Maine community solar procurement bill, LD 1444

Wednesday, April 26, 2017

This week a committee of the Maine state legislature is scheduled to hold a public hearing on a bill that would direct state regulators to enter into long-term contracts to procure 120 megawatts of large-scale community solar distributed generation resources by 2022.  While Maine law currently allows some community-scale solar development, LD 1444, An Act Regarding Large-scale Community Solar Procurement, would create new structures geared toward state-sponsored long-term contracts and could open the door to broader ownership of or participation in community-scale solar in Maine.

If enacted into law as drafted, the bill would direct the Maine Public Utilities Commission to hold a series of four annual competitive solicitations by January 1, 2022.  Each solicitation would seek to procure 30 megawatts of large-scale community solar distributed generation resources.

Through an initial solicitation to be held by March 1, 2018, the Commission would set a uniform clearing price or "standard solar rate" for all awarded bids in the initial procurement.  Subsequent procurements would be subject to a declining block contract rate, under which the Commission would reduce the rate relative to the previous procurement by up to 3%.  But if the Commission were to conclude that a subsequent solicitation was not competitive, no bidders may be selected and the capacity available in that solicitation will be deferred to a subsequent solicitation.

Any resource selected for contracting would be offered a standard contract for a term of 20 years at the specified contract rate.  The resources' counterparty would be a "standard buyer" whose mission would be to "aggregate the output of the portfolio of distributed generation resources procured pursuant to this chapter and sell or use the output of these resources in a manner that maximizes the value of this portfolio of resources to all ratepayers."  Initially, the bill designates each investor-owned transmission and distribution utility as the standard buyer for its own service territory, but it would allow the Commission to designate another entity if doing so is in the best interest of ratepayers.  The benefits and costs of the procurement, shall be tracked and reviewed annually, and any gains would be allocated to from ratepayers of the project's host utility -- just as any losses would be recovered from those ratepayers.

On the project side, LD 1444 would establish a sponsor/subscriber model for large-scale community solar distributed generation resources.  A project sponsor would own or operate the resource.  A customer could subscribe for a proportional interest in such a resource, sized to represent at least one kilowatt of the resource's generating capacity.  Several additional requirements include:
  • The total expected annual value of all of a customer's subscriptions must not exceed 120% of the customer's most recent annual electricity bill. 
  • At least 50% of the subscriptions to a large-scale community solar distributed generation resource must be for 25 kilowatts or less, unless a municipality accounts for more than 50% of the subscriptions to a large-scale community solar distributed generation resource.
  • A municipality may not account for more than 70% of the subscriptions to a large-scale community solar distributed generation resource.
Once under contract, a project sponsor and subscribers receive the contract rate for the output of a large-scale community solar distributed generation resource that is fully subscribed. For any portion not subscribed, the project sponsor receives the wholesale rate.  Each subscriber will be allocated a bill credit based on its percentage interest of the facility's total production for the previous month.  These credits must be applied against the subscriber's monthly electricity bill.

LD 1444 is scheduled for a public hearing before the Committee on Energy, Utilities and Technology on April 27, 2017.

Maine PUC releases 2015 renewable report

Wednesday, April 19, 2017

Maine energy regulators have released a report on the state's electricity renewable portfolio standard, presenting data from 2015.  The Maine Public Utilities Commission's Annual Report on New Renewable Resource Portfolio Requirement - Report for 2015 Activity [PDF] provides a look at Maine's renewables law, now in its tenth year on the books.  It may also inform legislative discussions later this spring about the future of Maine's renewable portfolio standard.

In 2007, the Maine legislature enacted a law requiring that specified percentages of electricity that supply Maine’s consumers come from “new” or Class 1 renewable resources, ranging from 1% in 2008 to 10% in 2017.  The law also required the Commission to report annually to the legislative energy committee on the status of this requirement and related compliance matters.

According to the report, Maine suppliers sourced approximately 891,757 renewable energy certificates or RECs, from 30 facilities, to comply with the 2015 requirement.  Of these, 20 facilities were fueled by biomass, 4 by hydropower, 3 by wind and 1 by landfill gas.  25 out of the 30 facilities were located in Maine, with 2 in New York, and one each in Connecticut, Massachusetts, and Vermont.  By REC volume, 99% came from facilities located in Maine.

