Hartford Business Journal

8 Hartford Business Journal • April 18, 2016 www.HartfordBusiness.com FOCUS ENERGY By John Stearns jstearns@HartfordBusiness.com A bout a dozen Connecticut towns stand to benefit from a bill changing the state's virtual net meter- ing (VNM) program to help them complete solar projects that will save municipalities and their taxpay- ers money, as much as $300,000 a year in reduced energy costs in some cases. Right now, the towns are locked out of the program because of a statewide cap on the amount of electricity that the systems can collectively sell or share at $10 million a year, of which $4 million is available for municipalities, with the balance for agri - cultural and state property. A proposal that passed the Energy and Technology Commit- tee on March 22 adds $5 million to the cap, an amount expected to help the so-called "stranded" towns complete their projects. VNM allows municipalities to assign sur- plus production from their solar generators, typically sited on otherwise unproductive town property such as closed landfills, to other metered accounts that are not physically con- nected to the generator, such as town halls, public works facilities and school buildings. The pending legislation, Senate Bill 394, would allow stranded towns to go forward with approved shovel-ready projects that received Zero Emissions Renewable Energy Credit (ZREC) awards, but were shut out of the VNM program. If the legislation passes, the towns and solar companies with which municipalities have power-purchase agreements would also be able to recoup the investments they've made in preparing their projects for the VNM program. Rocky Hill Mayor Claudia Baio said she hopes the legislation will salvage the town's stranded solar proj- ect, which includes three power-purchase agreements with SolarCity to construct a 3.9-megawatt solar array consisting of 13,000 solar panels on 15 acres of a former town-owned sand pit. Rocky Hill estimates it would save $200,000 to $300,000 per year in energy costs, plus receive about $90,000 per year in lease revenues from Solar City. "We're talking about substantial electric bill savings that can be passed onto the town," Baio said. Other stranded towns are Branford, Beacon Falls, Bethel, Cheshire, Clinton, Milford, Oxford, Newtown, Put- nam and Woodbridge, according to Paul Michaud, exec- utive director and founder of the Hartford trade group Renewable Energy & Efficiency Business Association and an energy attorney at Murtha Cullina LLP in Hartford. Rep. Charles Ferraro (R-Milford), who testified in sup- port of SB 394, said VNM proved so popular that 14 munici- palities quickly consumed the municipal credits, leaving at least 11 other towns, "which have spent considerable money and effort," unable to advance. Eversource Energy said it started accepting VNM applications in Sept. 2014 and the VNM queue was filled by April 2015. Eversource, which transmits 80 percent of the elec- tric load in the state, can allocate 80 percent of the $4 million for municipalities to its VNM customers, or $3.2 million. United Illuminating, now called Avangrid, carries the balance of the state's power. An Eversource official seemed open to the legislative proposal accommodating the stranded cities, while caution- ing that there's still a lot to learn about the administrative, operational, engineering and cost impacts on the broader distribution system from myriad alternative-energy projects. "This program, if we just expand it by $5 million and it's really purposed for dealing with the few municipal entities in the queue right now, that makes sense, but all those other issues we need to keep look- ing at … ," said Ed Davis, director of rates for Eversource. Eversource's concern is that as these kinds of programs expand, there's a cost to customers, Davis said. The utility buys excess power from the generating municipalities, at more than about 20 cents per kilowatt hour, on average, which is pretty high for production, he said. "Somebody has to pay for that, so what happens, the cost of these programs are borne by our customers," Davis said. "Our concern is as the program expands we're seeing increas- es to what ratepayers are supporting." In written testimony, the Office of Con- sumer Counsel (OCC) also expressed con- cern about ratepayer impact, but gave con- ditional support for the $5 million VNM-cap expansion. The state Department of Energy and Environmental Protection said it's ana- lyzing VNM in the context of other state programs to increase clean energy in Con- necticut as part of an upcoming update to its statewide Comprehensive Energy Strat- egy plan. Michaud, the energy lawyer, said the impacts on the distribution system from the VNM pro- gram are miniscule. "[Utilities] will argue that they're looking out for the ratepayers and they don't want costs to be shifted to the ratepayers who don't use solar; I don't really agree with that argument," he said. " … What's happening … is the private contractors are actually paying to upgrade the system." Stafford is among the towns that isn't stranded, build- ing 2.8 megawatts of solar arrays, including an 800-kilowatt unit at a landfill that it hopes will offset 80 percent of its electricity costs. It's paying to upgrade the distribution sys- tem for its project and is buying its solar equipment rather leasing it. It expects to pay off the equipment in nine years and save $250,000 to $300,000 a year by year 10, said Dennis Milanovich, town engineer. The challenge is