Renewable Energy Fund Revenues Way Down, Solar Rebates on Hold

Jul 20, 2015

State officials announced Monday that the state’s renewable energy fund, which provides rebates for people putting solar panels on their roofs or installing high efficiency wood-fired boilers, earned $4.38 million dollars last year.

That might sound like a lot, but it’s a drop of 75% from the previous year.

This decline comes at a time when the fund is seeing record demand, thanks to a booming solar industry driven by plummeting prices in recent years. The Public Utilities Commission says any applications for rebates in the coming year will be put on hold until it can put together a budget.

That means if you wanted to get a rebate for new solar panels (or any other qualifying technology) it’s not clear if you’ll get it.

Why did revenue go down?

To understand why, you need a quick primer on where the money for the renewable energy fund comes from.

New Hampshire and basically all of the New England states have laws that set goals for how much renewable energy the utilities need to buy, (called renewable portfolio standards). If the electric companies aren’t able to get enough energy or can’t get it at a reasonable price, they are allowed to pay into the renewable energy fund.

There’s one more layer of complexity:  the state has set individual goals for different categories of energy. These sub-categories are basically ways to support individual technologies – like the existing hydro-power dams and small wood-fired power plants that are sprinkled all over the state.

There are six small wood-fired power plants in New Hampshire that got their own sub-category under the renewable energy law, but as it happens those power plants have been finding it more lucrative to sell into southern New England, mostly Connecticut, where the incentive programs are more generous to generators.  

So in 2010, 2011 and 2012 more than half of the money in the Renewable Energy Fund was coming in because of the lack of wood-fired renewable energy in the state.

Chart: How much REF revenue came from older biomass plants?

So what changed?

Two things.

First, a few years ago lawmakers were worried about the cost to rate-payers of these goals. Since the idea of the incentives was to support the wood-fired plants, that were already getting more money by selling into other states, it seemed silly for New Hampshire rate-payers to pay when the policy goal was already being accomplished.

They changed the program so that the New Hampshire goal for energy coming from these old wood-fired plants is basically optional.

Second, a brand-new biomass plant was finished in Berlin last year: the Burgess Biopower plant. The energy coming from that has also helped to push down the amount of payments the utilities are making.

Does that mean the program is working?

It is generally true to say that this is how the program was designed to work. It’s supposed to send a market signal:  if there’s not enough renewable energy being built there will be more money available to create incentives, and vice versa.

Chart: Renewable energy fund revenues

This is not particularly helpful to point out to any homeowner thinking of installing a renewable energy system.

If you were hoping to put solar on your roof or a pellet boiler in your basement, now all of a sudden the financial calculus is a little trickier. Basically this is what the state is saying with this announcement-- we didn’t get as much money into the account to just give it out willy-nilly while we write our budget. So while we do, you can submit applications but we can’t guarantee that there will be enough for you to get a rebate.

The average residential rebate for a solar installation in 2014 was more than $3,488, and for putting in a pellet boiler it’s more than $5,768. That’s a big part of how homeowners are convinced to go ahead and make these purchases.

Wait, didn’t lawmakers fight over the renewable energy fund in the budget?

Yes! At first House budget writers were going to take all of the money from the fund, which they priced at $51 million over two years. Which just goes to show how far off the mark they were when estimating how much money was going to go into this fund. Given that there was only $4 million in the fund this year, it would have had to be a blockbuster year in 2016 to make up that gap.

In the end, Senate lawmakers wound up proposing to take $1.5 million a year from the fund which they want to funnel into Homeland Security. When last year's fund totaled more than $17 million, that seemed like a drop in the bucket.  But now, that’s looking like it’s going to be more than a third of the incentive money available. It really makes the raid seem like a much bigger number in comparison.

**An earlier version of this story said the Eversource built the biomass plant in Berlin. The plant was built by Laidlaw Power, Eversource buys the energy**