The report also estimates the cost to Maine ratepayers of Maine's new renewable resource portfolio requirement.  According to the report, the cost of RECs used for compliance in 2015 ranged from "approximately $2.00 per MWh to $42.50 per MWh, with an average cost of $13.16 per MWh and a total cost of $11,738,174."  Adding in $3,018 in alternative compliance payments by one supplier, the report estimates a total cost to ratepayers during 2015 of $11,741,192.  The report translates this total cost into "an average rate impact of about one-tenth of a cent per kWh. This is equivalent to about 55 cents per month, or 1%, for a typical residential customer; $50 per month for a medium commercial customer that uses 50,000 kWh per month; and $500 per month for a large commercial/industrial customer that uses 500,000 kWh per month."

Maine law also includes a Class 2 renewable portfolio standard, requiring an additional 30% of electricity come from existing renewables and other Class 2 resources.  According to the Commission's report, the average cost of a Class 2 REC in 2015 was $0.28 per MWh, with a total cost of $965,818.  The report notes that this is "equivalent to about 5 cents per month for a typical residential customer, and $4 and $40 per month for medium and large commercial/industrial customers with the usage levels described above, respectively."

This session, the 128th Maine Legislature is considering several bills that could affect Maine's renewable energy laws, including LD 532, An Act To Remove the 100-megawatt Limit on Hydroelectric Generators under the Renewable Resources Laws, as well as LD 1185, a concept draft which "proposes to enact measures designed to update Maine's renewable portfolio standards."

Brewer Anheuser-Busch InBev sets global renewable electricity goal by 2025

Thursday, April 6, 2017

World’s largest brewer Anheuser-Busch InBev SA – parent to brands including Budweiser, Corona, Rolling Rock, Michelob, and Stella Artois – has committed to sourcing its electricity entirely from renewable sources by 2025.  The move would make AB InBev the largest corporate direct purchaser of renewable electricity in the global consumer goods sector.

AB InBev makes 30% of the world’s beer, operating breweries in 50 countries. Collectively, these facilities consume 6 terawatt-hours of electricity a year, of which 7% is currently renewable-sourced.  According to a March 28 press release, changing to 100% renewable electricity will reduce the company's carbon footprint by 30%, an estimated reduction of about 2 million tons of carbon dioxide a year.

While many multinational companies “invest” in renewables by buying renewable energy credits or certificates known as "RECs", AB InBev’s plan involves no REC-buying. The company reportedly intends to obtain 75 to 85 percent of its electricity through direct power purchases under a power purchase agreement or similar commercial arrangement, with remaining 15 to 25 percent coming from on-site distributed generation installations at its facilities, like solar panels. The company has committed to producing the energy in the country in which it is to be consumed.

Sourcing renewable energy is relatively easier in some countries, like Mexico. AB InBev announced that its largest facility, a Grupo Modelo brewery, had signed contracts to get all its electricity from wind power, including 220 MW to be built by Iberdrola SA in Puebla. Those new wind projects alone, destined to supply the brewery, represent a 5% increase to Mexico's renewable energy capacity. But in other countries, most notably in Africa, a lack of markets and infrastructure to connect industrial consumers with renewable energy may prove challenging. Also worth noting is that the company's commitment relates to electricity, and not directly to fuels or heat required for beer production and distribution. 

Nevertheless, Anheuser-Busch InBev's commitment to sourcing 100% renewable electricity by 2025 across its global portfolio of facilities represents another data point in the trend of corporate direct investment in renewable energy.  Corporations including Apple, Google, and Amazon have made a variety of commitments relating to renewable electricity, citing benefits ranging from environmental sustainability to locking in power pricing.

Trump executive order on domestic energy policy

Thursday, March 30, 2017

U.S. President Donald Trump has signed an executive order affecting domestic energy policy.  His March 28, 2017 Presidential Executive Order on Promoting Energy Independence and Economic Growth includes a variety of directives, generally aimed at reducing federal regulations affecting domestic energy production.  Here's a look at his Executive Order targeting Obama-administration climate regulations and other agency actions that potentially burden the development or use of domestically produced energy resources.

The Executive Order includes 8 operative sections.  One provides policy statements; six call for regulatory reviews that could lead to rule changes or revocations, or directly revoke and rescind Obama-era actions.  The final section includes general provisions.

Section 1 includes five policy statements, such as that "is in the national interest to promote clean and safe development of our Nation's vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation."  It also sets a federal policy "that executive departments and agencies (agencies) immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law."

