By Brianna Brand
The New Hampshire Public Utilities Commission (PUC) announced last month that they were temporarily closing the state’s popular Residential and Commercial and Industrial Solar Rebate Programs.
These programs, managed by the PUC’s Sustainable Energy Division, have been in place since 2008 and have been exponentially increasing in popularity over the past few years as solar installation costs have dropped dramatically. The programs offer one-time rebate payments to eligible recipients for installing solar photovoltaic systems, allowing NH residences and businesses to produce their own supply of local clean electricity. Even though rebate prices have dropped from a maximum of $6,000 at the onset of the residential program to a maximum of $2,500 at the start of the 2017 program, demand has remained steadily, if not at times overwhelmingly, high.
But sheer demand wasn’t the monumental factor that caused the PUC to temporarily close the programs. Nor was it the $1,000,000 C&I program waitlist, or the $500,000 residential waitlist. Rather, an anticipated decrease in available funding was the main motivator behind the shutdown.
The rebate programs are funded by the Renewable Energy Fund (REF), a program under NH’s Renewable Portfolio Standards (RPS). Under the RPS, if utilities cannot purchase enough Renewable Energy Credits (RECs, each represents one megawatt of eligible clean electricity generated) to fulfill their compliance obligations, they must pay Alternative Compliance Payments (ACPs). ACPs fund the Renewable Energy Fund, which also provides rebates for residential wind, biomass, and solar hot water installations.
ACP payments fluctuate from year-to-year, depending on the availability of RECs in the marketplace. In years where RECs are scare, utilities pay more ACPs, yielding higher rebate program budgets. In years where there are more RECs available to purchase, utilities don’t pay as many ACPs into the REF rebate pool.
This year, ACP payments are expected to be less than in previous years. Estimates place the incoming ACP values at approximately $3.6 million, a shortfall compared to last year’s approximately $4.2 million ACP revenues or 2015’s $4.4 million.
The PUC is currently in the process of reconciling incoming ACP payments and developing program budgets for the upcoming fiscal year. Programs will not re-open until after September 1, 2017.
The rebate programs have experienced start-stop issues in the past, including the establishment of wait lists. Solar industry installers will likely work with their customers to determine appropriate pricing options and timelines. The solar industry in NH remains strong, supporting over 1200 well-paying jobs. Similarly, interest in solar PV systems remains high as more and more NH residents and businesses seek to increase their energy independence and lower electricity costs.
Going forward, an important issue that could continue to affect the rebate program funding levels is that per a NH Statute (RSA 362-F:6, II-a), utilities can add up all of the systems that net-meter and do NOT create RECs, then apply that total amount (in kW), using a 20% capacity factor, to reduce their RPS obligation. In effect, if a customer does not create RECs, the utilities get to net-out that customer’s system’s production from the compliance obligation, meaning utilities have to buy fewer RECs from other sources and fewer ACPs flow into the REF. The balance between the REC market and ACP payments will heavily influence the rebate programs in the future.
NHSEA has created a helpful REC guide and REC creation program to help system owners manage their RECs effectively to allow for the continued growth of solar in NH, available at https://www.nhsea.org/renewable-energy-credits-recs.
Brianna Brand is the Program Director of the New Hampshire Sustainable Energy Association (NHSEA).