Solar Programs Are Driving Electricity Rate Increases
Gerry Chasse is a past President of Emera Maine and retired Chief Operating Officer of Tampa Electric Company. With 34 years in the electric utility industry, he is experienced in the New England electricity market, the Florida market, solar development, grid operations, grid modernization planning, electric reliability, large scale transmission and most other aspect of utility operations.
Finally, a Public Advocate willing to speak out against solar programs that are fueling large electric rate increases in Maine. And the reaction…the solar industry, which has been heavily subsidized in Maine since its inception, doesn’t like it. Their argument, that fewer solar farms than what are currently in queue will actually get built, only means that fewer of them will make it through the feeding frenzy generated by an expansion of the state’s Net Energy Billing program. It doesn’t change the fact that solar is heavily subsidized and both the direct and indirect costs will continue to grow, causing steep electric rate increases.
If solar could stand on its own two feet, the answer is simple. Allow solar to compete in the market like all other generators. But it can’t. The solar industry in Maine wants you to believe that solar is the cheapest form of generation available today. It is true that unsubsidized solar energy in places like Arizona, New Mexico, and Florida costs between 3 and 6 cents per kilowatt-hour. These are 500 acre or larger solar farms producing only energy, built on flat, low-cost land and producing it at high capacity factors. Larger solar projects built in Maine, with the help of federal subsidies, may get below 10 cents, but most, especially the smaller ones, still can’t compete. Why can’t they? Because Maine has 50% less sun than those states. Our solar farms are small. And solar annual capacity factors are 15% or less and less than 10% in the winter.
Ironically, when Maine de-regulated the electric industry in the 90’s, one primary concern was ratepayers taking on the risk for generation development. With this strange turn of events, the legislature has backtracked and squarely placed the risk of solar on the backs of ratepayers.
The solar industry will tell you that 10 cents is much less than the standard offer which has recently spiked to about 17 cents. This is an apples and oranges comparison. Solar produces energy only. The standard offer includes the cost of capacity (those generators that are needed to back up solar when the sun doesn’t shine every night and every cloudy day). It includes the cost of renewable energy credits from a market created by standard offer and competitive energy providers who must purchase the clean and renewable attributes of solar, wind and biomass required by current state law. It also includes other ancillary market costs and the profits of CEP’s. Yes, these out-of-state companies profit from us. The solar industry will not tell you these things. But they will say that “the OPA is echoing the utility’s numbers there and they have not done their own analysis”. Well, share your numbers then. Show us how you are lowering electricity rates in Maine. Show us how your total installed costs compare. Show us your capacity factors, your cost of capital, your financial model, your profit margins. They won’t do that. They will just continue to lobby Augusta for more subsidies because their primary concern is their bottom line and not your electricity bill.
Aside from the direct costs of solar, we have only just begun to see the indirect costs of integrating and operating solar on the grid. Every bit of solar requires a standby generator or battery to back it up. Today, only two-hour and four-hour batteries exist that allow you to shift the timing of the use of solar produced energy a short period. Every bit of solar connected to the distribution grid requires more complex technology to operate it and ensure the grid remains reliable. These all add to costs that CMP and Versant will have to collect from customers.
The state has no plan to integrate wind and solar into the grid and no plan to deal with the electrification of heating and transportation. To continue to move forward with legislation that incentivizes and subsidizes these resources is irresponsible at best and negligent at worst. You cannot effectively and economically manage a power system through legislation. You need a plan. On its current path, Maine’s retail rates will be the first of the contiguous states to hit 40 cents/kwh and for all of that cost, there will be no appreciable reduction in carbon emissions in the electric, transportation or heating sectors.
Maine’s program to subsidize and incent more solar is seriously flawed. It is directly tied to retail electric rates and as retail electric rates rise, the subsidy grows. It’s a cost generator, enriching solar developers and costing Mainers hundreds of millions of dollars in above market electricity costs. Net Energy Billing needs, at a minimum, to be drastically restructured. But after 40 years of the evolution of solar generation technology, it’s really time that the industry stop asking for, and our legislators stop handing out, these massive subsidies.
By Gerard Chasse