District of Columbia Council Member, Mary Cheh, recently introduced one of the more important pieces of legislation the District’s solar community has seen in some time: the Distributed Generation Amendment Act of 2011.  This bill sets a framework and goals for the District that will ensure the development of a robust solar community by creating jobs, providing a price hedge against rising energy costs, strengthening the local transmission grid, and producing significant localized environmental benefits.

The bill accomplishes these goals in two ways.

1.      It increases the solar renewable portfolio standard (RPS) requirements for the District so that these requirements look more like the policies of surrounding states: Maryland, Delaware, and New Jersey.  This sets up the long-term foundation for the solar community, and positions the District as one of the leading cities to attract and retain investment in solar.

2.      It ensures that only solar systems actually located on the District’s distribution grid qualify towards DC’s RPS, or solar energy goals. This has the added effect of stimulating local economic development while ensuring DC reaps the many benefits of distributed solar energy.

What is a Renewable Portfolio Standard (RPS)?

A renewable portfolio standard is a state-legislated policy (in this case, the District’s policy) that requires energy suppliers to provide a portion of their electricity from renewable energy in a state.  This means that for every unit of electricity provided to the district, a certain percentage must come from wind, solar, biomass, etc.

The District’s RPS has a specific requirement for solar, which means that for every unit of electricity sold, a portion (.04% in 2011) must come specifically from solar.  Energy suppliers can meet this requirement by:

(1)   Supplying solar electricity from solar systems they build, or

(2)   Paying a solar energy system owner (like a homeowner) to supply it for them.  This is accomplished by purchasing the solar renewable energy credits (SRECs), something akin to carbon credits, associated with the solar system. SRECs are key to making solar affordable and they are fundamental for making solar systems economical for homeowners and businesses.

RPS legislation like the District’s is now very common. Altogether, 36 states have a RPS or similar legislation and 16 states have a RPS with a solar carve-out similar to that in DC.

The Distributed Generation Amendment Act of 2011 makes some critical changes to the RPS that will ensure its effectiveness in the future.

Why is solar beneficial to the District of Columbia?

The District of Columbia currently imports almost 100% of all of its energy supply. Solar generation, and more specifically, distributed solar generation provides significant social, environmental, and economic benefits.  Some benefits of local solar generation include:

  • Increasing the stability and reliability of the distribution grid
  • Reducing pollutants such as NOx and SOx
  • Diversifying the District’s fuel sources
  • Decreasing the price vulnerability District rate-payers incur by relying solely upon fossil fuel sources, which have significant variable costs
  • Reducing the heat-islanding affects found in DC
  • Reducing the demand for energy during the middle of the day, and specifically during the summer.  This aligns with peak demand, and disproportionately offsets highly polluting “peaker” units
  • Creating jobs in the District of Columbia

The Distributed Generation Amendment Act of 2011 bill forges the foundation necessary for sustainable industry growth for years to come, while creating many more local green collar jobs (over 600 have been created so far) and a significant revenue stream for the city through increased tax revenues.

What are the benefits of the legislation for a homeowner?

A residential system owner can save a substantial amount of money on their utility bills by installing a solar energy system, typically between 30-50% (or $400-800 annually), depending on the size of their system. Homeowners can also sell the green attributes associated with their energy production in the form of solar renewable energy credits (SRECs). The average homeowner can earn between $900-1800 annually by selling SRECs. Energy suppliers buy these SRECs to meet their RPS goals.  This is why an effective renewable portfolio standard (RPS) is so critical for solar financing.

The Distributed Generation Act of 2011 provides homeowners and businesses with a significant economic incentive to go solar.  The legislation creates a long-term and sustainable market for solar renewable energy credits (SRECs) which solar system owners can sell to energy suppliers.  The legislation also ensures that the market for SRECs will remain stable and strong into the future, which will spur solar development and investment in the District.

For the District’s environmental community, this bill moves us towards a more sustainable future, while also creating jobs and helping local industry.  It is well crafted, with significant support from the solar industry, and it is a piece of legislation worthy of community support.

If you want to help the District lay the foundation for a sustainable solar community and spur solar development in the city, we urge you to contact your DC council member .