N.H.'s Solar Boom Could Soon Hit A Wall

Aug 6, 2015

By all accounts, New Hampshire’s solar industry has started to accelerate in a big way. This year New Hampshire is on track to see a five-fold expansion in the number of solar farms in state since last fall. While that may be the case now, many in the industry say solar is racing towards a brick wall.

Here’s why.

Solar power is supported by a collage of incentives in New Hampshire: There are state rebates for smaller projects, state grants for larger ones, a federal investment tax credit, and renewable energy credits that owners can sell.

But perhaps the most important is net-metering: when a solar panel generates more than the home or business or town is using it shows up as a credit on the utility bill. Without net-metering, anyone that generates excess energy over the course of a month is basically donating it to the power company (large projects can apply to sell power at whole-sale rates, but none have because it is all but impossible for them to break even).

And in New Hampshire, each utility has a hard cap on how many projects can net-meter.

“We’ve received two large applications for net-metering, and that represents roughly half of our cap,” says John Shore, a spokesman for Liberty Utilities.

That cap 1% of peak electric demand, or 50 megawatts statewide. Legislators created net-metering in 1998, and they capped it because utilities worry that the credits may eventually get too expensive, and drive up rates for non-solar customers.

It took Liberty more than a decade to fill the first half of its cap; it filled the second half in just a few months this spring. “So it did happen very quickly for us,” says Shore.

The story is the same in the service territory of all of New Hampshire’s utilities.

Andrew Kellar is a developer with a company called New Hampshire Solar Gardens, which has 25 solar farms in the works, mostly municipal projects in towns like Franklin, Milton, and Hillsborough.  He says the industry is kind of freaked out.

“We will come to a screeching halt,” Kellar explains, “Our company ourselves have stopped looking at new sites, because there’s no reason to. We’ve had to reach out to all our existing customers, and we’ve had to tell unfortunately unless they can change their ways and move rapidly, we have to put their project on hold.”

Net metering is not the only incentive that is on the rocks. The money for the state’s grants and rebates came in short this year and is likely going to be far outstripped by booming demand. And the federal tax credit runs out at the end of 2016.

Taken as a whole, this makes for a lot of uncertainty for developers.

“Just given the sequence of things, you don’t want to invest all your investment dollars in figuring out the net-metering piece of this without the rebate, you need the rebate you’re not going to get it till July. You need the [federal investment tax credit], it’s expiring at the end of December,” says Chris Anderson with Borrego Solar, a company which is finishing work on the largest solar array in the state so far in Peterborough, “You’re just getting squeezed.”

Anderson and Kellar and others in the industry say swift action is needed to keep New Hampshire’s solar boom from stopping just as it begins.

“We’d like to see some kind of emergency measure take place, how that happens and the process is not totally clear to me,” says Kellar.

Emergency Measures

“We would need two-thirds of the House to suspend the rules to allow the introduction of this bill in order to get it passed,” explains Frank Edelblut. He’s a freshman in the House of Representatives, a free-market conservative, and the man who is working with Republican leadership trying to get squeeze something into the special veto session.

He thinks he can assemble the votes he needs in an unlikely coalition.

“Wherever you are on the political spectrum, if you think that development of renewables is a good idea because it’s responsible stewardship of the environment, then that’s great, come along with me and help me get the caps up,” he says, “If you’re pro-business, you see it’s not a good idea to have production capacity caps on an industry, we see a need to take that off.”

It’s not clear if his proposal will make it to the floor. Republican leadership would have to agree to allow the vote to suspend the rules to happen, but Edelblut says the utilities have signed off on a bill that would lift the cap between 20 to 40 percent. He would then look into a longer-term solution during the next legislative session.

“This is still new for a lot of us, I don’t think anybody was really sure how this was going to go, how quickly it was going to accelerate, how quickly the utilities would reach their cap,” says Liberty’s John Shore.

New Hampshire is not the first state to wrestle with whether to lift its cap on net-metering. Maine passed a law that has been hailed as an innovative solution to the net metering question. Massachusetts has raised its cap more than once and is currently debating doing so again. And Vermont lifted its net-metering cap to 15 percent of peak electric load.

Even here in New Hampshire, one utility has already confronted this question. The Electric Coop, which is the only utility in the state not regulated by the Public Utilities Commission, decided of its own volition to continue with net-metering, though at a slightly less generous rate for small projects.

But as the state approaches its cap, it will be a defining moment for the solar industry in New Hampshire: how do policy-makers see the burgeoning technology? As a threat, or an opportunity?