Sol SOURCE Archives - Sol Systems

With the recent passage of the Inflation Reduction Act, the federal government has taken a bold step towards a carbon-free future for America. There remain critical obstacles; including rising interest rates, supply-chain issues, tariffs, and module costs. But we have embarked.

States looking to follow the federal government’s lead on climate -a refreshing change- have a powerful framework to leverage and replicate: renewable portfolio standards (RPS) and corresponding renewable energy certificate (REC) markets. Corporations looking to offset their carbon footprint, specifically Scope 2 but indirectly also 3 emissions that represent the Scope 2 emissions of their supply chain, can (and should) engage in updating these markets to ensure the markets are designed to achieve their carbon-free goals.

This article takes a fresh look at RECs, why they are important, how they can drive additionality and emissionality, and how RECs can be an integral part of customers’ carbon-free goals.

PART I: What Is a REC?

A REC is an intangible certificate that represents the environmental benefits associated with a specific amount of electricity produced by a renewable energy resource, generally one megawatt-hour (MWh)[1].When renewable electricity is produced, it enters a shared electricity grid and becomes indistinguishable from electricity generated by other sources – similar to water flowing into a network of pipes. Although individual electrons cannot be tracked on the grid, RECs enable renewable energy to be independently measured, tracked, and traded like other commodities. REC markets also ensure integrity because the environmental benefit of a REC can only be counted once when a customer “retires” the REC to claim it.

Each REC can be tagged with information about the project that produced it, the project’s location, technology type, and the time period when the electricity associated with the REC was generated. The electricity production is first recorded by a project’s electric meter and is then communicated electronically to third-party environmental registries or regional transmission organizations (RTOs) who validate and award the REC.[2]

There are generally two types of RECs in the United States: compliance RECs and voluntary RECs.

Compliance RECs were first introduced in the 1980s as part of an incredibly successful state market-based mechanism, the Renewable Portfolio Standard (RPS), for driving the expansion of renewable generation. In these RPS compliance markets,[3] retail electricity suppliers and utilities are mandated to purchase a defined (usually increasing) percentage of their electricity supply from renewable sources. These buyers are generally referred to as “compliance buyers,” and they are required to either produce renewable electricity themselves, where allowed, or buy RECs in order to satisfy their RPS requirements. If these buyers do not meet the RPS requirement, they are required to pay an Alternative Compliance Payment (ACP), a non-compliance fee that acts as the price ceiling for RECs within a given compliance year.

Demand within a compliance market is set by the RPS and generally increases year over year. If demand is high and supply (renewable energy projects producing RECs) is low, REC prices will rise towards the ACP. As more renewable energy gets built within the market, REC supply will increase, and REC prices will decline.

Renewable energy projects that do not sell RECs into compliance markets can still sell RECs to businesses, homeowners, governments, and non-profits who are interested in purchasing these RECs on a voluntary basis. These voluntary customers may purchase voluntary RECs to meet their renewable procurement goals, or to combine these RECs with “brown” electricity from coal and other fossil fuels and “green” their energy supply. If a family purchases green energy through their utility or retail energy supplier, this supplier is likely combining their preexisting brown electricity with voluntary RECs to offer renewable energy to customers.

Voluntary market pricing has been increasing over the past couple of years, largely driven by corporate appetite for RECs to meet Environmental, Social, and Governance (ESG) goals. Unlike the compliance markets, the pricing in a voluntary market is not tied to an ACP. It functions more similarly to a traditional market; as demand for renewable electricity goes up (relative to supply), prices follow until supply begins to meet that demand. Conversely, as demand for RECs goes down, so do prices. Increased corporate demand has helped incentivize the development of renewable energy projects in non-compliance markets, providing another revenue source for these projects.

The owner of a renewable energy project can either sell the electricity and the RECs produced by the project together (called a “bundled” product) or sell the electricity and RECs separately. The value of a REC can vary depending on the type of renewable project that produced it, the duration of the contract to purchase it, whether the RECs are being sold into a compliance market or a voluntary market, and what the ACP – essentially the price ceiling in compliance markets – is set to.

For example, solar RECs are generally sold at a premium; longer duration contracts are usually signed at lower prices; and RECs generally trade at higher prices in compliance markets than in voluntary markets. Prices in compliance markets range from $3 per REC for some types of technologies to hundreds of dollars for solar RECs in some compliance markets. Compliance RECs compose anywhere from 25-80 percent of a project’s revenue depending on the market. Voluntary RECs typically compose 10-20 percent of a project’s revenue.

The additional revenue earned by renewable generators through REC sales is essential for enabling renewable projects to compete with heavily subsidized fossil-fuel generators. The REC markets in the United States are some of the most sophisticated environmental markets in the world.[4] They are particularly important because of their integrity and their “traceability”—their ability to trace the production of renewable energy across multiple states, a variety of technologies, and across multiple jurisdictions, and millions of owners.

The REC markets also enable governments, businesses, and the public to directly participate in valuing renewable energy and assigning long-term value to renewable energy assets – driving the energy transition. While large organizations often negotiate complex virtual power purchase agreements (PPAs) to procure large volumes of renewable electricity and RECs bundled together, unbundled REC markets enable individuals and smaller organizations, like churches and schools, to also participate in the renewable energy market and purchase their electricity from clean sources even if they cannot procure electricity directly from onsite or offsite generation. Only if a customer owns and retires a REC can a renewable energy usage claim be made.

PART II. REC Markets and Additionality

How REC Markets Drive Additionality

The economic concept of additionality is a bit like the “but for” test in tort law: but for a specific action or intervention, a certain outcome would not take place. In the renewable energy industry, additionality generally means that but for a specific agreement to buy energy from a specific facility, that facility would not be built.[5] Many customers look to buy electricity from new renewable energy projects to create additionality.[6] Some have raised concerns that current REC markets do not effectively drive additionality or the development of new renewable generation. We disagree.

RECs and REC markets play a key role in driving new renewable energy deployment and projects by guaranteeing an income stream for new projects. Project owners earn a significant portion of their revenue by selling their project’s RECs, either to its electricity off-taker in a bundled sale or independently to third parties. In either case, revenues from REC sales often provide the critical cash flows that enable a project to move forward.

Large corporate and institutional customers drive around 25 percent of all large-scale solar build in the United States. Most of these customers procure their electricity through a financial instrument called a “virtual PPA.” Under a virtual PPA, a customer commits to purchase electricity from a specific project at a fixed price, and instead of delivering electricity directly to the customer, the project delivers its electricity onto the grid at a floating market price. The customer then pays to or receives from the project owner the difference between the fixed and floating prices, guaranteeing a fixed revenue stream for the project,[7] making it financeable and hence enabling the project to be built.

Even when these customers buy a bundled product (the purchase of both RECs and electricity) through a virtual PPA, they are still purchasing RECs. When the renewable project delivers electricity onto the grid, that electricity is sold through the RTO or to the local utility, and the corporate customer (buyer) is really transacting on a financial swap. The project then keeps the green attributes associated with generation in the form of the RECs and those RECs are sold to the customer for retirement.

Corporate buyers can (and should) still claim additionality (if that is their critical metric) if the virtual PPA enables new generation. However, these buyers should recognize that this approach is really a combination of a financial instrument plus a REC procurement; and should also recognize that other financial instruments may enable new renewable energy projects just as meaningfully. For example, if a customer’s goal is to provide a financeable income-stream for a project to drive new renewable energy capacity (additionality), they could alternatively purchase RECs from the project over a long period of time or finance the project with critical tax equity – or both.

Consider the following example: A project in the Southwest Power Pool (SPP) may have the opportunity to sell its RECs unbundled from the associated electricity. A project owner in the SPP might find that the voluntary REC market provides a better premium for its renewable energy than the utility - which drives healthy competition in regulated territories. A corporate customer hoping to procure renewable energy and drive new capacity could contract to purchase 10–15 years of RECs from the project, providing a financeable revenue stream and creating additionality similarly to a PPA. Further, enabling projects in SPP through such a REC strip may have a more profound impact on reducing carbon emissions than transacting on a virtual PPA in the California Independent System Operator (CAISO) given the higher carbon intensity of the SPP grid. More on that in a moment.

In short, by purchasing RECs, customers can provide critical cash flows to projects that would not have been financially viable otherwise. Over the last decade, Sol Systems has worked with over 20,000 customers to provide long-term REC financing, and by doing so has facilitated the development of tens of thousands of new projects – that is additionality.

RECs are Critical Regardless of Additionality

Of course, RECs can also be purchased from preexisting renewable energy projects. Although revenue generated by REC sales can be critical to an existing project’s continued operation, these purchases do not drive new construction and therefore generally are not associated with additionality. While we understand (and support) the preference for new build, preexisting RECs are also critical to the industry for a couple of reasons.

First, RECs enable project owners and customers to track and transact renewable energy in a market in which electrons are liquid and impossible to track. Second, investors rely upon merchant unbundled RECs (sometimes from the beginning and sometimes after a PPA term) in their underwriting to finance renewable energy projects just as they rely upon merchant electricity. The opportunity to eventually sell these “merchant” RECs is an essential basis for an owner’s initial investment in a new project. Although the decision today to purchase RECs from an operational renewable energy facility does not lead to new build (because the project has already been built) the current market for unbundled RECs was a core part of the initial underwriting and financing of the project when it was developed years ago.

Customers that purchase and retire RECs from preexisting renewable energy assets can still claim renewable energy use by offsetting their non-renewable or brown electricity consumption with merchant RECs. They should just be clear about what type of RECs they have purchased,[8] and about the fact that the REC purchase did not drive new or additional solar projects. Moving forward customers should also begin to disclose the carbon “benefit” of these RECs and compare that to the carbon footprint of their current electricity needs. A concept often referred to as emissionality or locational marginal emissions.

