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North Carolina’s RPS
Under Attack

After a strong showing in the national rankings last year, North Carolina’s solar market could now be in jeopardy. The state, which deployed 131.9 MW of solar in 2012 - enough to rank fifth in the U.S., according to the Solar Energy Industries Association - is currently considering a removal of its renewable portfolio standard (RPS). H.B.298, which would repeal or significantly weaken the RPS law, passed a state House committee last month, bringing it a step closer to potentially becoming law.

North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) currently requires the state’s investor-owned utilities to procure 12.5% of their generation from renewable energy by 2021, while electric cooperatives and municipal utilities are required to procure 10% by 2018.

Although the REPS most directly drives the development of large-scale PV projects in the state, its continued existence is considered crucial for all segments of the solar market - including the numerous local installers that have helped create North Carolina’s recent solar success.

Having a renewable energy mandate in place sends a powerful market signal, says Stew Miller, president of Cary, N.C.-based solar installer Yes! Solar Solutions.

“It lets the public know that the government supports solar and the renewable energy industry,” he explains. “It also attracts companies to North Carolina that have a progressive energy policy.

“I fear that if it is repealed, we’re going to lose a lot of good companies to neighboring states,” Miller adds.

Until recently, North Carolina’s southern neighbors had not yet deployed the types of policies needed to attract solar investment and allow projects to flourish. But with the launch of new initiatives and incentives in Georgia - where the Georgia Power Advanced Solar Initiative aims to create 210 MW of solar development - and South Carolina, solar companies that had primarily operated in North Carolina may be increasingly tempted to pack up and head south.

“Almost all the major North Carolina developers are already looking for land and have done projects in South Carolina and Georgia,” Miller notes. “This bill to repeal the RPS just adds more uncertainty.”

Yes! Solar Solutions has performed jobs in South Carolina, and while no corporate exit from North Carolina is imminent, shifting south if North Carolina loses its RPS “wouldn’t be difficult,” he adds.

More than 15,200 full-time equivalent employees currently work in North Carolina’s clean energy industry, according to a recent press release from the Carolina Sustainable Energy Association.

Supporters of H.B.298 claim that North Carolina’s REPS places an undue cost burden on ratepayers - a refrain heard across the U.S. in recent months as various RPS mandates have come under attack.

According to the bill’s sponsor, State Rep. Mike Hager, Republican Majority Whip, North Carolina’s REPS also hurts the government’s wallet.

Hager, a former executive at Duke Energy, told committee members during recent legislative discussions that the solar sector and other renewable energy industries should be able to stand on their own at this point, Miller says.

“[T]he subsidies cost the state revenue,” Hager wrote on his official Facebook page. “Presently, the mandate will cost the state counties and cities over $50 million before 2021. In addition, the renewable energy tax credit cost the state over $60 million per year - there’s some more subsidies for you.”

Renewable energy advocates dispute such claims, citing studies showing that clean energy development provides millions in economic benefits for the state and serves as a net revenue generator. In North Carolina, the REPS and other pro-renewables policies will deliver more than $173 million in cost savings between 2007 and 2026, according to one such study.

“No good ever comes when you pass laws based on a mistaken premise, and the assumption underlying this bill that the REPS law raises electricity rates and costs jobs could not be further from the truth,” said Ivan Urlaub, executive director of the North Carolina Sustainable Energy Association, in a statement.

Fortunately for North Carolina’s solar sector, the state’s residents appear to continue favoring renewable energy and the REPS. Although the attention surrounding H.B.298 could sway public opinion, a poll from earlier this year showed that a solid 82.6% of residents said policymakers should ramp up renewable energy procurement in the state. Nearly 70% of survey respondents specifically supported the REPS.

- Jessica Lillian

 

Court Dismisses
PACE Lawsuit

Will the U.S. residential solar market ever see a powerful program return to its project finance toolbox? Residential property assessed clean energy (PACE) finance, which allows property owners to pay for solar installations and other energy efficiency improvements through their property tax bills, has been essentially sidelined by mortgage-related legal complications for the past few years. Unfortunately, the most recent court decision failed to raise the hopes of PACE supporters.

Last month, the Ninth Circuit Court of Appeals in California dismissed a case filed by Sonoma County, the State of California and other parties to challenge the legality of action taken by the Federal Housing Finance Authority (FHFA) to curtail PACE back in July 2010.

“We … conclude that FHFA’s decision to cease purchasing mortgages on PACE-encumbered properties is a lawful exercise of its statutory authority as conservator of the enterprises,” the court wrote in its ruling.

“There are three other appellate courts that have ruled similarly,” says Adam Browning, executive director of the solar advocacy organization Vote Solar. “There is a line of thinking that this ruling was not unexpected.”

According to the 2010 statement from the FHFA, which serves as the conservator for government-sponsored enterprises Fannie Mae and Freddie Mac, PACE loans pose “significant risk to lenders and secondary market entities, may alter valuations for mortgage-backed securities and are not essential for energy conservation.”

At the time, the agency also questioned whether the PV arrays and other systems installed under PACE programs “actually produce meaningful reductions in energy consumption.” The end result for solar energy companies looking to install PACE-funded projects was a series of new rules for handling mortgages on the properties where the solar arrays were to be installed - halting PACE.

A series of lawsuits from the Natural Resources Defense Council, the California Attorney General and others followed, and a preliminary injunction in 2012 led the FHFA to begin a rulemaking process on how to deal with PACE loans.