Section 2 calls for an immediate review of all agency actions that potentially burden the safe, efficient development of domestic energy resources, "with particular attention to oil, natural gas, coal, and nuclear energy resources."  It directs agency heads to submit a memorandum to the Office of Management and Budget detailing such potentially burdensome actions, and including "specific recommendations that, to the extent permitted by law, could alleviate or eliminate aspects of agency actions that burden domestic energy production."  With respect to actions targeted with specific recommendations in a final report, agency heads are directed to "as soon as practicable, suspend, revise, or rescind, or publish for notice and comment proposed rules suspending, revising, or rescinding, those actions, as appropriate and consistent with law."

Section 3 rescinds or revokes a variety of Presidential actions and reports, including several of President Obama's executive orders regarding climate change, the President's 2013 Climate Action Plan, and the Council on Environmental Quality's 2016 final guidance for federal agencies on consideration of greenhouse gas and climate issues in performing reviews of agency actions under the National Environmental Policy Act.

Section 4 calls for the Administrator of the Environmental Protection Agency to "immediately take all steps necessary to review" the Clean Power Plan governing electricity-sector emissions and related rules "for consistency with the policy set forth in section 1 of this order and, if appropriate, shall, as soon as practicable, suspend, revise, or rescind the guidance, or publish for notice and comment proposed rules suspending, revising, or rescinding those rules."

Section 5 disbands a working group on the social cost of greenhouse gas emissions, and restricts the ways agencies may account for the monetary value of changes in greenhouse gas emissions resulting from regulations.

Section 6 calls for the Secretary of Interior to lift moratoria on federal land coal leasing activities imposed under a 2015 order, and to commence federal coal leasing activities.

Section 7 calls for review of federal regulations affecting emissions from the oil and gas sector, including 2016 emissions standards for new, reconstructed and modified sources, and a 2015 rule governing hydraulic fracturing on federal and Indian lands, among others.

Section 8 includes general provisions, generally similar to those found in other executive orders.


MA net metering, Single Parcel and Subdivision rules

Tuesday, March 28, 2017

Massachusetts utility regulators have opened an inquiry to review the current standards and procedures by which distributed generation projects seek exceptions to the net metering rules and regulations that generally require each facility to be sited on a single parcel of land.  The case could lead to changes in the Department of Public Utilities' Single Parcel Rule and Subdivision Rule.

On March 15, 2017, the Massachusetts Department of Public Utilities issued an order opening an inquiry relating to the application of its net metering rules, which it docketed as DPU 17-22.  As described in that order, under Massachusetts statutes and regulations, "net metering allows customers to generate credits for excess electricity that net metering facilities generate."  The rules include limitations on the size of a generation facility eligible for net metering -- below 60 kW generally, or up to 2 MW for renewable projects (or 10 MW for certain public facilities).

Because the rules include project size limits, how you define the "facility" can affect its eligibility for net metering.  In one case, the Department established a "Single Parcel Rule", defining an eligible net metering facility as “the energy generating equipment associated with a single parcel of land, interconnected with the electric distribution system at a single point, behind a single meter." In 2016, the Department received 13 petitions seeking an exception to the Single Parcel Rule, an increase over three petitions in 2015 and one petition in 2014.

The Department also recognized if it was adopting parcel boundaries as a factor for defining a net metering facility, it should also set a date after which it would presume that the further subdivision of parcels was to game the net metering rule.  In its Subdivision Rule, the Department required that any customer who seeks to establish a net metering facility on a parcel of land that was subdivided after January 1, 2010, file a petition demonstrating that the subdivision was not for the purpose of creating multiple parcels specifically to support multiple net metering facilities.

But in a move that could lead to changes to these regulations, in its March 15 order opening inquiry, the Department identified a series of questions on which it seeks written comment.

Questions posed by the Department relate to the aggregation of capacity, blanket exemptions and case-by-case exemptions, the treatment of multiple facilities on one parcel, the treatment of a single facility on multiple parcels,  possible methods of streamlining submission and review of petitions for exceptions from the net metering rules and regulations, process requirements for petitions for exemptions, and challenges in allocating credits to multiple accounts and related solutions.

The Department has requested initial written comments no later than 5:00 p.m. on April 10, 2017.  It has also scheduled a technical conference for May 3, 2017.

Emerging technologies and the electric grid

Monday, March 27, 2017

A task force examining the deployment of emerging technologies across the North American electric grid has identified three imperatives necessary to ensure the continued reliability and efficiency of the bulk electricity system, relating to: renewable supply and integration; greater situational awareness; and controlling an increasingly distributed energy system, with increased deployment of distributed energy resources.