Part III: REC Markets and Emissionality

One criticism of REC markets is that they were designed to drive renewable energy, and have succeeded, but they are not calibrated to necessarily incentivize the outcome we are all trying to achieve – a net zero economy. This is a fair criticism, and one that becomes more cogent and important as we build more renewable energy. We should not be incentivizing new renewable energy build in a market that is already saturated with renewable energy the same way we incentivize renewable energy build in a market that relies upon coal. REC markets have been critical to supporting and catalyzing new renewable energy capacity. Moving forward, they must better capture, reflect and value the carbon emissions that this new renewable energy capacity is displacing – also referred to as “avoided emissions”.

The implicit environmental value of renewable electricity corresponds to the carbon and other pollutants associated with the non-renewable electricity it displaces, usually measured in CO₂e.[9] The carbon intensity of a grid changes throughout the day and is a function of the fuel sources (coal, natural gas, bunker fuel) used by generation facilities on the grid at a specific time. Each fuel source has a CO₂e impact, and the carbon footprint of each utility territory or RTO at a given moment is an amalgamation of these different generation facilities that are producing. Companies like Watt-Time are endeavoring to measure this impact in real-time.

REC markets are critical tools for this endeavor. These markets could (and should) tag each REC with the corresponding carbon intensity of the grid at the time and location of their production to provide customers with both the traditional MWh displaced metric, and also a CO₂e metric measured in tons.[10] This is exactly the information customers need to measure, trace, and ultimately price the specific environmental impact of RECs with an aim to fully displace carbon on the grid. This approach to valuing renewable energy based on actual displaced emissions is often referred to as “emissionality,” and several large corporations are working to develop better methods of accounting for this metric.

While these changes would add complexity to existing REC markets, the benefits would be substantial.

First, utilities, retail energy suppliers, corporations and other consumers could better understand the actual carbon reduction associated with each REC and value RECs based on the corresponding CO₂e value. This would incentivize renewable energy development in utility and RTO geographies with a higher carbon footprint, accelerating the transition to carbon-free electricity. This would also enable states to transition RPS programs into carbon-free programs by linking the language and metrics of carbon (tons offset) with the language and metrics of RPS markets (MWh produced and offset).

Second, the changes would help large corporations, academics, and the SEC who are struggling with how to integrate RECs into Scope 2 requirements because RECs measure MWhs of renewable energy produced, and Scope 2 requirements focus on carbon displaced. Customers can currently offset the electricity they consume with RECs without an understanding of the carbon intensity of the grid in which they operate, or the emissionality of the RECs that they procure. They may be procuring too many RECs or procuring too few.[11]

Tagging RECs with a carbon intensity (in tons of CO₂e) would enable these customers to precisely match their REC procurement and carbon credit procurement under one framework to achieve verifiable carbon neutrality. Creating a 7-year transition period for customers and markets to integrate RECs based on their emissionality into their Scope 2 plans would enable both the market to evolve, and customers to better measure and plan for their carbon-free future.

Our Conclusion: A New Architecture for the Future

Over the past 14 years Sol Systems has helped develop or finance tens of thousands of renewable energy projects throughout the United States. In our experience, REC markets provide a proven and effective framework for valuing, incentivizing, and transacting with renewable energy resources. It is critical for customers, utilities, policymakers and other stakeholders to understand the significant potential of these markets and also possible areas of improvement. We urge academics and policymakers, especially those who may not actually be actively involved in the renewable energy industry, to listen to and engaging with the practitioners and participants currently building this industry.

We recommend three primary adaptations for our industry:

Redefine & Broaden the Concept of Additionality: Additionality is a core principle for many large corporations seeking to catalyze the development of new renewable energy capacity. Additionality is not the same as emissionality, but it does drive the displacement of carbon-intensive fuel sources on the grid. We urge corporations to rethink how they define additionality with respect to renewable energy procurement and adopt a more flexible and broader approach that could incorporate long-term REC procurement and/or tax equity financing, which can represent 30-40 percent of a project’s financing needs. From our perspective, additionality should mean providing critical additional financial certainty for a project that enables that project to move forward; and can be achieved through multiple strategies.
Integrate Emissionality into REC Markets: RTOs should move quickly to integrate emissionality into REC tagging and tracking so that market participants can better integrate carbon intensity and emissionality into their REC procurement. These RTOs should meet to discuss an appropriate and uniform application of the concept. Market participants, including NGOs and interested corporations, can help fund these efforts if needed. This effort should begin in the United States, but should be leveraged and replicated in other countries, beginning with those that are most critical to decarbonization. Emissionality gives us the tools and the language to talk constructively about renewable electricity production, RECs and carbon intensity interchangeably.
Integrate REC Emissionality Into Scope 2 Requirements: We urge academics and policymakers to leverage and adapt preexisting REC markets to architect and achieve the carbon-free future we are all focused on creating. Current REC markets are efficient and transparent platforms to transact both RECs and related CO2e reduction. Rather than carving out REC procurements from Scope 2 compliance, as some have suggested, REC markets should be a key tool and instrument for implementation. Corporations currently offset their electricity and related carbon footprint with REC procurement. We recommend a 7-year ramp towards a framework where corporations reach their Scope 2 requirements through the CO2e of their REC procurement, a more precise methodology that bridges RECs (measured in MWh) and carbon (measured in CO2e). This enables the appropriate development of this market architecture.

[1] For scale, the average U.S. home uses around 7-10 MWh of electricity annually depending on size, location and consumption

[2] For example, PJM-GATS uses Energy Attribute Certificates to track the regional production of electricity by all generation types in 14 jurisdictions from Illinois to North Carolina

[3] 30 states and the District of Columbia currently have compliance legislation in place. Several other states have enacted voluntary programs

[4] The combined market for compliance and voluntary RECs in the United States is valued at $5 - $10 billion annually

[5] Additionality is a determination of whether an intervention has an effect when compared to a baseline. Interventions can take a variety of forms but often include economic incentives. The concept was initially used in carbon offset markets.

[6] Actually measuring the environmental impact of displacing this electricity in a certain location and at a certain time is a bit more complicated, and new “additional” build in an electricity market that has no carbon footprint does not provide environmental benefits

[7] There are situations where this can be reversed

[8] For example, “We have offset all of our electricity for this facility with renewable energy from an operating wind farms located in our utility territory.”

[9] Currently the environmental impact of electricity production and other human activities is measured in CO2e. This measures the impact of a given activity on global warming (the global warming potential) over a century and compares it to the same impact of one ton of carbon dioxide over the same period of time. This is an attempt to standardize and measure the impact of human activities on climate. Environmental markets must improve tracking and valuation of other pollutants, e.g., mercury, nitrogen oxides, and particulate matter. CO2e is a good start.

[10] Carbon intensity of the grid could be measured at the RTO level, at the utility level, or at the actual nodal level. The greater the specificity, the more precise the market can be in incentivizing localized environmental benefits, but the more complex the market tracking and systems need to be. We would suggest utilizing a RTO average as a start.

[11] Offsetting electricity consumption with RECs is a critical first step but does not entirely reflect the carbon intensity displaced by renewable energy or the carbon intensity of the electricity consumed. Customers could be over-purchasing RECs because the grid they are operating in is has a low carbon intensity compared to where they are purchasing RECs from; or under-purchasing RECs because the grid that they are purchasing RECs from has a low carbon intensity compared to where they are operating.

Click here to read the full November edition of the Sol SOURCE.

The Sol SOURCE is a renewables journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains trends and observations gained through interviews with our team, incorporating news from a variety of industry resources.

Below, we have included excerpts from the November 2022 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – Property tax exclusion extended to 2026 and new load management standards

On September 18, 2022, SB 1340, a bill to extend the property tax exclusion for solar to 2026, was signed by the Governor. California has seen several reversals of long-planned energy policy decisions this year, including efforts to keep its last nuclear plant open while shelving (for now) plans to recalculate net-energy metering (“NEM”). The California Public Utilities Commission (“CPUC”) issued a proposed decision that would delay a NEM 3.0 program to August 27, 2023.

On October 12, 2022, the California Energy Commission (“CEC”) adopted new load management standards to increase demand flexibility across the state. The new standards, which include requiring utilities to develop and offer retail electric rates that “change at least hourly”, will go into effect in April 2023. The changes are expected to reduce peak energy use and save customers $267 million over 15 years.

Connecticut - Non-Residential Renewable Energy Solutions draft decision released

On October 19, 2022, the Connecticut Public Utilities Regulatory Authority (“PURA”) released a draft decision on the Year 2 Non-Residential Renewable Energy Solutions (“NRES”) program (Docket 22-08-03). If adopted, the program’s overall capacity would be expanded from 60 MW to 110 MW and remove size-to-load provisions for commercial rooftop projects. A final decision is expected on November 9, 2022.

District of Columbia – RPS increase legislation introduced

The recently introduced Local Solar Expansion Amendment Act of 2022, which would maintain the Solar Alternative Compliance Payment (“SACP”) at $500/MWh and raise the solar carve-out from 10 percent to 15 percent by 2041, was heard on October 3, 2022. Multiple stakeholders provided testimony, voicing both support and concerns for the Act. Changes to the bill language are expected to address concerns arounds costs and feasibility.

There remains no official word on nominees for the DC Public Service Commission vacancy.

Illinois–Illinois Commerce Commission kicks off the Fall 2022 indexed REC procurement

Block 6 of the Adjustable Block Program (“ABP”) officially opened on September 1, 2022. At the same time, the Illinois Power Authority (“IPA”) circulated an updated program guidebook which can be found here.

The Procurement Administrator published the final indexed REC contract and RFP documents for the Fall 2022 indexed REC procurement. The RFP is for new utility-scale wind and solar projects over 5 MW along with any-size brownfield-site photovoltaic projects.

On the regulatory side, the industry continues to engage in ongoing proceedings related to the DG rebate and net-metering tariffs with Ameren and ComEd.

Maine – New England Clean Energy Connect on hold until next year

The Governor’s Energy Office has reconvened the distributed generation stakeholder group now that Maine’s legislative session has ended. The next meeting will take place on November 17, 2022. We expect a straw proposal later this fall to contain more successor program design details in advance of a final report due January 2023.

The New England Clean Energy Connect (NECEC) transmission project, which was the subject of a ballot measure approved by state voters in November, has been put on hold until April of next year when the case goes to trial. The NECEC project planned to carry electricity from Canadian hydropower through Maine and into Massachusetts.

