If solar energy gained widespread use in Maine it would have a greater total value than conventional power generation, according to a state-sponsored study that analyzes the costs and benefits of generating power from the sun.
Among the report’s conclusions is that the long-term value of electricity produced from solar panels is roughly 33 cents per kilowatt hour. That’s more than twice the 15 cents or so that most Mainers pay for power that is conventionally generated and delivered on the grid.
But it’s a complex projection because a sizable portion of the 33-cent figure stems from avoiding the typical market costs associated with conventional power generation for things such as transmission and fuel. Notably, more than 9 cents of solar energy’s total value is derived from environmental and social benefits, such as offsetting climate-changing carbon dioxide emissions.
The report also said that solar power would help lower the high cost of supplying the electric grid on the hottest days of the year, when solar panels could meet the demand created by air conditioning.
The much-anticipated report is being praised by renewable energy advocates as proof that Maine should step up support this spring for proposed laws designed to promote the growth of solar energy.
The administration of Gov. Paul LePage is taking a measured response to the study. LePage has strongly opposed subsidies for renewable energy because he says they raise Maine’s already-high electric rates. But Patrick Woodcock, the governor’s energy director, indicated that the new study could moderate the governor’s position. Woodcock said it will form a basis for debate over how much support for solar is cost-effective and where the money would come from.
“If we can demonstrate that ratepayers are going to benefit from a policy, the governor would support that policy,” he said.
BILLS SEEK TO PROMOTE SOLAR
Debate over the costs and benefits will play out in the Legislature, where at least four bills being prepared would create incentives for solar energy. The most far-reaching is from Assistant House Majority Leader Sara Gideon, a Freeport Democrat. Her bill would reduce barriers to community-based solar projects and encourage solar development by tweaking a state-mandated program that requires power providers to buy renewable energy.
Based on similar incentives in other states, Gideon’s proposal could lead to more than 7,000 home and 3,000 business installations, as well as more than 2,000 jobs in the solar industry by 2021, said Dylan Voorhees, clean energy director at the Natural Resources Council of Maine.
The first-of-its-kind study for Maine was done at the request of the Legislature by consultants for the Public Utilities Commission. It stemmed from a bill passed last year that directed the state to “encourage the attraction of appropriately sited development related to solar energy.”
INCENTIVES, SUBSIDIES AND POLITICS
Interest in solar energy is growing in Maine, sparked by panel prices that have been falling in recent years. Even so, an array that can supply 80 percent of a typical home’s electric needs can cost $15,000.
For now, that high price is tempered by a 30 percent federal tax credit. But the credit is due to drop to 10 percent for businesses and to zero for homeowners after 2016, unless Congress extends the deadline. The credit’s uncertain future suggests that state incentives, to the extent they exist, may play a greater role in the industry’s growth.
Environmental advocates lament that Maine is the only New England state lacking specific policies to encourage solar energy. That’s limiting Maine’s ability to create jobs, reduce its dependence on natural gas and make solar more affordable for homes and businesses, Voorhees said.
The PUC study summarizes policies in New England, as well as four mid-Atlantic states. These policies range from rebates and lower-cost financing, to rules and rate design.
But in Maine, Republican politicians, for the most part, have been opposed to these incentives.
Last year, LePage vetoed a bill that would have reinstated a $1 million solar rebate program to lower costs for homeowners and small businesses. The rebate came from a tiny surcharge on power bills.
Woodcock said it’s not clear to him that $1 million is the right amount to spur solar development. The study, he said, can help clarify the correct number.
“Would we increase growth by a certain percent if we added a certain amount of rebate?” he asked. “We already have growth, so what would be a cost-effective solar policy for the state?”
REPUBLICANS OPPOSE INCENTIVES
Whether LePage ultimately eases his opposition to solar incentives, it’s less likely that other Republican leaders will acquiesce.
Sen. Mike Thibodeau, R-Winterport, has made no secret of his distaste for renewable energy subsidies. He has said that they account for “hundreds of millions of dollars that are sucking the very life out of Maine’s economy.” President of the Senate, Thibodeau is preparing a bill to cap the subsidies available to renewable energy projects.
Thibodeau didn’t respond to requests for his reaction to the PUC solar study.
For her part, Gideon said her bill and the three others being drafted each has the common goal of breaking down the financial barriers to greater solar development in Maine.
“The overriding takeaway from the study is that the value of solar is actually greater than the cost of solar,” she said.
SOLAR REQUIREMENTS OVER REBATES
The PUC study also was touted by Maine’s small but growing solar industry. But Fortunat Mueller, a partner at ReVision Energy in Portland, said he’s not fixated on rebate programs. The widely discussed $1 million figure is too small to be effective, he said, and any program that runs out of money midway through the year, as the former one did, isn’t very helpful.
Mueller said a key part of Gideon’s bill, which requires retail electricity providers to get 2 percent of their supply from new solar capacity in 2021, is a more-powerful way to drive development. That so-called solar carve-out target could double output each year starting in 2016, he said.
“In the last few years, as Maine has fiddled, the rest of New England has made major investments in solar energy development and is starting to see the rewards,” he said.
Mueller noted that the latest national census by The Solar Foundation, a nonprofit interest group, shows that the industry added workers at a rate nearly 20 times faster than the overall economy. It counted more than 173,000 people working in the sector, mostly in installation.
Massachusetts rose from fourth to second place in the ranking with 9,400 jobs, behind dominant leader California. By contrast, Maine ranked 43rd in the country with 400 jobs.