Solar Benefits all Ratepayers: What some Business Execs are Getting Wrong

October 29, 2015
Jason Kotoch

Executives from six Massachusetts groups that claim to represent the economic interests of Bay State businesses signed onto an October 19th letter asking state lawmakers to limit solar programs by keeping net metering caps in place and cutting compensation and incentive payments in the name of reducing energy costs in Massachusetts. The letter makes a number of false assertions and unsubstantiated cost claims about solar to make their case.

Read their letter HERE.   

The letter's signatories—Massachusetts Taxpayers Foundation, Associated Industries of Massachusetts, Massachusetts Business Roundtable, Retailers Association of Massachusetts, Springfield Regional Chamber of Commerce and the Greater Boston Chamber of Commerce—repeat utility industry lines while ignoring the overwhelming evidence that shows, without a doubt, that solar is good for the Commonwealth and ALL ratepayers.

An honest assessment of the current energy market in Massachusetts and the impact of solar policies on ratepayers in Massachusetts yields the following data:

1. The benefits of solar far exceed the costs. 

The Net Metering and Solar Task Force analysis clearly established that the net benefits of solar surpass the costs by 2.5-2.7 times, depending on the policy scenario.  This result is in line with numerous value of solar studies and similar analyses conducted across the region in recent years.  It’s also in line with an Acadia Center study that evaluated the value of distributed solar in Massachusetts.  The results of that analysis showed that the benefits of solar for the grid exceed retail electricity rates. Values for solar in that study ranged from 28-35 cents/kWh.

2. Solar lowers energy costs for all ratepayers.

Solar reduces the amount of electricity utilities must purchase from fossil fuel-fired power plants. It also reduces the amount of energy lost in generation, long-distance transmission, and distribution, losses that cost ratepayers money.  Solar also lowers new capital investment costs. By reducing overall demand, solar helps ratepayers reduce or avoid the need to invest in new power plants, transmission lines and other forms of electricity infrastructure.  What’s more, analysis from the Lawrence Berkeley National Laboratory shows that even the most aggressive net metering program would have minimal (0.1-2.7%) impact on electricity rates.

3. Utilities overstate the cost of solar while ignoring its benefits. 

Utilities are quick to throw out multi-billion dollar cost figures for solar programs but fail to mention any of the benefits. The numbers used by utility companies have never been evaluated or validated.  What’s more, the cost figures provided by National Grid and Eversource to the Net Metering and Solar Task Force overstate costs and potential ratepayer impact.  For example, the utilities assume Solar Renewable Energy Credits (SREC) prices that are at or near the ceiling for the useful life of the system (e.g. 25 years).  Average SREC prices are much lower and SREC payments end after 10 years. 

4. The cost of solar must be considered in relation to other energy investments. 

The assumption of utilities and others seems to be that money not spent on solar is money saved.  That’s simply not the case. As the Pilgrim nuclear power station and Brayton Point coal-fired power plant announce their closings, new energy generating capacity will be needed to replace these facilities.  Instead of embracing local energy generation, utility companies are criticizing the cost of solar programs while asking ratepayers to pay billions of dollars to expand fossil fuel infrastructure and build transmission lines to Canada.

5. Electricity costs are rising and increasingly volatile due to overreliance on natural gas.

Overreliance on a single fossil fuel source, natural gas, is raising electricity rates, not Solar. Last winter’s electricity price spike cost ratepayers $3 billion in three months. The region’s reliance on natural gas, and our vulnerability to fuel price fluctuations is set to increase if plans to build new natural gas power plants and expand pipelines are realized.  As early as 2006, ISO-NE warned that the region was already too reliant on natural gas. 

6. Businesses across the Commonwealth have embraced solar.

Large and small companies alike are benefitting from solar. Staples, Inc., the biggest retailer of office supplies in the country, is the ninth largest user of solar power of any non-utility business in the US. The company benefits from 14 MW of solar installed at its operations across the country, including a 686 kW installation on a garage roof at its Framingham headquarters. The family-owned hardware chain, Aubuchon Hardware, is also benefitting from solar. Aubuchon has installed a 584 kW system on the rooftop of its Westminster distribution center and purchases net metering credits from a community solar project in Gardner.

7. Solar incentives have reduced over time.

A solar project built in Massachusetts in 2011 receives, on average, $470 per megawatt hour of electricity generated.  A solar project built in Massachusetts in 2014, receives $280 or less, depending on the SREC factor for the project, for the same megawatt hour.  Furthermore, the Department of Energy Resources (DOER) also has the regulatory authority to reduce incentives further.  As per the SRECII regulations, DOER can reduce incentives for new solar projects starting in 2016 if a market analysis shows such a reduction is warranted.

8. Eliminating net metering caps is necessary to meet the 1600 MW solar target in a timely and cost-effective manner.

The Net Metering and Solar Task Force report shows that not raising net metering cap is the most costly option to meeting the 1600 MW target.  The report also shows that reaching the target without raising the caps would require a quadrupling in the rate of installations in the residential sector. That’s unrealistic for any number of reasons. Finally, failing to raise the caps would continue to deny access to solar to residents and businesses in 171 communities by making it impossible to build community shared solar and medium to large-scale rooftop solar projects.