Massachusetts – Finalized Clean Energy Standard amendments published

On August 11, 2022, Governor Baker signed omnibus energy legislation into law (HB 5060). Among other things, the law maintains an offshore wind procurement target of 5,600 MW by 2027 and creates an offshore wind tax credit. The law also addresses grid modernization and directs the Massachusetts Department of Energy Resources (“DOER”) to study a variety of energy storage programs. Furthermore, it requires that DOER include a pollinator-friendly solar incentive in the Solar Massachusetts Renewable Target (“SMART”) program or successor program, bans biomass from qualifying for the RPS after January 1, 2022, as an eligible RPS Class I or II technology, relaxes the net-metering cap, and mandates that all new vehicle sales in the state be zero-emission beginning in 2035.

On October 14, 2022, the Massachusetts Department of Environmental Protection (“MassDEP”) finalized amendments to the states Clean Energy Standard (“CES”) which include:

Raising the rate of increase of the CES standard to 6 percent each year from 2026-2030 and lowering the rate of increase from 2031-2050 to 1 percent each year, reaching 80 percent in 2050.
Increasing the CES-E stringency from 20 percent to 25 percent of 2018 retail sales starting in 2023.
Setting the CES alternative compliance payment (“ACP”) rate at $35/MWh and the CES-E ACP rate at $10/MWh in 2022 through 2050.

These changes were made to align the CES with the 2030 Interim Clean Energy and Climate Plan (“Interim CECP”) and the Massachusetts 2050 Decarbonization Roadmap Report (“2050 Decarbonization Roadmap”) to accelerate the state towards fully decarbonized electricity.

New Jersey – Senator Smith introduces RPS revision bill

On April 26, 2022, BPU issued a Straw Proposal for the Competitive Solar Incentive (“CSI”). While there have been delays, the CSI program is still expected to launch later this year. The BPU is also expected to review ADI incentive levels as part of the one-year review. Legislation related to interconnection (S431), energy storage incentives (S2185), remote net metering (S2848), and the legacy SREC program (S439) moved through the Senate. On October 17, 2022, S2848 was reported out of Assembly Telecommunications and Utilities Committee and referred to the Assembly Environment and Solid Waste Committee. We expect all these bills to be heard in the fall.

Senator Bob Smith (D-17) introduced S2978 on August 8, 2022. As currently written, the bill would:

Revise the RPS in New Jersey by applying the Class I standard to electricity sold in the State after subtracting electricity generated by existing nuclear and other zero-carbon sources.
Require that at least 50 percent of RECs used to comply with the RPS be in New Jersey.
Mandate that 100 percent of retail electricity delivered to New Jersey be from Class I sources by 2045.

The bill was scheduled for hearing on September 30, 2022, by the Senate Environment and Energy Committee but was pulled from consideration. We expect to see bill amendments from Senator Smith later this year.

Ohio – Public Siting Board proposes procedure revisions

On June 16, 2022, the Ohio Public Siting Board proposed procedure revisions, including one that would require solar setbacks of 150 feet from roads and unaffiliated properties and 300 feet from unaffiliated residences. Other proposals including public disclosure requirements for new facilities, codifying decommissioning requirements included in SB 52, and fencing requirements for solar sites. Initial comments were due on August 12, 2022, and reply comments were due on September 2, 2022.

Pennsylvania – Legislature approves hydrogen and natural gas tax credit bill

On October 26, 2022, HB 1059 passed both the Senate and General Assembly. The bill primarily focuses on state tax credits for hydrogen and natural gas, including $50 million annually for a federally designated regional clean hydrogen hub and $20 million in tax credits for to semiconductor manufacturing. The tax credit for using natural gas to make petrochemicals or fertilizer would also be increased by $30 million annually. Governor Wolf has until November 6, 2022 to sign or veto the bill.

Rhode Island - Department of Environmental Management changing REC accounting methodology

Earlier this month, the Rhode Island Department of Environmental Management (“RIDEM”) published a press release indicating the Department is looking at changing their renewable energy credit (“REC”) accounting methodology, specifically to account for greenhouse gas emissions. The current methodology used by RIDEM was developed from MassDEP. They are now looking to transition towards the model used by the Connecticut Department of Energy and Environmental Protection (“CTDEEP”) to ensure all RECs settled in Rhode Island are correctly counted towards the state’s electric sector.

Virginia – SCC requests additional comments related to the revenue-grade meter requirement

In March 2022, DEQ announced that it would define solar panels as impervious surface areas. On April 14, 2022, DEQ released additional guidance that pushed implementation out to January 1, 2025, for all projects that have not received interconnection approval. In July, DEQ released two additional stormwater guidance documents focused on stormwater management and erosion and sediment control. Comments were due August 31, 2022.

On October 3, 2022, Governor Youngkin unveiled his 2022 Virginia Energy Plan. Among other things, the plan calls for the Virginia Clean Economy Act (“VCEA”) to be reevaluated in 2023, and every five years thereafter. It also calls for the repeal of Virginia’s Clean Car Standard and for the state to exit the Regional Greenhouse Gas Initiative (“RGGI”).

On April 14, 2022, the Virginia State Corporation Commission (“SCC”) opened a docket to establish a self-certification process for small distributed generation systems seeking to qualify as low-income projects and consider additional GATS-related questions. On July 26, 2022, the SCC issued an order for additional comments in the docket. Staff issued their report on September 22, 2022. All stakeholder comments were due on October 20, 2022.

SOLAR CHATTER

In yet another example of renewable energy’s incredible momentum, a recent report by BloombergNEF found that solar and wind energy accounted for 10 percent of global electricity generation in 2021. Just 10 years ago, the two sources combined for less than one percent of global generation. —Who knows how far we’ll be looking back at 10 percent a decade from now?
After Hurricane Ian battered the Caribbean and Florida, solar energy proved to be one of the most resilient and important sources of power for many residents in the aftermath of the storm. Particularly in Puerto Rico, where much of the electric infrastructure was brought offline, rooftop solar provided many residents with a lifeline to power.
Last week, the U.S. Treasury began holding meetings with leaders in the clean energy industry in an effort to streamline new guidance on incentives included in the Inflation Reduction Act. The meetings, which will consist of six roundtable discussions, are focused on expediting the development of guidance while ensuring it is “correct and strikes the right balance”.
September saw the return of the industry’s largest trade show, RE+ (formerly named Solar Power International), which saw more than 27,000 attendees descend on Anaheim for the conference. This was the first show to include all technologies in the clean energy space and the excitement around the Inflation Reduction Act from the industry at large was evident. For our analysis of the Inflation Reduction Act, read our lead article from the August edition of the Sol SOURCE.

Click here to read the full August edition of the Sol SOURCE.

Below, we have included excerpts from the August 2022 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – Property tax exclusion likely extended to 2026

On August 23, 2022, SB 1340, a bill to extend the property tax exclusion for solar to 2026, went to the Governor. California has seen several reversals of long-planned energy policy decisions this year, including efforts to keep its last nuclear plant open while shelving (for now) plans to recalculate net-energy metering (“NEM”). The California Public Utilities Commission (“CPUC”) recently issued a proposed decision that would delay a NEM 3.0 program to August 27, 2023.

On August 25, 2022, the California Air Resources Board will vote on regulation that will ban sales of new gas-powered cars by 2035. The measure is expected to pass.

Delaware and New Jersey – Third Circuit Court rules on Delaware and Hoboken climate lawsuits

On August 17, 2022, the Third Circuit Court agreed that lawsuits brought by the State of Delaware and the City of Hoboken, New Jersey, against oil companies belong in state courts. This is the latest in series of cases fossil fuel companies have sought to hear in federal courts, which are presumed more hostile to states’ efforts to hold major fossil emitters accountable for climate change. Four other appellate courts that have already rejected these efforts, but oil companies have asked the U.S. Supreme Court to rule on the issue.

District of Columbia – RPS increase legislation introduced

Before leaving for recess, Councilmember Cheh introduced the Local Solar Expansion Amendment Act of 2022, which would maintain the Solar Alternative Compliance Payment (“SACP”) at $500/MWh and raise the solar carve-out from 10 percent to 15 percent by 2041 (DC already requires 100 percent renewables by 2032). The bill will be heard on October 3, 2022.

As a reminder, effective April 1, 2022, all new systems must have a revenue-grade production meter or inverter-based production measurement equipment. Older systems may continue to use estimation.

Mayor Bowser signed two pieces of legislation into law on August 1, 2022:

The Clean Energy DC Building Code Act requires that all new buildings be net-zero by 2026 and energy produced onsite must be from renewable sources.
The Climate Commitment Act requires that the District achieve carbon neutrality by 2045. To ensure that the target is met, the law sets five-year greenhouse gas targets. In addition, the law mandates fossil fuel-powered space or water heating appliances may not be installed in government buildings after January 1, 2025. Starting in 2026, the DC government may only purchase zero-emissions vehicles.

There remains no official word on nominees for the DC Public Service Commission vacancy.

Illinois – Illinois Power Agency submits final plan to the Illinois Commerce Commission

Illinois continues working to implement myriad regulatory requirements stemming from last year’s landmark Clean Energy and Jobs Act (“CEJA”). After revising the Long-Term Renewable Resources Procurement Plan (“LTRRPP”) based on stakeholder feedback, the Illinois Power Agency submitted its final plan to the Illinois Commerce Commission (“ICC”) on March 21, 2022. The ICC issued its final order on the LTRRPP on July 14, 2022 which serves as a guidebook for CEJA’s implementation and application. Shortly after, the IPA filed their compliance plan containing REC pricing for Block 6, which is set to open on September 1, 2022. Additional details on the LTRRPP along with the full REC model and prices can be found in this IPA announcement. The IPA is also expected to circulate an updated guidebook prior to the opening of Block 6.

The ICC also approved two additional procurement events to be held this fall and next summer for RECs from utility-scale wind, utility-scale solar, and brownfield site photovoltaic projects. The fall procurement is expected to be posted on October 7, 2022 with bids due by December 9, 2022.