Comments in favor of PACE poured in from thousands of entities, Browning notes. This response provided a generous record of evidence on ways that PACE could be “administered in a way that would be protective of FHFA’s concerns,” he adds.

One question raised by the most recent court ruling is whether this rulemaking process will continue, as the FHFA may no longer be required to proceed with it. Before the ruling, the agency filed for an extension on presenting its final rule until September, Browning says. That final rule, if issued, may wind up being either a positive or a negative for PACE.

“The other potential outcome is that the case is dismissed and [sees] no more legal challenges, and FHFA decides it doesn’t want to go through the rulemaking process,” he explains. “We would be back to where we began.”

A third - and likely most favorable - possibility is that Sonoma County and the other plaintiffs will appeal the decision and petition for a larger panel or the Supreme Court to hear the case - a step that must be taken within 45 days after the court decision.

PACE advocates could also seek relief in federal legislation, although Browning warns that for any policy goal - solar-related or otherwise - finding success when Congress must be involved tends to be “extremely difficult.” One bipartisan House bill introduced last year to protect PACE failed to result in a companion bill in the Senate, where several senators voiced their willingness to co-sponsor such legislation, but no one stepped forward to serve as a sponsor, Browning recalls.

Furthermore, for PACE in particular, pulling members of Congress into the fray runs contrary to the program’s chief identity as a town- and state-level offering that does not require taxpayer funds or other congressional backing, he adds.

“This is all about local control and not waiting for the federal government to come in and establish something,” he says. “It’s for communities that want to take action and go forward.”

While the future of residential PACE may seem murky at the moment, commercial programs - including California’s record-setting initiative announced last fall - continue unaffected. In fact, Browning adds, PACE-enabling bills continue to clear legislatures across the U.S., including most recently in Utah and Arkansas. - Jessica Lillian

 

California City Will
Require Solar

The Lancaster, Calif., City Council has approved a new ordinance requiring newly built residential units to provide solar power - a first in the U.S., according to the city. The measure was incorporated as part of a comprehensive review of the city’s residential zoning laws and passed at a March 26 council meeting, according to the San Fernando Valley Business Journal.

Residential units built within Lancaster on or after Jan.1, 2014, must provide an average of 1 kW of solar-­generated electricity per housing unit. Installation of solar energy systems is not required for all homes within a production subdivision, the city notes. However, the builder will still be required to meet the aggregate energy generation requirement within the subdivision.

 

Dominion Virginia
Program Approved

Virginia’s State Corporation Commission has approved a request by Dominion Virginia Power (DVP) to offer a rate option for customers who own solar generation installations. The rate option is one of the components of DVP’s Community Solar Power program.

The new rate program will allow qualifying solar customer-generators to purchase all of their electricity from the company on their current rate schedule and sell all of their solar generation to DVP at a fixed price of $0.15/kWh for a period of five years. DVP will purchase up to 3 MW of energy output from customer-owned solar generation installations.

DVP utilizes a portion of the voluntary environmental contributions received through the company’s Green Power program in addition to the avoided cost energy rate component to arrive at the $0.15/kWh purchase price.

 

RPS Revisions Could
Threaten Conn. Solar

The Connecticut Department of Energy and Environmental Protection (DEEP) is recommending that the state restructure its renewable portfolio standard (RPS).

The DEEP recommends changing the state’s RPS to increase the Class I target from 20% by 2020 to 25% by 2025 and allow the state to run a competitive bid process to buy a portion - 7.5% by 2025 - of the energy needed to meet this target. However, the DEEP is also proposing to allow large-scale hydropower projects to qualify as a Class I resource.

The New England Clean Energy Council warns that such a move could hurt the state’s market for solar and other renewable energy resources counted under the existing RPS.

“We strongly believe that inclusion of large hydropower in the RPS will undermine achievement of its objectives,” the group writes in a recent letter. “Instead, it would discourage deployment of new renewable energy technologies using market mechanisms that continue to increase competition and bring about price declines, along with local economic development benefits.”

 

Vt. Businesses Oppose
Anti-Solar Bill

More than 150 businesses, including several solar firms, have sent a letter to Vermont legislators stating that S.B.30 is “an unbalanced piece of legislation that will upend decades of well-planned, statewide energy permitting, stifle jobs and restrict access to affordable, clean energy.”

The bill, which was introduced as a three-year moratorium on wind, has expanded to restrict the development of solar, among other clean energy sources, according to Renewable Energy Vermont. The bill targets energy generation projects above 500 kW.

The current legislation not only exempts transmission projects and oil and gas pipelines, but also acts as a de facto ban on clean, local renewable energy, Renewable Energy Vermont and the letter’s authors state.

Additionally, the move will “drive up the cost of energy for all Vermont homes and businesses,” the companies wrote in their letter. “By making renewable energy more expensive to develop and more limited in its availability, Vermont will have a harder time meeting its existing statuary energy goals.”

 

Hawaii Raises
Thermal Rebate

Hawaii Energy, the state’s energy conservation and efficiency program, has increased its instant rebate on new, qualifying residential solar water heating systems from $750 to $1,000. The new rebate is expected to be available only for a limited time.

A typical household of four or more that switches to a solar water heater can save up to 40% - about $600 a year - on its electric bill, according to Hawaii Energy. R