Over a year following the passage of the Distributed Generation Amendment Act of 2011, solar advocates in DC remain persistent in their efforts to make solar more affordable for District residents. Since the beginning of 2012, two new pieces of legislation have been introduced that would increase accessibility to solar. More importantly, as the demand for solar renewable energy credits (“SRECs“) continues to increase since the beginning of 2012, a greater focus has been placed on achieving these aggressive renewable portfolio standard (“RPS“) requirements through promoting and incentivizing the development of solar on the commercial and residential scale. However, barriers to a solar investment continue, and the DC Council seeks to remedy these challenges through the pieces of legislation introduced this year. The first bill introduced is the Community Renewables Energy Act of 2012, with the second being the Energy Innovation and Savings Amendment Act of 2012
Community Renewables Energy Act
In March 2012, Coucilmembers Mary Cheh (Ward 3) and Yvette Alexander (Ward 7) introduced the Community Renewables Energy Act of 2012 to the DC Council to support community-owned solar energy facilities and allow DC residents to receive credit for the solar electricity generated by the community owned system, which will help to offset their own utility electricity bills via net metering. Many DC residents are unable to use solar energy because they either rent an apartment or own a property that is not ideal for a solar installation. With these restrictions, a large portion of DC residents do not have the ability to participate in the solar industry. This form of virtual net metering would allow for anyone to reap the energy benefits associated with owning a solar installation.
To receive the benefits from a Community Generation Facility, a DC electric utility customer would “subscribe” and commit to purchasing a certain portion of the solar electricity from the community facility. They would then be credited for that solar production on their utility bill (i.e. they purchase 100 kilowatt-hours of solar electricity generated form the community solar energy system, and their utility electric bill is reduced by 100 kilowatt-hours). This is the process referred to as “Virtual Net Metering.”
While many DC residents vested in solar energy showed an immense amount of support for this bill and the creation of community solar facilities at the June 14th hearing, the bill still faces opposition from utility companies. The utilities and energy suppliers present at the hearing expressed their concerns surrounding the additional costs instituted by this fundamental change in the metering process. The utilities are willing to work with the bill’s supporters to allow for this legislation to move forward. However, it will not pass without a high level of cooperation. The DC Council and the utility representatives alike hope to use models like the Community Solar Garden initiative in Colorado as a basis for developing an agreeable platform for this legislation.
Energy Innovation and Savings Amendment Act
Shortly after the introduction of the Community Solar Bill, in April 2012, the Councilmembers Mary Cheh (Ward 3), Yvette Alexander (Ward 7), Tommy Wells (Ward 6) and Chairman Phil Mendelson introduced the Energy Innovation and Savings Amendment Act of 2012 to the DC Council to exempt solar energy systems from the burden of the personal property tax.
Personal property tax has been a significant barrier to solar finance and installation, as it can raise the costs of the system following installation. Personal property tax may specifically hinder third party ownership. This tax creates an unfair discrepancy between owners of solar systems who install facilities on their own property and third party ownership of a system installed on a host site. Owners who install systems on their own property do not have the personal property tax imposed, but rather pay a real property tax at a much lower rate. Third party investors do not own both the property and the solar project on the property, and thus, they are subject to the personal property tax at a much higher rate of close to 20-30% of the revenues in the first year of operation for a system. This discrepancy creates an unequal playing field and drives down the opportunities for third party solar investments.
One DC utility has taken a stance to support this legislation, as it will benefit and incentivize greater investment in solar in the District, while also helping the District to obtain the solar requirements set for utilities through the RPS. Third party investments in solar will be crucial to reaching the ultimate goal of 2.5% solar power by 2023, as set forth in the RPS, which will require close to 200MW of installed capacity over the next 10 years.
With the passage of both the Community Renewables Energy Act of 2012 and the Energy Innovation and Savings Amendment of 2012, the District of Columbia may see a much brighter future for the solar industry. The solar industry would greatly benefit if these bills are passed by the end of the year, and this would help set important precedents for the industry as a whole. As the District took the necessary and aggressive steps to increase the solar requirements for utilities in 2011 through the Distributed Generation Amendment Act, it continues to take the necessary steps to ensure equal access to solar for all those interested and spur third party investments to help the District maintain its goals in renewable energy. DC is already one of the solar hotspots in this country and, in relation to its size DC currently tops the list of installed capacity (kW) per square mile. With strong SREC market conditions and growth in installed capacity, DC can remain atop the list as an attractive market for developing solar.
About Sol Systems
Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial and utility-scale projects.
Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying their origination, diligence, and financing processes. Developers seeking financing for projects can access over $2.5 billion in capital through the Sol Systems investor network.