Maine – Governor’s Energy Office reconvenes DG Stakeholder Group

Maine continues to work to incent a wider variety of clean electricity options in the state while wrestling with their role in the national transmission system. The Governor’s Energy Office has reconvened the distributed generation stakeholder group now that Maine’s legislative session has ended. We expect a straw proposal later this fall to contain more successor program design details in advance of a final report due January 2023. Litigation continues over the fate of the New England Clean Energy Connect (NECEC) transmission project, which was the subject of a ballot measure approved by state voters in November. The NECEC project would carry electricity from Canadian hydropower to the New England grid.

Massachusetts – Omnibus climate legislation signed into law

The Baker Administration continues to push forward several energy-related items in its last year. On April 15, 2022, the Massachusetts Department of Environmental Protection (“MassDEP”) published proposed amendments to the Clean Energy Standard (“CES”). The proposed amendments include setting the CES alternative compliance payment (“ACP”) and Clean Energy Standard-Existing (“CES-E”) ACP to $35/MWh and $10/MWh respectively for years 2022 through 2050. Comments were due on June 3, 2022, and we expect a final decision in the coming months.

On August 11, 2022, Governor Baker signed omnibus energy legislation into law (HB 5060). Among other things, the law maintains an offshore wind procurement target of 5,600 MW by 2027 and creates an offshore wind tax credit. The law also addresses grid modernization and directs the Massachusetts Department of Energy Resources (“DOER”) to study a variety of energy storage programs. Furthermore, it requires that DOER include a pollinator-friendly solar incentive in the Solar Massachusetts Renewable Target (“SMART”) program or successor program, bans biomass from qualifying for the RPS after January 1, 2022, as an eligible RPS Class I or II technology, and mandates that all new vehicle sales in the state be zero-emission beginning in 2035.

New Jersey – Senator Smith introduces RPS revision bill

The Board of Public Utilities (“BPU”) continues to broadly deny extensions for projects unlikely to meet Transition Renewable Energy Credit (“TREC”) deadlines while smoothing the process of moving projects from the TREC to the Administratively Determined Incentive (“ADI”) successor program. On April 26, 2022, BPU issued a Straw Proposal for the Competitive Solar Incentive (“CSI”). While there have been delays, the CSI program is expected to launch later this year. The BPU is also expected to review ADI incentive levels as part of the one-year review. Legislation related to interconnection (S431), energy storage incentives (S2185), remote net metering (S2848), and the legacy SREC program (S439) moved through the Senate and are expected to be heard in the Assembly this fall.

Senator Smith (D-17) recently introduced S2978, which would revise the RPS in New Jersey. Specifically, the bill would apply the Class I standard to electricity sold in the State after subtracting electricity generated by existing nuclear and other zero-carbon sources. In addition, the bill would also require that at least 50 percent of RECs used to comply with the RPS be located in New Jersey. Finally, it would mandate that 100 percent of retail electricity delivered to New Jersey be from Class I sources by 2045 and would remove the Class II requirement in 2045. The bill has been referred to Senate Environment and Energy Committee, where we expect a hearing this fall.

New York – New York Power Authority opposes Assembly’s Build Public Renewables Act

On July 28, 2022, the New York Power Authority (“NYPA”) announced that they did not support the Build Public Renewables Act that passed through the Senate (S6453) on June 1, 2022. The Assembly companion bill (A1466) did not move forward prior to the end of session. The bill would have directed NYPA to build and own new renewables and require the Authority to largely shut down fossil fuel plants by 2030. New York State has a goal to reach 70 percent renewable electricity by 2030.

Ohio – Public Siting Board proposes procedure revisions

On June 16, 2022, the Ohio Public Siting Board proposed procedure revisions, including one that would require solar setbacks of 150 feet from roads and unaffiliated properties and 300 feet from unaffiliated residences. Other proposals include public disclosure requirements for new facilities, codifying decommissioning requirements included in SB 52, and fencing requirements for solar sites. Comments were due August 12, 2022.

Pennsylvania – Court-issued injunction delays Pennsylvania participation in RGGI

After several showdowns between Governor Wolf (D) and the Republican-controlled Legislature, including a last-minute stay on publication, regulations establishing Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (“RGGI”) were published April 23, 2022. However, on July 8, 2022 the Commonwealth Court issued an injunction, further delaying Pennsylvania’s participation. The injunction required plaintiffs to post a $100 million bond, subject to forfeit if they lose the underlying challenge to RGGI.

Virginia – A Stakeholder Consultation Regulatory Advisory Panel (RAP) was recently convened to make recommendations to the Virginia Department of Environmental Quality (“DEQ”) and the legislature regarding implementation of HB206, which modifies the Permit By Rule process for solar projects under 150 MW. Topics covered across the five RAP working groups include avoidance & mitigation, mitigation/in lieu, significant adverse impact for projects less than 10 acres, and local control.

The 2022 Virginia Energy Plan process has officially kicked off (as directed by the Virginia General Assembly, every four years the Virginia Department of Energy develops a comprehensive Virginia Energy Plan). The 2022 Energy Plan will provide energy policy recommendations around environmental goals, energy costs, consumer choice, and innovation.

On April 14, 2022, the Virginia State Corporation Commission (“SCC”) opened a docket to establish a self-certification process for small distributed generation systems seeking to qualify as low-income projects and consider additional GATS-related questions. On July 26, 2022, the SCC issued an order for additional comments in the docket. Staff are required to file comments by September 22, 2022. All other stakeholders may submit comments until October 20, 2022. One issue the industry has raised is the September 2021 Order requiring revenue-grade meters for all projects regardless of size or interconnection date.

SOLAR CHATTER

The U.S. Energy Information Administration (EIA) announced that renewables will make up 22 percent of electricity generation in the United States in 2022 This number is expected to rise to 24 percent in 2023 as renewables continues to carve out a larger portion of the total American electricity grid.
Solar continues to show its strength in creating American manufacturing jobs, as the famed Pittsburgh Bethlehem Steel Plant has now been reopened to manufacture solar tracking systems. The factory, commissioned by Nextracker, is the third they’ve commissioned with a steel manufacturing partner this year.
Electric vehicles reached a critical adoption benchmark in the United States in June, as five percent of new car sales were fully electric. Financial analysts see reaching five percent as the breakout from the early-adopters phase, where the technology begins to become more mainstream and adoption begins rapidly accelerating. As adoption continues, car manufacturers begin a more rapid shift in supply, and through an accelerated learning curve and economies of scale, prices can fall quickly. We expect the incentives in the IRA will ensure this growth happens in North America, further growing domestic clean energy manufacturing capabilities.
Registrations opened for the U.S. Department of Energy’s 2023 Solar Decathlon Design Challenge, where college students across the world compete to design sustainable buildings powered by renewable energy. Sol Systems has multiple Decathlon alumni, with Robertson’s having taken second place in in the inaugural competition for the University of Virginia.
Omaha Public Power District (OPPD), the public utility responsible for electricity in and around Omaha, Nebraska, voted unanimously to delay the closure of its coal plant by three years, the sixth such delay to occur in 2022 alone. OPPD’s reasoning mirrors similar decisions recently that citied tariffs and other supply chain constraints as well as interconnection delays in delaying closure of coal plants in favor of clean electricity like solar. These decisions will have myriad environmental and public health implications for local communities as well as globally.
SEIA recently released a Manufacturing Roadmap, laying a path for the U.S. manufacturing industry to thrive in the wake of the the Inflation Reduction Act’s (IRA) investments in reshoring and growing domestic manufacturing. SEIA shows how the U.S. can exceed 50 GW of domestic solar manufacturing capacity by 2030. A key element of this is the development of a well-trained workforce that brings new entrants into the clean energy space and helps current energy workers transition.

Click here to read the Sol SOURCE June 2022.

Below, we have included excerpts from the June 2022 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – California has seen some changes to long-planned energy policy decisions this spring, including potentially keeping its last nuclear plant open while shelving (for now) plans to recalculate net-energy metering (“NEM”). After industry objection, celebrity intervention, and Commissioner turnover, the highly contested NEM 3.0 proposed decision was suspended, likely until after the November election. On May 9, 2022, the California Public Utilities Commission (“CPUC”) issued a ruling formally reopening the NEM 3.0 docket and requesting feedback on a transition approach in the form of a fixed electric bill credit adder on top of the hourly export credits. In addition, the Commission is seeking feedback on whether the successor tariffs should be extended to include community solar as well as the viability of access for renters and low-income ratepayers. Comments are due June 10, 2022, and reply comments are due June 24, 2022.

On April 21, 2022, the California Independent System Operator (“CAISO”) and Western Energy Imbalance Market (“EIM”) announced that cumulative benefits for entities participating in the rapidly growing real-time energy market have exceeded $2 billion, suggesting neither entity intends to halt efforts to expand.

District of Columbia – After considering a range of options, the DC Public Service Commission will allow existing customer-sited solar projects to continue operating on estimated production. However, effective April 1, 2022, all new systems must have a revenue-grade production meter or inverter-based production measurement equipment. This is part of a broader effort to ensure that customers’ REC production can be tracked.

There remains no word yet on nominees for the DC Public Service Commission vacancy, which continues as the DC election heats up. June elections will see competition for Mayor, Attorney General, and several rarely open Council seats.

Florida – On April 27, 2022, Governor Ron DeSantis (R) shocked the solar industry by vetoing a bill backed by Florida Power & Light that was widely expected to gut the rooftop solar industry in Florida (SB1024/HB741). Gov. DeSantis, in several high-profile disputes with other Florida corporations, cited inflation and other cost concerns in his surprise veto. This adds Florida to states that have rescinded (or at least delayed) drastic changes to NEM in recent weeks.

Illinois – Illinois continues working to implement myriad regulatory and other requirements stemming from last year’s landmark Clean Energy and Jobs Act(“CEJA”). After revising the Long-Term Renewable Resources Procurement Plan based on stakeholder feedback, the Illinois Power Agency submitted its final plan to the Illinois Commerce Commission (“ICC”) on March 21, 2022. ICC is expected to issue a proposed order by June 8, 2022, which will provide guidance on future block operations and REC pricing. Per CEJA, the ICC must issue a final order by July 19, 2022. The IPA will be running its second Indexed-REC RFP for electric supply and renewable energy products this fall. The program website and guidebook are valuable resources.

