Solar Energy Should be encouraged
The recent energy legislation, “Grid Transformation and Security Act” (SB966), has a number of significant flaws. It failed to set a sufficiently high target for solar. It also failed to remove a variety of barriers to third-party solar generation. These barriers negatively impact the solar industry, local government solar, as well as residential and business solar. The 2018 Energy Plan must provide a robust review of these barriers and recommend legislative remedies and other reforms. Remedies and reforms are especially critical to open the market for investment in distributed solar. Some of the most critical reforms needed are listed below.
· Remove the 1% cap on net metered solar. Net metering reduces the need for utilities to build expensive new generation facilities, reduces carbon in the grid and increases grid resilience and emergency preparedness in communities. Net metering is a critical component in any plan to reduce carbon and achieve cost effective clean energy goals. The legislative cap on the amount of net metered solar in a utility territory stymies investment and threatens the viability of the rooftop solar installation business, which has created tens of thousands of jobs in other states. The 2018 Energy Plan should recommend repeal of the 1% cap.
· Clarify that third-party financing through power purchase agreements (PPAs) for customer-sited solar is legal. Under a third-party PPA, a solar developer owns and operates a solar facility on customer’s property and then sells the electrical output to the customer. The customer gets access to solar without incurring up-front costs; the developer takes advantage of the Federal investment tax credit and depreciation rules. While it appears that the PPAs are legal under the Virginia Code, the utilities have taken the position that PPA’s are only permissible as pilot programs. This has severely restricted the opportunity for third parties to pursue PPAs and obtain PPA financing except in the limited case of pilot projects. The 2018 Energy Plan should recommend a legislative provision to clarify that third-party financing through PPAs is legal.
· Permit local governments to install solar facilities of up to 5 MW on government-owned property and use the electricity for government-owned buildings. Current law limits the output of a solar facility on government-owned properties to on-site use or use on contiguous property, and imposes a 1 MW cap on any project. The 2018 Energy Plan should recommend legislation that would allow local governments to credit up to 5 MW of output of a solar array located on government-owned property where there is no electric load – such as in the case of a closed landfill – to other government-owned properties within the same jurisdiction, such as schools or municipal buildings. This would enable local governments to host arrays on their properties above 1 MW and thereby also achieve savings to taxpayers.
· Permit customers to attribute the output of a single renewable energy facility to more than one meter on the customer’s property or on adjacent property owned by the same customer. The Virginia Code permits farm customers to aggregate their meters thereby enabling them to put solar on one building (such as a barn) and attribute the output to other buildings on the farm. However, other customers do not have this flexibility and must limit use of the output of a solar array to one meter on the same property. The 2018 Energy Plan should recommend that the Virginia Code be amended to permit all customers to use the output of their solar array on buildings they own located on the same or adjacent property. Giving customers this flexibility will result in more solar installed, more efficiently.
· Increase the project size cap for net-metered non-residential projects from 1 MW to 2 MW. The Virginia Code restricts net-metered non-residential projects to 1 MW. This restriction artificially limits the size of solar projects that could otherwise produce more clean electricity in our communities.
· Allow customers to install a net-metered solar facility larger than that necessary to meet the previous 12 months of demand. Currently, customers can only install a net-metered solar facility that is designed to meet the previous 12 months of demand. This restriction prevents a customer from sizing a facility to meet future demand from, for example, purchases of electric vehicles or home additions. It also allows power companies to second-guess customers’ decisions regarding the size of their solar arrays. Yet, customers who produce more electricity than they consume over the year cannot sell the excess at retail. Thus, there is no economic incentive for customers to install excess solar and no legitimate reason why the utilities should oppose repeal of provisions that limit the size of the net-metered solar facility to the previous 12 months of demand. The 2018 Energy plan should recommend repeal of limitations currently imposed by the Virginia Code.
· Allow owner/operators of multi-family residential and commercial buildings to install a solar facility on the building or surrounding property and sell the output to tenants whether or not they are individually metered, without being treated as a utility. Under the Virginia Code, owners or operators are prohibited from installing solar facilities on multi-family residential as well as commercial buildings and selling the output to tenants without being treated as a utility. This restriction especially hurts low and moderate-income tenants of apartment buildings who would like the same access to onsite solar enjoyed by owners of single-family homes.
· Eliminate standby charges on residential solar facilities between 10 and 20 kW. Because of the growing popularity of electric vehicles, customers need larger residential solar systems. Standby charges act as a tax on the larger systems making them economically prohibitive. These charges, therefore, harm ratepayers by restricting the addition of privately-funded, clean peak power to the grid. The 2018 Energy Plan should recommend that the Virginia Code be amended to eliminate standby charges on residential solar facilities between 10 and 20 kW.