to produce only as much power as you need, said Milanovich, who praises the VNM pro- gram, but acknowledges its complexity. "You put in a lot of hours on something like this to get your arms around it," he said. "It's not been too hard a burden, but it could have been a little easier." Michaud said the program is a victim of its own suc- cess and limitations. "If they would lift the cap, the program — Connecti- cut has over 240 closed landfills — could theoretically energize the entire state on landfills, approximately 80 megawatts worth if you were to use every closed land- fill," he said. It would essentially be enough generation to replace a small fossil-fuel burning power plant, Michaud said. n Q&A Narrowing the clean- energy affordability gap Q&A talks about a new initiative to expand solar use by lower- income homeowners with Kerry O'Neill, managing director, resi- dential programs at Connecticut Green Bank. Q: The Connecticut Green Bank last year launched a new "Solar for All" initiative with Louisi- ana solar installer PosiGen to make solar panels affordable to low-income home- owners. Would those homeowners normal- ly be unable to afford solar panels? A: We launched the program because we recognized that our lower-income homeowners were an underserved market that needed a unique approach — they just weren't going solar in the same numbers that higher-income households were. To reach this market we needed solar installers who understood how to work with communi- ty partners to reach homeowners living in lower-income neighbor- hoods, a solar system that had an affordable monthly rate that provided a significant savings on energy bills, and an application process that didn't require com- plicated credit checks. The public-private partner- ship we launched with PosiGen brought into the state an installer that has a track record of reach- ing lower-income customers with a unique approach that includes pairing solar with energy effi- ciency, giving homeowners even greater savings on their energy bills. And PosiGen doesn't use a traditional financial qualification process that looks at credit scores, removing another barrier for low- er-income households going solar — the worry that they wouldn't get approved for financing. Q: What is the "clean-ener- gy affordability gap" and why is it important to the state's clean-energy aspirations? A: The energy affordability gap is the difference between how much a household actually spends on energy each year versus what is considered to be an affordable amount. Lower-income house- holds in Connecticut have a signif- icantly higher energy burden than higher-income households do. This is money that could be spent on much needed medicine, or education, or paying other bills or saving. With Gov. Malloy's poli- cies around cheaper, cleaner and more reliable energy for the state, we need to be sure that no one is left behind, that all residents have access to affordable options for going solar and making energy- efficiency improvements. Solar for All improves the financial sustainability of low-to- moderate income families who are most susceptible to rising energy costs by reducing their energy consumption and pro- viding opportunities to leverage state and federal incentives. Q: How has the Green Bank pro- moted the Solar for All program? A: The Green Bank has worked with PosiGen to launch targeted campaigns. Beginning in Bridge- port, which launched in October, and then New Haven, which launched in January, we're working with PosiGen now to get a campaign going in Hartford and the sur- rounding areas next. PosiGen also has a special launch promo- tion that involves a discount on the monthly payment for the first three to 12 months, depending on how many families sign up in the first weeks of the campaign. The Green Bank has a long tra- dition of partnering with cities and towns, community and faith organi- zations, neighborhood groups and local leaders to spread the message about all the ways residents can go solar or make their homes more efficient. We've tapped into these relationships to introduce the Posi- Gen-Green Bank partnership. So far about 200 people have signed up. Q: What roles do PosiGen and the Green Bank play in this partnership? A: PosiGen is the installer responsible for the entire process with the customer — from quot- ing the project, making the sale, handling the application process, installing the solar system and effi- ciency upgrades, and then provid- ing the financing for the solar lease and energy-savings agreement. The Green Bank connects Posi- Gen to local community groups and leaders and helps organize events, with PosiGen managing the day-to- day outreach and marketing across the state in targeted communities. The Green Bank catalyzed PosiGen to move to Connecticut and build out its operations. It has provided $5 million in low-cost debt capital to PosiGen and also provides a tiered solar incentive for qualifying limited income households. n KERRY O'NEILL Managing director, residential programs, Connecticut Green Bank Hartford was the first Connecticut municipality to put solar on a closed landfill (shown in the photo), although it had to do it without the benefit of virtual net metering. Paul Michaud, executive director and founder, Renewable Energy & Efficiency Business Association and energy attorney, Murtha Cullina LLP Claudia Baio, mayor, Rocky Hill Towns push to expand virtual net metering P H O T O | H B J F I L E

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