Indiana – Indiana saw the first, but likely not the last, delayed closure of a fossil fuel power plant due to the Commerce investigation that created new uncertainty for the solar industry. On May 4, 2022, the Northern Indiana Public Service Company (“NIPSCO”) announced that the planned shutdown of a coal-fired power plant would be delayed to 2025, citing “uncertainty and delays” in the solar panel industry. NIPSCO representatives stated on an earnings call that they expect the investigation to delay solar projects by six to 18 months. As a result, the utility expects to delay the retirement of two coal‑fired units by two years. NIPSCO previously calculated that replacing its coal with renewables could save customers billions of dollars over three decades.

Maine – Maine continues to attempt to develop a wider variety of clean electricity options in the state while wrestling with its role in the national transmission system. The Governor’s Energy Office is expected to reconvene the distributed generation stakeholder group now that Maine’s legislative session has ended. We expect a straw proposal later this fall to contain more successor program design details in advance of a final report due January 2023. On May 10, 2022, developers of the New England Clean Energy Connect (NECEC) transmission project argued in court against the constitutionality of a ballot measure approved by state voters in November that sought to nullify the project. The NECEC project would carry electricity from Canadian hydropower to the New England grid.

Maryland – While most observers expect next year to be a watershed year for climate and clean energy legislation if the Governorship flips, Governor Larry Hogan (R) allowed the Climate Solutions Now Act of 2022 (SB 528) to become law without signature. The law requires the State to reduce statewide greenhouse gas emissions, establish a net-zero statewide greenhouse gas emissions goal, and develop building energy efficiency and building and transportation electrification requirements.

Massachusetts – The Baker Administration continues to push forward several energy-related items in its last year. On April 15, 2022, the Massachusetts Department of Environmental Protection (“MassDEP”) published proposed amendments to the Clean Energy Standard (“CES”). The proposed amendments include setting the CES alternative compliance payment (“ACP”) and Clean Energy Standard-Existing (“CES-E”) ACP to $35/MWh and $10/MWh respectively for years 2022 through 2050. Comments are due on June 3, 2022, and we expect a final decision in the coming months. On May 20,2022, the Massachusetts Department of Energy Resources (“DOER”) issued an email notice to stakeholders identifying two errors affecting the minted supply of 2021 Clean Peak Energy Certificates (CPECs).

Omnibus energy legislation focused on advancing offshore wind is expected to make it through the legislature before the July 31, 2022 end of session. A conference committee has been appointed to merge HB 4524 (previously HB 4515) and SB 2842. The House version contains specific offshore wind provisions, including tax incentives, grid modernization, and a target of 5,600 MW by June 2027. The Senate version is slightly broader and includes energy efficiency and transportation goals. We likely will not see much movement until July.

On May 24, 2022, the Commonwealth’s highest court ruled Attorney General Maura Healey can pursue a lawsuit charging ExxonMobil with violating state consumer protection laws. Healey, a candidate for Governor, alleges ExxonMobil knew about the threat of climate change but downplayed it publicly while selling fossil fuels.

New Jersey – The Board of Public Utilities (“BPU”) continues to broadly deny extensions for projects unlikely to meet Transition Renewable Energy Credit (“TREC”) deadlines while smoothing the process of moving projects from the TREC to the Administratively Determined Incentive (“ADI”) successor program. On April 26, 2022, BPU issued a Straw Proposal for the Competitive Solar Incentive (“CSI”). Staff will hold three virtual Stakeholder Meetings this summer to discuss the CSI Straw Proposal, with comments due June 20, 2022. On May 18, 2022, the BPU adopted a rule to implement the requirements of Section 38(d)(2) of the Clean Energy Act of 2018, as amended, which establishes a cost cap on certain Class I renewable energy incentives. Additionally, the BPU calculated the Cost Cap for Energy years 2021, 2022 and 2023 and noted that they are not forecasted to exceed the cost cap in 2022 or 2024. In the same order, the BPU also released the megawatt allocations in the ADI for Energy Year 2023 (as a reminder, the energy year and capacity allocations close with new blocks opening on June 1, 2023).

Legislation related to interconnection (S431) and energy storage incentives (S2185) will be heard and voted upon at the next Senate Energy and Environment Committee meeting, which is scheduled for June 6.

New York – New York’s gubernatorial drama continued this spring, with Lt. Gov. Brian Benjamin resigning over alleged campaign finance violations in his previous position. After last-minute legislation to allow him to replace Benjamin on this year’s ballots, Antonio Delgado was sworn in as lieutenant governor on May 25, 2022. A special election to fill his congressional seat will be held at the same time as the August 23, 2022, primary.

On April 14, 2022, the New York Public Service Commission issued a final order approving a new framework for the state to achieve at least ten gigawatts of distributed solar by 2030 (often referred to as the “10GW Roadmap”). The adopted framework includes an investment of $1.5 billion in ratepayer-funded incentives to extend the NY-Sun program. It also adds prevailing wage requirements for projects 1 MWac or greater. NYSERDA released an updated NY-SUN operating plan on May 31, 2022. Incentive programs will officially open on June 7, 2022.

North Carolina – North Carolina has begun to implement HB 951. On May 16, 2022, Duke Energy submitted its proposed plan to the North Carolina Utilities Commission (“NCUC”) as required by HB 951. This plan will be a key component NCUC will use to compose the overall Carbon Plan as required by December 31, 2022.

Ohio – Ohio energy policy continues its recent ambivalence toward clean energy. On March 8, 2022, the Public Utilities Commission of Ohio argued to the Ohio Supreme Court that its approval of the Solar Generation Fund established by 2019’s scandal-mired HB6 was proper. The Ohio Manufacturers’ Association Energy Group has argued the Commission erred in designing the rate mechanism.

The Ohio Public Siting Board is expected to issue new rules this year to require solar setbacks of 100' from roads and 300' from residences. We also expect additional requirements around fencing and vegetative screening, as well as bills to require larger setbacks to be introduced.

Pennsylvania – Pennsylvania’s as-yet unresolvedprimary will see a dramatic gubernatorial contest between Attorney General Josh Shapiro (D), a vocal proponent of solar and other clean electricity, and conservative State Senator Doug Mastriano (R). The Senate race for the seat currently held by retiring Senator Pat Toomey (R), which will help determine control of the U.S. Senate, will see Lt. Gov. John Fetterman (D) versus the winner of a recount between Dr. Mehmet Oz and David McCormick.

The PUC’s annual AEPS compliance report includes discussion of the Hommrich lawsuit that invalidated regulations around virtual meter aggregation and contains a recommendation to reform net metering “to curb excessive wholesale generation from being compensated at retail rates…” In the report, the Commission recommends that “the General Assembly consider modifying the structure of net metering by placing reasonable bounds to curb excessive wholesale generation from being compensated at retail rates.”

Virginia – On April 11, 2022, Governor Youngkin signed multiple bills related to renewable energy. SB 502 and HB 1087 allow localities to assess projects 5 MW or less for either Machinery & Tools or Revenue Share tax (not both). The bill does not apply to projects 5 MW or less that were approved by a locality prior to July 1, 2022. SB 537 and HB 206 give localities the option to require developers to replace or preserve existing trees in a particular site. For example, a developer could be required to ensure that 10 percent to 20 percent of their site is covered by tree canopy, depending on how the site is zoned and how many units there are per acre. Trees that are planted have 20 years to grow into a canopy that exceeds 5 feet in height. Trees can be planted elsewhere if there is not enough on-site, but they must be in the same locality.

In March 2022, the Virginia Department of Environmental Quality (“DEQ”) announced that—effective immediately—it would define solar panels as impervious surface areas. On April 14, 2022, DEQ released additional guidance that pushed implementation out to January 1, 2025 for all projects that have not received interconnection approval.

Public comment for the draft Virginia Energy handbook for renewable energy and energy storage development on brownfields and previously coal-mined lands were due on May 23, 2022. A draft copy of the report can be found here. The final report is scheduled to be released by July 1, 2022.

In April 2022, the Virginia Department of Energy and the Virginia Solar Initiative at the Weldon Cooper Center for Public Service at the University of Virginia released the Virginia Solar Survey. The first such survey in Virginia offers data regarding each county and city’s experience with and readiness for solar development.

On April 14, 2022, the Virginia State Corporation Commission opened a docket to establish a self-certification process for DG resources seeking to qualify as low-income projects and consider additional GATS-related questions. Comments are due June 8, 2022.

