Connecticut energy officials urged the state take a cautious approach when considering suspending the state’s cap on commercial solar projects for six years, warning that it could have “unintended consequences,” and possibly affect ratepayer costs during a public hearing before the Energy and Technology Committee.
A bill under consideration by the committee, and widely supported by solar companies and environmental organizations, would raise the cap on how many megawatts of commercial solar projects Connecticut could authorize each year. Connecticut has two caps on commercial solar development through its Non-Residential Renewable Energy Solution (NRES): one on the price of the project, and another on how many megawatts can be deployed.
Applications for the NRES program fill up quickly with solar developers coming to Connecticut’s electricity distribution companies – which administer the program – with shovel-ready projects, but only a select few receive approval. Solar companies and environmental organizations are hoping to change that so that Connecticut can develop more clean energy.
However, Department of Energy and Environmental Protection (DEEP) Commissioner Katie Dykes said removal or raising the caps could have “unintended consequences,” because the caps are designed to create competitive pressure on developers to keep prices low.
“There cannot be a competitive process that drives down costs for ratepayers without a cap, or a limitation, on the amount the utilities are authorized to purchase,” Dykes said in written testimony. “The current NRES megawatt cap incents all developers to bid competitively, offering prices that are aligned with project costs. DEEP has consistently maintained that competition is the best way to ensure that the ratepayers who fund these projects can obtain large volumes of solar development for the least cost.”
Marissa Gillett, executive director of Public Utilities Regulatory Authority (PURA), said that major changes or disruptions to the NRES program could be “costly for developers and ratepayers alike,” and would require a program redesign and a look at both the price and deployment caps to best determine how much ratepayers could potentially be impacted by the change.
“The Authority anticipates that removing the annual MW caps on deployment will result in all projects clearing at the price cap,” Gillett said in written testimony. According to PURA’s calculation, if all the proposed projects in the past were approved, it would add $7.2 million over two years to ratepayer costs and $145.7 million over a 20-year contract. Those costs typically included on the Public Benefits portion of an electric bill.
Eversource also warned of unintended consequences, largely because of the costs for upgrading grid capacity and connecting those solar projects to the grid, which would then be passed on to ratepayers.
“Many of the projects in the State’s existing pipeline are unlikely to be built as the costs to upgrade substations and other electric distribution infrastructure to integrate these renewable powerplants will be prohibitive without first reforming State interconnection cost allocation methodologies,” wrote Andrew C. Belden and Laura E. Perbeck of Eversource.
Eversource indicated that the caps have reduced the impact on ratepayers by 20 to 30 percent. The utility has recently requested a rate increase that they say is the result of public policies. The rate increase request, however, has been met with fierce outcry by both the public and lawmakers.
United Illuminating (UI), on the other hand, supported lifting the caps only for “shovel ready projects” or projects that already have an estimated cost of connecting to the grid so there is a better understanding of the cost and a more straight-forward route to going online.
“UI notes that while the Company has seen more demand than there has been available megawatts, UI has not yet seen that all of the projects selected for an award have gone in-service, and has historically seen a high attrition rate when comparing the projects that have been selected during the procurement and those that have terminated prior to going in-service,” wrote Christie Prescott, director of wholesale power contracts for UI.
The solar industry and environmental groups were largely supportive of lifting the solar caps for large-scale project, arguing that Connecticut is falling behind on its green energy goals for electricity, particularly considering coming infrastructure funds from the federal government under the Inflation Reduction Act, which, they argue, could lower the overall cost to Connecticut ratepayers.
Mark Scully, president of the Peoples Action for Clean Energy (PACE), said the caps should be lifted for the duration of the federal funds and that Connecticut would have to deploy 20,000 megawatts of solar by 2050 to meet the state’s goals, but currently Connecticut is only deploying 100 and 200 megawatts per year.
“At that rate, it will take us 200 years to get to the levels we need. And, as you know, we don’t have 200 years to solve the climate crisis,” Scully wrote. “In order for Connecticut to come anywhere close to meeting our goals, we need to quickly ramp up solar deployments to 500 megawatts per year.”
During testimony, Scully highlighted the escalating cost of importing natural gas to power the grid and argued that by creating more solar, Connecticut could ride a “downward sloping cost-curve” of renewable energy.
Charles Rothenberger of Save the Sound wrote in testimony that New York and Massachusetts have deployed 4,300 and 4,900 megawatts of solar, compared to 1,300 megawatts in Connecticut.
“Northeast states share similar goals when it comes to facilitating the energy transition, our specific targets vary widely, and Connecticut is well behind our neighbors in commercial solar deployment,” Rothenberger wrote.
Mike Trahan, executive director of the Connecticut Solar and Storage Association, wrote in testimony that demand for commercial solar projects has outgrown supply, with 75 percent of applications rejected by Connecticut’s utility companies through no fault of their own, because there aren’t enough megawatts available under the caps.
“We’ll bring in more financing, we’ll hire more electricians and installers, we’ll lower the electric bills of thousands of more ratepayers. We’ll pay more taxes. And so, yes. We support lifting caps. It helps the state hit its goals,” Trahan wrote. “The current megawatt cap must be lifted to provide ratepayers greater access.”
Lawmakers on the Energy and Technology Committee recognized the balancing act required to expand solar while simultaneously trying to limit the impact on Connecticut ratepayers who currently pay the second-highest electricity rates in the continental United States and have grown increasingly disgruntled. Sen. Norm Needleman, D-Essex, likened it to “dancing on the head of a pin.”
Connecticut’s commercial solar development has largely been developed in more rural area because the land is more plentiful and cheaper, lowering the overall cost. But that placement means solar arrays cannot easily connect into the grid and, even when they do, threaten to overwhelm the substations that need to be upgraded to accept the increased energy. Upgrades to the electric grid system are then passed on to ratepayers.
Organizations like PACE, have proposed creating solar canopies over large parking lots in urban areas where connection to the grid will be easier and the substations have more capacity.
Committee co-chair, Rep. Jonathan Steinberg, D-Westport, indicated that canopies are expensive, but advocates indicated that the costs could be reduced through federal infrastructure funds.
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