll customers from its existing pool of 130,000 households that already receive the low-income discount rate. No contracts or credit checks would be required.
Some, however, argue that it is too soon to put the problem of low-income solar access in the hands of a utility rather than the private market. In the fall, the state energy department issued newly revised rules for the SMART program intended to make it easier and more appealing for private solar developers to serve low-income consumers. The solar sector deserves a chance to see if these changes will help before the state turns the problem over to the utilities, said David Gahl, senior director of state policy for Massachusetts, New Jersey and New York at the Solar Energy Industries Association.
“The department has encouraged the development of a strong, independent solar industry,” he said. “We need to let some of the policy changes play out before we wholesale give the utilities the ability to serve all these customers and abandon the initial intent of the regulators.”
Others in the solar sector object to the 0.82 cents per kilowatt-hour National Grid plans to take from their SMART incentive payments to cover administrative costs. The utility argues that its approach reduces the cost for developers, making low-income projects more appealing, and sending more savings to consumers. Some low-income solar advocates, however, contend that administering the program should not cost anywhere close to a penny per kilowatt-hour and that the money should go directly to customers.
“They are the ones who already control the customer and have the relationships and do the billing,” Abe said. “They shouldn’t have to charge anything.”
A better approach, say Abe and others, would be for the state to allow low-income solar programs to partner with municipal aggregation systems. The municipal aggregation model allows individual towns and cities to negotiate the electricity rate and choose the renewable energy content for all their residents with a power supply company. More than 160 Massachusetts cities and towns have or are developing a municipal aggregation program.
Offering community solar to low-income households through a municipal aggregation program would streamline the process of identifying and signing up eligible households, encouraging developers and spreading the benefits to more consumers, supporters said.
“That can be done with no credit concerns, no termination fees, no contracts — there’s almost no real cost to administer it,” said Mark Sandeen, founder of solar developer RePower Partners and president of renewable energy advocacy group MassSolar. “This is a really, really, really good idea.”
Though major cities like Cambridge and Boston have indicated an interest in this model, the state has not yet approved the model.
National Grid is also now awaiting state approval for its proposal and hopes it is cleared to pursue the project. The utility rejects the idea that the solar market should have time to solve the problem of inequitable access before the utility gets a chance to act, said spokesperson Robert Kievra.
“In our view,” he said, “‘wait and see’ would be the wrong approach for our low-income customers.”