SOLAR CHATTER

In the wake of the trade complaint brought on by Auxin Solar, the Solar Energy Industries Association (“SEIA”) is projecting the 27 GW expected to be brought online in 2022 could drop all the way 10 GW, with an additional 70 GW over the next three years at risk of failing to come to fruition.
In a late-May study released by the RMI, detailed analysis projected $5 billion in annual savings for electricity customers if the Investment Tax Credit (“ITC”) and Production Tax Credit (“PTC”) were extended and expanded. The study adjusted its model for both recent inflation and fossil fuel price volatility.
Renewables Forward announced the hiring of its first executive director, Chris Nichols, to champion the DEI initiative started by leading U.S. clean energy companies and partners, of which Sol Systems is a founding member. Nichols brings an impressive track record spearheading DEI work from within and outside the clean energy industry.
The solar business landscape is always changing, and May was no different with large-scale developer Borrego announcing the sale 8.4 GW of their solar portfolio along with 6.4 GW of their battery storage footprint. While Borrego moves on from developing, French energy company TotalEnergies announced the purchase of 50 percent of developer Clearway in TotalEnergies’ latest move to increase its role in the U.S. market.
After fits and starts, the Securities and Exchange Commission (“SEC”) recently proposed how public companies should disclose risk from climate change and climate change regulation. Under the proposal, companies would be required to disclose information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, as well as to disclose certain climate-related financial statement metrics in a note to their audited financial statements. The goal is to require the disclosures necessary to properly evaluate investor risk, the core mission of the SEC. The risks of not doing so are highlighted in a number of fora, including the recent decision allowing Massachusetts’s lawsuit against ExxonMobil under state consumer protection laws to move forward. Massachusetts alleges the company knew about the threat of climate change but downplayed it publicly while selling fossil fuels.
The “social cost” of a pollutant, such as carbon dioxide, quantifies the cost to all of us of adding one more ton of emissions – in other words, how much damage does a pollutant cause. All pollutants have these metrics, but the “social cost of carbon” has proved particularly contentious in the U.S. lately - after numerous attempts to block its use through the courts, the Supreme Court recently declined to take the case, allowing the White House to finalize (and likely significantly increase) the metric. New York State recently completed a similar analysis, and now uses $121 per ton CO₂, significantly increasing the calculable benefits of clean energy and climate programs.
Congress left town for the Memorial Day holiday weekend without meaningful progress on alleviating Senator Joe Manchin’s opposition to passing a reconciliation bill that includes an ITC extension and expansion (all Republicans remain opposed). When Congress returns, the focus will be on the July 4th holiday as a soft deadline to reach an agreement to use reconciliation to pass a party-line climate, energy, and deficit reduction package. We do expect Democrats to use the reconciliation process before the August recess to extend Affordable Care Act (“ACA”) subsidies; if not extended, notice of premium increases would go out just before the November election, hampering an already potentially dismal election for Democrats.

About Sol Systems

Sol Systems is a leading national solar energy firm with an established reputation for integrity and reliability across its development, infrastructure and environmental commodity businesses. To date, Sol has developed and/or financed over 1 GW of solar projects valued at more than $1 billion for Fortune 100 companies, municipalities, counties, utilities, universities and schools. The company also actively shapes and trades in environmental commodity and electricity markets throughout the United States. The company was founded in 2008, is based in Washington, D.C., and is led by its founder. Sol Systems works with its team, partners, and clients to create a more sustainable future we can all believe in. For more information, visit https://www.solsystems.com

Click here to read the Sol SOURCE January 2022.

Below, we have included excerpts from the January 2022 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – NEM 3.0 reform creates uncertainty, and likely new hurdles for California solar developers. On December 13, 2021, the California Public Utilities Commission (CPUC) released the eagerly anticipated proposed decision in the NEM 3.0 docket. The proposed decision was left off the docket for the January 27, 2022, meeting, delaying a discussion until at least February – the next open meeting is February 10, 2022, with the agenda published 10 days prior. Turnover at the Commission and a new Chair, as well as increasingly public discord over the proposal, could amplify this delay.

Stakeholder and analyst reactions are varied, but what does seem clear is that if the decision were to be finalized as proposed, California NEM would drastically lower compensation for residential rooftop solar without storage. Given the relatively high penetration of solar in California, electricity is abundant and cheap midday, but the CAISO grid is increasingly strained in the early evening hours when solar production declines but air-conditioning and other high-demand uses remain. The system is a bit “ducked” as it were.

The Proposed Decision’s intent is to incentivize a shift to solar plus storage, and larger-scale solar, in order to reduce demand for high-emitting peak power. Some of the key proposed changes include reducing payments to solar customers whose production exceeds use, adding a monthly “grid participation charge” for homes (but not businesses) that install solar, adding a temporary “market transition credit” to lessen some higher costs for households outside SDG&E territory, requiring homes that already have solar panels to switch from the existing net metering program no later than 15 years after their sy stems were installed (20 years for low-income homes), and creating a “storage evolution fund” to encourage homes and businesses that already have solar to add batteries, creating an “equity fund” of up to $600 million over four years to bring clean energy to low-income and more-polluted neighborhoods.

This could enable homes and businesses to install solar systems up to 150 percent of their electrical demand to help cover future demand from electric cars or electric heating systems (note, California recently required all new single-family and multi-family homes up to three stories high to have a solar photovoltaic (PV) system as an electricity source), and to shift to time of use (TOU) rates. These changes would apply to customers of SCE, PG&E, and SDG&E but not of publicly owned utilities such as the LADWP. Overall, the proposed NEM revisions are a risk to solar developers, specifically rooftop developers that do not develop storage. However, broad opposition is likely to alter the final rulemaking, and the final rule could provide an opportunity to developers of more flexible systems that are able to displace more emissions by displacing dirtier electricity across more hours of the day.

Connecticut – The fate of banked RECs remains technically unknown in Connecticut. Last year, the Public Utilities Regulatory Authority (PURA) proposed several changes to the Renewable Portfolio Standard (RPS), including the ability to change (and possibly eliminate) the number of RECs that could be banked and used for compliance in future years, which would introduce quite a lot of uncertainty and downward price pressure in the market if finalized and upheld against certain legal challenge. We expect a final ruling in 2022. On July 28, 2021, PURA issued a final order to establish a nine-year, statewide Electric Storage Program for all residential, commercial, and industrial customers.

District of Columbia – New solar energy metering requirements could cause DC residents and businesses to pay for more solar. On August 13, 2021, the DC Public Service Commission (PSC) proposed to require all renewable generating facilities, including behind-the-meter generators, to use revenue-grade production meters or inverter-based production measurement equipment, as opposed to the current allowance for estimation from small sources.

The overwhelming majority of comments submitted by the October 13, 2021, deadline recommended that new requirements should only apply to new customers, with many opposing the entire proposal. We expect any final rule to be pushed into the fall of 2022 at the earliest, with a potential for the rule to be re-proposed. The DC PSC is also working to replace Commissioner Willie Phillips, who was confirmed to the Federal Energy Regulatory Commission (FERC) in late 2021. As a national leader and early adopter of urban solar incentives, DC is facing the twin challenges of how to measure small systems while the market shifts away from the 3G used by many older metered systems. These challenges, at the same time as the shift from the central station grid model to a more flexible, two-way grid, provide an opportunity for developers that can offer high-quality data, including to existing systems providing verifiable solar electricity.

Illinois – Governor Pritzker re-opened Illinois to solar development by signing the Climate and Equitable Jobs Act (CEJA; SN 2408) on September 15, 2021 and a trailer bill (HB 3666) that clarified several provisions, including around prevailing wage requirements and high impact business provisions, in November 2021. Notably, the law sets Illinois on a path to 100 percent clean electricity by 2050. The omnibus energy legislation is quite expansive, but importantly for the solar industry, it re-opens and re-funds the previously closed Adjustable Block Program (ABP). CEJA added three new Block categories (solar on schools, community-driven community solar, and distributed generation (DG) that utilizes equity-eligible contractors) in addition to the original Block categories of small DG, large DG, and community solar. The Illinois Power Agency (IPA) formally re-opened the ABP on December 14, 2021.

Outside of the ABP, the law also includes new labor standards that include the payment of prevailing wage for all solar projects that receive renewable energy credits (RECs) from the IPA. Utility-scale projects, which do not qualify for the ABP, will be able to participate in the first Indexed REC request for proposals (RFP) this spring. Stakeholder comments on the IPA’s draft REC contracts concluded on December 17, 2021, and final language is expected early- to mid-2022. In accordance with CEJA, the IPA withdrew the current Long-Term Renewable Resources Procurement Plan (LTRRPP) revision and issued a new draft on January 13, 2022. The draft LTRRPP incorporates changes to the RPS resulting from CEJA and provides additional clarity on topics including the ABP, competitive procurements, and REC eligibility.

Maine – Like a crisp winter sunrise over Acadia, new DG opportunities are coming over the horizon in the Pine Tree State. On November 2, 2021, Maine voters approved a ballot question to require that a two-thirds majority vote is required to approve new major transmission lines, including the New England Clean Energy Connect (NECEC). On November 3, 2021, NECEC developers filed a lawsuit challenging the ballot question.

However, the recently passed federal infrastructure law allows the Secretary of Energy to designate National Interest Electric Transmission Corridors, which would give FERC backstop siting authority to approve projects in the national interest, which may include NECEC. Separately, in 2021, the passage of L.D. 936 required Maine to begin the process of revamping their Net Energy Billing (NEB) program. Notably, the law directed the Governor’s Energy Office to prioritize distributed generation that is sited on previously-developed land, such as brownfields, within a low-to moderate-income community, or directly serving customer load.

The GEO, alongside a stakeholder group, published an interim report on NEB alterations and impacts on December 31, 2021. A straw proposal with concrete successor recommendations will be released in 2022 and a final report will be delivered to the State Legislature in 2023. This effort will hopefully lead to a more equal incentive distribution between large-scale developers and smaller C&I developers who are working to ensure clean solar electricity is a reality in communities that would otherwise not benefit from clean energy.

Massachusetts – Policymakers are moving forward on the region-leading effort to maximize solar deployment in high-density areas and improve the interconnection process in one of the nation’s oldest grids. On September 7, 2021, FERC opened a review of ISO-NE’s rules for requiring grid upgrades to accommodate planned transmission facilities. On October 29, 2021, the Massachusetts Department of Energy Resources (DOER) filed its proposed final Phase 2 version of the 225 CMR 14.00 Renewable Energy Portfolio Standard (RPS) Class I and 225 CMR 15.00 RPS Class II with the Secretary of the Commonwealth’s Office. The Phase 2 version of the regulation contains changes related to biomass. The final version of the regulations along with the associated guidelines can be found here. On November 24, 2021, in Docket 20-75, the Massachusetts Department of Public Utilities (DPU) issued an order establishing a provisional cost allocation program (Provisional Program) to facilitate the interconnection of distributed generation currently in the interconnection queue and facing atypically high interconnection costs.

As a reminder, Docket 20-75 was established primarily to consider cost socialization to reduce interconnection costs faced by developers. While timing is uncertain, we do still expect an additional order on the long-term planning process described in the DPU’s Straw Proposal. On December 30, 2021, the DPU issued a long-awaited order expanding the Solar Massachusetts Renewable Target (SMART) program from 1,600 to 3,200 megawatts (MW). Notably, the DPU rejected utilities’ proposed tariffs and directed them to refile a tariff within 15 business days. The order officially took effect on January 14, 2022.

