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Solar Policy Review

Solary Policy: Net Energy Metering Trends map

2015 brought welcome solar policy news for solar developers, installers, financiers and electricity consumers – here’s what you need to know:

US Solar Policy: ITC Extended

Last December Republicans and Democrats negotiated an energy horse-trade which resulted in an extension of the 30% Investment Tax Credit. Republicans wanted an end to the 4-decade old ban on most US oil exports, which was intended to increase our energy independence in an OPEC-dominated oil era. But today the US produces more oil than any other nation (yes, more than Saudi Arabia and Russia)… and exporting that oil should balance markets and bring revenues home.

In exchange Democrats seized the opportunity to extend tax credits for both solar and wind, a full year ahead of the looming ITC cliff. Enacting that extension as part of the 2015 omnibus spending bill created a much more stable policy environment for solar customers, developers and financiers.  Helio Micro Utility expects it will also eliminate an anticipated ITC cliff-driven solar supply-demand imbalance, leading to lower project prices and improved economics for solar stakeholders.

US Solar Policy: 50% Bonus Depreciation

The tax aspects of US solar policy get even better. 50% Bonus Depreciation is back via 2015’s tax extenders legislation… resulting in substantial additional present value tax savings. Solar facilities placed in service between 2015 and 2017 generate deductions on 50% of the tax basis in the equipment immediately and the other 50% using the normal depreciation table… an improvement on the prior 5 year MACRS schedule, which took 2 years to reach 50%.  Bonus depreciation then phases down to 40% in 2018 and 30% in 2019.

Global Policy: Paris Climate Talks

Top these favorable US policy decisions off with the recent Paris climate change agreement, in which 195 countries agreed to work to reduce their reliance on fossil fuels, and we have a strong policy environment for solar and other renewable energy systems.

State Solar Policies: A Mixed Bag

At the state level the solar policy news is mixed.   California policy fosters dramatic growth in Community Choice Aggregation and Shared RenewablesConnecticut, Maryland and Minnesota have pilot CCA programs.  Georgia finally opened its markets to third party Power Purchase Agreements, and Georgia Power has launched an affiliate to sell rooftop solar. Florida, North Carolina, and Virginia have 3rd party owner ballot measures, proposals, or legislation pending.    New Mexico “dismissed with prejudice” a utility’s proposal to raise rates for rooftop solar customers, and Colorado similarly closed a proceeding wherein a utility requested changes to Net Energy Metering.

State Solar Policy Focus: Net Energy Metering

The biggest solar policy battles between utilities and solar stakeholders rage on the Net Energy Metering front.

Solary Policy: Net Energy Metering Trends map

PV’s prospects are tied to state-level Net Energy Metering solar policy

 

New Jersey Governor Chris Christie raised the cap on net metering, and New York regulators suspended the cap on net metering altogether, and is driving a successor net metering policy, as is Maine.  Pennsylvania‘s PUC proposed increasing the net metering system size cap to 200% of load, South Carolina reaffirmed retail net metering, and  Mississippi finally introduced net metering, albeit at a slight premium to wholesale rates.  California solar advocates rejoiced as their public utility commission proposed to extend retail net metering for solar and other forms of distributed generation through 2018, but strong solar growth is pushing that state towards net metering caps and curtailment concerns that could erode solar economics sooner.  The states colored light green in the map above worked to clarify their net metering policies… and clear policies benefit all.

Not all state solar policy news was sunny. Massachussets failed to lift its net metering caps.  Arizona will consider their utilities’ request for new rooftop net metering rates – but only as part of a full rate proceeding.  Hawaii‘s PUC issued a ruling ending net energy metering for new solar customers in favor of alternative but less favorable tariffs.  And perhaps the worst news came from Nevada, where the public utility commission sided with NV Energy, retroactively degrading net metering policy and the related benefits of distributed solar.  

To stay abreast of the fast-changing state-level solar policy environment I recommend checking the quarterly “50 States of Solar” report from NC State’s Clean Energy Technology Center.

Is 2016 the best year ever for Solar?

Solar project costs are front-loaded, but the benefits last for a generation, hence the headlights that stable solar policy afford enable rationale decision making for solar stakeholders. Today we enjoy the most stable solar policy environment ever, and current project economics are exceptionally strong.  The investor marketplace confirms my optimism: solar project valuations have never been higher, and in spite of the ITC extension there remains a great sense of urgency to deploy projects before net energy metering caps or curtailment reduce the value of future projects.  Here at Helio Micro Utility we’re seeing unprecedented demand, especially from developers and financiers of 500kW – 2MW CCA and Community Solar, utility-led distributed generation, and Low Income Housing projects.

If you are considering developing, purchasing or financing such a project, I’d welcome your call or email, and the opportunity to objectively think through your unique solar opportunities and challenges together.  If fitting we can arrange a no-cost structured financing session to determine the economic value of your project and it’s potential for savings, margins, development fees and returns to Tax Equity or Sponsor Equity investors.