The 39-page report, “Emerging Technologies: How ISOs and RTOs can create a more nimble, robust electricity system,” was published on March 16, 2017, by a group of nine Independent System Operators (ISO) and Regional Transmission Organizations (RTO) known collectively as the ISO/RTO Council (IRC).

With respect to integrating renewable resources, the IRC noted that it "[s]upports policies and positions recognizing the electricity system’s ability to accommodate large amounts of renewables and realizing their growing potential."  While remaining "agnostic to specific technologies that may faciiltate renewable integration", IRC supports policies that accommodate emerging renewable integration technologies, while "avoiding early technological lock-in."

With respect to situational awareness, the IRC notes the lack of available data on the penetration of distributed energy resources, but that a lack of data or its sharing should not limit grid operators' understanding of what's happening on the grid.  IRC suggests the development of a general operational data framework, "where increasingly comprehensive operational data from the distribution system is provided as DER penetrations reach different thresholds."

The report also notes, "Because of emerging technologies, North America’s electricity systems are moving toward a more distributed arrangement." In 2016, the Federal Energy Regulatory Commission issued a Notice of Proposed Rulemaking in which it proposed rule changes "to remove barriers to to the participation of electric storage resources and distributed energy resource aggregations" in organized wholesale electric markets.  Recognizing that such a rule change could set a framework for future DER growth, the IRC calls for continued coordination, data sharing, and flexibility.

Maine net energy billing rules, 2017 revision

Monday, March 20, 2017

On January 31, 2017, the Maine Public Utilities Commission adopted revisions to its rule chapter 313, governing net energy billing.  Net metering, or net energy billing, is the metering and billing mechanism that Maine and most other states have adopted to promote the development of solar photovoltaic and other distributed renewable energy facilities.  While the Commission first adopted a net energy billing rule in the early 1980s, its 2017 revisions to that rule reduce the benefits of net metering for future projects.  Here's a look at Maine's revised net energy billing rules.

The Commission described its actions in a written order dated March 1, and published its final rule on the same date.   Most notably, the Commission reduced the amount of future generation facility output that can be netted against its transmission and distribution utility bill -- by first introducing, then reducing, a concept called "nettable energy."  Nettable energy is now the entire amount of energy generated by the facility, including the amount consumed by a customer “behind-the-meter”.  This shift -- from netting on a net basis, to netting on a gross basis -- is a significant change in state policy that is unfavorable for behind-the-meter generation.

As before, a net energy billing customer with solar or other eligible generation may offset all of its energy supply bill with its nettable energy.  But the Commission's new rule phases out the former 100% crediting of net energy for transmission and distribution charges.  Depending on the year into which a project is placed in service, the new rule reduces the portion of the "nettable output" -- what counts for netting -- by 10% in each of the next 10 years, reaching 0% T&D crediting for customers that become net energy billing customers after calendar year 2026.  The result is a gradual reduction of the incentive to net energy bill.  (Note that once a customer becomes a net energy billing customer, its rate treatment will generally last for 15 years.  Likewise, existing net energy billing customers may continue to net bill under the previous rule's approach for a 15-year period, after which they could continue to net for supply but not for T&D.)

The Commission also added a section covering renewable energy credit (REC) aggregation.  Section 4 of Chapter 313 provides that new customers in 2018 and after may elect to have the RECs or environmental attributes of project power be aggregated by their local investor-owned utility for sale into the regional market, with the proceeds returned to participating customers.  The Commission described its decision to include a REC aggregation program as "an effort to obtain on an optional basis a value stream that is not currently being monetized."  If small renewable projects would qualify for RECs, but are either not doing so or are not selling the RECs, REC aggregation options may allow some projects to connect with the market.  On the other hand, by selling the RECs, the project owner or power consumer cannot claim to have consumed green electricity, so there are tradeoffs.

The Commission did not change some other aspects of the rule, such as maximum project size (660 kW) or its limit on the number of accounts or meters permissible under a single net energy billing arrangement (10).  It noted, "Fundamental changes to NEB in Maine and promotional programs for larger renewable and community solar projects are the purview of the Legislature as a matter of State energy policy."

Based on a list of legislative requests, the state legislature will consider at least 12 bills relating to solar energy in its 2017 session.

On March 10, the Commission published a Frequently Asked Questions document covering the Chapter 313 net metering rules.  The FAQ provides answers to 10 questions, ranging from why the Commission changed the rule, to providing specific examples of how much nettable energy a customer would be able to claim depending on the year in which its project was placed in service.