New Jersey – The solar successor program is finally in place, but over 3,000 TREC applicants hang in limbo as the BPU processes last-minute applicants. After months of stakeholder processes and input, the Board of Public Utilities (“BPU”) released four orders on July 28, 2021, including a detailed solar successor incentive program and the official close of the Transition Incentive (TI) program (August 27th, 2021). The new Successor Solar Incentive Program, “SuSI”, provides incentives for both projects under 5MW (“Administratively Determined Incentive”) and over 5MW (“Competitive Solar Incentive”). The ADI provides fixed incentives for smaller DG projects and added new incentives for public entities, such as schools and municipalities. The program officially opened on August 28, 2021.

The program officially opened on August 28, 2021. At the end of October 2021, the New Jersey Board of Public Utilities (BPU) issued a draft rule proposal on the Class I cost cap calculation and methodology. The cap would be raised to about $950 million, which we expect is plenty of headroom given the cost offsets (carbon and energy value). If the cost cap is breached, the Board would be able to invoke a reduction in the ADI which is currently set to 150 MW.

On November 30, 2021, the BPU held their first stakeholder meeting regarding the design of the Competitive Solar Incentive (CSI) Program that is expected to launch later this year. Stakeholder comments on the design were submitted on December 14, 2021, and stakeholder sessions will continue in January and February of this year. On November 10, 2021, a recently re-elected Governor Murphy (D) signed Executive Order No. 274, 20221, which establishes a new interim greenhouse gas reduction target of 50 percent below 2006 levels by 2030. We expect signature of this near-term target to underpin continued strong solar incentives in New Jersey and increased focus on improving interconnection, a key BPU focus going into the new year.

New York – Like its co-leader in climate action in California, the Empire State is tackling how to maximize the emissions-reduction potential of solar energy, giving a boost to solar with storage over standalone solar projects. On December 17, 2021, the New York State Energy Research and Development Authority (NYSERDA) and New York State Department of Public Service (DPS) released the long-awaited Distributed Solar Roadmap to propose a pathway to achieve 10 GW of distributed solar deployment by 2030. New initial NY-SUN block incentives intended to sustain development through 2022 include (1) Upstate Commercial and Industrial (C&I), Small C&I (< 1 MW) in Consolidated Edison Company of New York (ConEd) territory, Large C&I (> 1 MW) in ConEd territory, and residential projects in ConEd territory. Projects in the queue that have not yet received an incentive are eligible for the new incentives. In addition, NYSERDA is recommending that prevailing wage or project labor agreements be required for all projects over 1 MW.

Despite opposition, the new Customer Benefit Contribution for residential and small commercial customers took effect on January 1, 2022. This charge does not apply to customers that interconnected solar PV systems before January 1, 2022, or to “front of the meter” projects such as community solar. This follows the recent trend, most obvious in the CPUC PD, of states looking to lessen net-metering incentives during prime hours or charge these customers directly for use of the grid. We expect this trend to continue in other states, and we expect to see more attempts to increase the value of solar systems with storage at the expense of “plain solar” going forward.

On November 30, 2021, Governor Kathy Hochul (D) announced that NYSERDA finalized contracts with Clean Path NY (CPNY) and the Champlain Hudson Power Express (CHPE) projects to connect cleaner electricity from upstate New York and Canada to New York City. NYSERDA will offer renewable attributes from these projects for voluntary purchase. These contracts have been submitted to the PSC for approval and are subject to a public comment period through February 7, 2022. Delivery is expected to begin in 2025 for CHPE and 2027 for CPNY.

North Carolina – Large clean energy buyers took a hit on October 13, 2021, when Governor Roy Cooper signed House Bill 951, Energy Solutions for North Carolina, which includes a number of provisions aimed at increasing clean energy deployment and reducing carbon emissions in the state, but largely excludes corporate procurements. The bipartisan law sets a carbon emissions reduction target of 70 percent by 2030 and carbon neutrality by 2050. The law also provides provisions for utility procurement but falls short of meeting the needs of businesses and other large energy consumers. The new law incentivizes utility ownership over competitive markets and flags a need to revise future policy to better align utility and independent developer interests with large renewable energy buyers to maximize deployment and emissions reductions.

Ohio – Final word on HB6 is still in limbo amid a heated legal battle with multiple legislative solutions on the table. The FirstEnergy HB 6 legal battle continues to dominate Ohio politics and energy policy discussions after this year’s passage of SB 52. On July 12, 2021, Governor DeWine (R) signed SB 52, which subjects large (over 50 MW) wind and solar projects to review by County Commissioners before Ohio Power Siting Board (OPSB) review. The legislation also allows County Commissioners to establish restricted areas where wind and solar projects are prohibited, subject to local referendum; adds members to the OPSB from affected counties; and requires developers to submit decommissioning plans when applying to OPSB. Ohio continues to be a big opportunity for large-scale solar and wind developers given their connection to PJM and MISO, as well as availability of former fossil interconnection sites. We see SB 52 as codifying good community engagement practices for developers and adding a manageable number of steps to the siting process.

Pennsylvania – A number of factors continue to dampen the otherwise-significant investment potential in the Commonwealth, including hostility to renewables from the Republican-controlled Legislature, flatlining of the Alternative Energy Portfolio Standard (AEPS) in 2021, and continued discord over RGGI. Pennsylvania has become a key state in the discussion of how to ensure proper decommissioning of solar facilities, particularly on agricultural lands. HB 2104 would establish state-wide decommissioning requirements for projects over 3 MW with a phased-in approach to posting financial assurance, which may be in the form of an escrow account or bond, and potentially letters of credit. However, two elements remain unresolved: First, the bill does not explicitly require the inclusion of salvage value in the calculation of decommissioning costs to reduce the amount of financial assurance required (it also does not exclude its use in the calculation or acquisition of a bond). Second, the bill requires that no more than 20 percent of a project’s total mass may be landfilled. Some have misinterpreted this as a requirement to recycle the remaining 80 percent, but the wind industry is particularly concerned that many of their components cannot yet be recycled and require ongoing parts replacement throughout the life of a project. Discussions on decommissioning renewables projects continue in both Chambers (the Senate is SB 284). Also this week, the bill (SB 945) to require the Commonwealth to sell (rather than retire) SRECs associated with solar procurements passed out of Committee, although we do not expect it to become law this session.

The Republican-controlled Legislature continues its attempts to block Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI), although Governor Wolf (D) has successfully blocked their efforts. However, given the Legislative Reference Bureau’s interpretation of regulatory publication requirements, Pennsylvania’s participation will slide to at least April 1, 2022, and potentially July 1, 2022 (auction participation and revenue may be able to occur earlier).

Virginia – The fate of the Virginia Clean Economy Act (VCEA) and solar development in the Commonwealth teeters on Democratic control of the State Senate. On November 2, 2021, the GOP flipped all three statewide executive offices as well as the House of Delegates, while Democrats retained the Senate. This election carried national implications as it is widely considered a bellwether for the 2022 national midterms. Governor Youngkin (R) has announced initial appointments indicative of a hostile posture to clean energy, including announcement of his intention to nominate former EPA Administrator Andrew Wheeler to lead the Department of Natural Resources. He has also stated a desire to reverse Virginia’s recent participation in the RGGI, although this would require legislative approval. All this leads us to watch Virginia particularly closely and ramp-up advocacy efforts to protect the recently-enacted VCEA.

Regional Round-Up

PJM – On December 15, 2021, PJM released a study looking at how to manage a high-renewables grid and found that PJM would better handle higher renewables penetration with strategic regional transmission expansion, grid-enhancing technologies, and storage. PJM also continues to move forward to reform the interconnection queue process. The goal of the reformed process is much faster interconnection agreements – currently, the process averages four years and PJM is targeting to reduce this to two years by shifting to a “cluster” versus “serial” review. While this transition will be rough for many individual projects, this switch should alleviate a significant hurdle to larger solar projects in the most populated area of the country.

Regional Greenhouse Gas Initiative (RGGI) – The December 2021 auction cleared substantially higher, at $13/allowance, just triggering the cost containment reserve (CCR), even as confusion swirled around the timing of Pennsylvania’s participation and Governor Youngkin’s desire to withdraw Virginia. This was potentially the last auction without Pennsylvania’s participation.

Transportation & Climate Initiative (TCI) – In late November 2021, states participating in TCI – a cap-and-invest program covering liquid transportation fuel (e.g., diesel and gasoline but not natural gas) – abandoned the program after Connecticut Governor Ned Lamont (D) and Massachusetts Governor Charlie Baker (R) withdrew.

TRADE UPDATE

On December 9, 2021, the U.S. International Trade Commission formally recommended Section 201 tariffs be extended another four years past the current endpoint in February. President Biden will make the decision before the current tariffs expire February 7, 2022. The parallel challenge to the bifacial exemption is continuing, and our trade groups are optimistic that will persist even if the tariffs are extended.   
On December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act.  The law aims to prohibit imports made using the forced labor of ethnic Uyghur Muslims in China, which the U.S. and other nations have termed an ongoing genocide. While the Section 201 tariffs were not in response to forced labor concerns, they have become politically entwined and passage of this law may relieve some pressure to extend the tariffs despite their impact to the President’s clean energy goals. 
Meanwhile, global supply chains continue to challenge the solar industry. While the price to install new solar continues to be relatively cheap compared to previous decades, supply chain disruptions led to increases in system pricing across all sectors of the industry. Utility-scale systems with single-axis trackers were among the worst hit, with system pricing increasing by 9 percent year-over-year in 2021.  Rystad Energy recently estimated shipping and equipment costs could postpone or cancel more than half of worldwide utility-scale solar projects planned for 2022.

