Solar billing program is changing with the times

The ongoing debate in the Maine Legislature over net energy billing and community solar is colored by confusion about how these programs work.

Net energy billing is a practice meant to encourage renewable power generation. Maine’s program provides generators with credit for renewable power they produce and send to the electric grid. Prior to 2019, eligibility was restricted to very small generators, a reflection of opposition from former Gov. Paul LePage and many Republican lawmakers. The rules changed drastically in 2019, following the election of Gov. Janet Mills and a Legislature dominated by Democrats. One element directed utilities to buy power from solar projects with up to 5 megawatts of capacity at fixed rates.

Those changes unleashed a flood of community solar projects, some of which are visible now along Maine’s roadways and open spaces.

Community solar has different models, including some that allow the public to buy a share of a project. But the most popular is the subscription model, in which developers sign up customers who want to offset their bills with solar energy – but don’t want or can’t afford to buy and install panels at their homes. In a typical arrangement, electricity customers receive a share of a project that matches their annual power use. They get a monthly kilowatt-hour credit for that amount, which the developer invoices, minus a 10% to 15% discount. That’s how customers can save money with community solar, and thousands have signed up.

With revenue from billing customers, the developer covers the project’s expenses and pays off a range of investors who lend money to help build the project.

But there’s a problem.

Reimbursement for many community solar projects had been tied to the standard offer, the annual default rate that most homeowners and small businesses pay for their electricity supply. As the standard offer rate rose with natural gas prices, it created a windfall for solar developers, but a mounting burden for customers. By contrast, another program run by the Maine Public Utilities Commission – for larger-scale, commercial projects – requires a bidding process and has led to contracts for solar energy at one-quarter the reimbursement level of the community solar program.

Fearful that community solar costs could spiral in the years ahead, lawmakers are trying to apply the brakes. One proposal reduces the size of projects eligible for net energy billing from 5 megawatts in capacity to 2 megawatts. Another change would eliminate the link to the standard offer. Lawmakers also set up a stakeholder group that met last year and issued a report with recommendations on how to further refine net energy billing and solar incentives. There’s no outcome yet from these recommendations.