SOLAR CHATTER

On December 8, 2021, President Biden signed an executive order requiring achievement of net-zero greenhouse gas emissions from federal electricity usage, vehicle fleets, buildings, operations and procurement activities by 2050. The EO uses the scale and procurement power of the federal government to achieve emissions reductions. The EO directs federal agencies use electricity from carbon-free sources by 2030, which it said will spur an additional 10 gigawatts of clean energy demand.
On December 7, 2021, more than 50 large electric utilities announced the National Electric Highway Coalition (NEHC) to install EV fast-charging infrastructure along major U.S. highway corridors by the end of 2023, in an effort to alleviate consumer range anxiety. The coalition is led by the Edison Electric Institute (EEI), which anticipates 22 million EVs in the U.S. roads by 2030, requiring more than 100,000 fast chargers.
SEIA and Wood Mackenzie Power & Renewables released their Solar Market Insight Report for Q4 2021 last month. Utility-scale solar set another record year with 3.8 GWdc of installations and over 6.1 GWdc of new utility-scale solar power purchase agreements signed in Q3 2021 alone, representing 46 percent growth over the same period last year. Continuing the trend of recent years, corporations, municipal utilities, and off-takers looking to invest in cleaner power generation were principally responsible for driving this growth.
To maximize the benefits of solar paired with agricultural land, The National Center for Appropriate Technology (NCAT) launched the nation’s first ArgiSolar Clearinghouse to connect farmers, ranchers, and land managers to solar developers to provide information and tangible benefits to increase the co-location of solar and farmland. 
Nebraska became the 20^th state to commit to 100 percent clean electricity by 2050. The Nebraska Public Power District (NPPD) Board approved the decarbonization effort alongside Omaha Public Power District (OPPD) and Lincoln Electric System (LES), meaning that almost every Nebraskan will receive electricity from an energy supplier that has pledged carbon neutrality.

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Click here to read The Sol SOURCE October 2021.

Below, we have included excerpts from the October 2021 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – Although the potential recall of Governor Newsom dominated headlines this summer, in the end, he garnered two-thirds support to remain in office. On September 23, 2021, Governor Newsom signed an Executive Order that requires all new cars and passenger trucks sold in California to be zero-emission by 2035. In addition, all medium- and heavy-duty vehicles must be zero-emission by 2045 where feasible (2035 for drayage trucks). Relatedly, California utilities are examining how to accommodate widespread EV adoption, with potential opportunities for DG. Closing briefs in the NEM 3.0 proceeding have been filed and we expect a proposed decision by early December 2021.

District of Columbia – On August 13, 2021, the DC Public Services Commission (PSC) proposed to require all renewable generating facilities, including behind-the-meter solar generators, to use a revenue-grade production meter or inverter-based production measurement equipment, as opposed to the current estimation procedures. Hundreds of individuals, organizations, key elected officials, and DC Department of Energy and Environment (DOEE) oppose major elements of the proposal. Notably, D.C. Councilmember Mary Cheh recommended the final rule provide exemptions for both legacy systems (i.e., those in operation before the rule takes effect) as well as any resident unable to afford the required system upgrades. The comment deadline closed October 13, 2021, likely pushing a final rulemaking into the winter at the earliest, and potentially after the departure of Commissioner Phillips, who has been nominated to the Federal Energy Regulatory Commission (FERC).

Illinois – After months of negotiations, on September 15, 2021, Governor Pritzker signed the Climate and Equitable Jobs Act (CEJA), a landmark law which sets Illinois on a path to 100 percent clean electricity by 2050 and, importantly for the solar industry, opens and re-funds the Adjustable Block Program (ABP), which supports solar on schools, community-driven community solar, distributed generation (DG) that utilizes equity-eligible contractors, small DG, large DG, and community solar. The law also includes new labor standards including requiring the payment of prevailing wage for all solar projects that receive RECs from the Illinois Power Authority (IPA). Per the enacted law, the IPA announced it was withdrawing their current LTRRPP revision, with a new draft expected early 2022.

Massachusetts – On September 22, 2021, the Department of Energy Resources (DOER) finalized several SMART guidelines, including changes to energy storage, alternative programs for community shared solar tariff generation units and low-income community shared solar tariff generation units, and low-income generation units. Separately, we anticipate the Department of Public Utilities (DPU) to issue an order in Docket 20-75 (interconnection cost socialization) by the end of this year.

New York – On August 24, 2021, Governor Kathy Hochul August 24, 2021, Governor Kathy Hochul took office and will serve the remainder of the current term, setting up an active primary for next year’s election. Governor Hochul made a series of Climate Week policy announcements, including a near-doubling of the NY-SUN distributed solar program to 10 GW of installed solar capacity by 2030, with details of this and several solar programs forthcoming. Governor Hochul previously signed legislation phasing out the sale of emitting cars by 2035. On 9/30, Governor Hochul designated Rory Christian (previous Environmental Defense Fund clean energy leader) as chair of the Public Service Commission and chief executive officer of the Department of Public Service.

New Jersey – After months of stakeholder processes and input, the Board of Public Utilities (BPU) released four orders on July 28, 2021, including a detailed Solar Successor Incentive (SuSi) Program and the official closure of the Transition Incentive Program (August 27, 2021). The SuSi program is comprised of two separate incentives, the Administratively Determined Incentive (ADI) that provides fixed tiered incentives to specific project types five megawatts (MW) or smaller and the Competitive Solar Incentive (CSI) that will focus on projects over five MW (anticipated mid-2022).

North Carolina - On October 13, Governor Roy Cooper signed House Bill 951, Energy Solutions for North Carolina, which includes a number of provisions aimed at increasing clean energy deployment and reducing carbon emissions in the state. The bipartisan law sets as a target a 70% reduction in carbon emissions by 2030 and carbon neutrality by 2050. The law also provides provisions for utility procurement but falls short of meeting the needs of businesses and other large energy consumers.

Ohio – With Governor DeWine’s signature, SB 52 went into effect on October 11, 2021, revising the power siting approval process for utility-scale solar and wind projects (over 50 MW). The law requires approval from the county prior to applying to the Ohio Power Siting Board (OPSB), which will now include as voting members for each specific solar or wind project, two county and township government representatives or designees. The law also allows counties to establish restricted areas where wind and solar projects are prohibited, subject to referendum and requires developers to submit decommissioning plans when applying to OPSB.

Pennsylvania – The Pennsylvania Legislature held several informational legislative hearings this summer to discuss providing a stable investment framework to increase solar development in the Commonwealth, preservation of agricultural lands, site decommissioning, and forced labor prevention. Separately, the Commonwealth remains on track to begin participating in RGGI in 2022.

Virginia – Dominion filed its RPS compliance plan on September 15, 2021. Separately, the State Corporation Commission (SCC) is working to finalize the certifications for resources that will be used to comply with the Virginia Clean Economy Act (VCEA). The matter is currently awaiting a Commission Order that will approve the finalized GATS business rules for Virginia. Once approved, the rules are expected to be retroactive to January 1, 2021, meaning any RECs generated after that date from an eligible RPS resource should be available to satisfy Virginia RPS requirements. Click here to learn more about Virginia REC options.

FEDERAL BUDGET & INFASTRUCTURE WATCH

After a whirlwind summer on the Hill, the Biden Administration released the Build Back Better (BBB) reconciliation package on October 28; this is one of four must-pass pieces of legislation this fall – funding the federal government (the current continuing resolution runs out December 3), extending the debt limit, enacting the bipartisan infrastructure bill, and passing the clean energy and climate provisions in the reconciliation package (see our main trend article above). The extension and expansion of the clean energy tax credits as included in the BBB are critical to the solar industry’s continued growth.
President Biden and his trade team face a number of decisions this fall that could break what Congress makes under the BBB – extending Section 201 tariffs and/or granting the pending AD/CVD petitions could severely hamper solar supply chains just as we need them more than ever.
This month, Treasury Secretary Janet Yellen rightly declared climate change a systemic risk to the financial system. The Financial Stability Oversight Council report states it plainly: “Climate change is an emerging threat to the financial stability of the United States.”

SOLAR CHATTER

The Solar Energy Industries Association (SEIA), released its quarterly Solar Market Insight report on Q2 2021, in which the U.S. solar market surpassed 3 million total installations. The 5.7 GWdc of installed solar is the country’s largest Q2 in history, a large part of why solar accounted for 56% of new electricity generation added in the first half of the year. After a tough year marred by COVID-19, the solar industry, as it always has, continues to show impressive resilience.
SEIA released a first-of-its-kind online certification program that rewards energy companies for putting diversity, equity, inclusion, and justice (DEIJ) best practices in place. The Diversity, Equity, Inclusion, and Justice Certification Program provides tools and guidance for companies as they analyze their practices and implement workplace solutions that improve diversity. As companies participate and excel in the program, they are eligible to receive either a Bronze, Silver, Gold, or Platinum certification.
As DC PSC Commissioner Phillips awaits confirmation to the Federal Energy Regulatory Commission (FERC), the Commission has split 2-2 on two major ISO/RTO filings, letting them go into effect by law. As a result, both PJM’s Minimum Offer Price Rule (MOPR) and the new Southeast Energy Exchange Market (SEEM) went into effect without a FERC order. Both can be appealed, setting up Commissioner Phillips as the decisive vote on both, as well as rulemakings coming out of the current push to reform interconnection and transmission queues.
On September 15, 2021, PJM proposed to reform interconnection queue processing with the intention to clear the current backlog and reform the process going forward. PJM proposes to move from the current “serial” cost allocation evaluation (aka first in, first considered) to a “cluster” approach similar to other RTOs. Details remain to be worked through, but clearing the 140 GW PJM queue would have significant climate benefits, given the vast majority of these projects are renewables.

About Sol Systems

Reimagining REC Markets: Integrating Additionality and Emissionality into a New Carbon-Free Paradigm

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STATE MARKETS

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The Sol SOURCE – August 2022

STATE MARKETS

SOLAR CHATTER

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The Sol SOURCE – June 2022

STATE MARKETS

SOLAR CHATTER

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STATE MARKETS

Regional Round-Up

TRADE UPDATE

SOLAR CHATTER

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The Sol SOURCE – October 2021

STATE MARKETS

FEDERAL BUDGET & INFASTRUCTURE WATCH

SOLAR CHATTER

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Explore sustainable energy solutions with Sol Systems

Explore sustainable energy solutions with Sol Systems