If Maine utilities have their way, the future of solar energy in Maine will be dominated by a limited number of large-scale projects feeding substantial amounts of power into the electric grid.

The solar installation industry, on the other hand, envisions a decentralized future in which the grid draws power from thousands of small installations on homes, businesses or shared community sites.

Which vision gains an advantage may be determined this year as the Legislature grapples with the question of how to compensate homes and small businesses that generate power when the sun shines, but depend on utility companies when it doesn’t.

The outcome is likely to influence the pace of solar development in Maine, which is at a pivotal point as falling equipment prices begin to make solar competitive with fossil fuels.

It also may help define the shape of future solar generation. Utilities support bigger projects because they say these can be optimized to generate power at lower costs and benefit more of their customers. Installers and their allies favor a decentralized approach, a concept that’s called distributed generation and makes up the core of their work.

Behind the jockeying is the potential that many homes and small businesses someday could generate and store their own power, freeing themselves from a grid that has been controlled for a century by utilities and energy companies.

In the meantime, advocates of the distributed generation approach say that homes and small businesses will continue to need a financial incentive known as net metering.

Through net metering, Maine utilities currently provide a one-to-one credit to customers on their bills for power they generate and feed back into the grid. The practice essentially means that customers with solar panels pay only for the “net” amount of electricity they buy each month, that is, what they consume minus what they generate. Homeowners who generate more electricity than they consume receive a credit toward future bills.

Net metering rules were enacted years ago, when solar electric panels were new and too costly for wide-scale use. But utilities say the system won’t fairly compensate them for the full cost of providing service to all customers, as more homes and businesses turn to solar power. Net metering also is opposed by the administration of Gov. Paul LePage, which says it’s a subsidy that leads to higher costs for ratepayers.

NO CLEAR PATH FOR LEGISLATORS

The future of net metering is being debated across the country, as solar energy becomes more mainstream.

The price of home solar-electric systems can vary, but Efficiency Maine, which administers energy efficiency programs, offers an example online that shows a typical residential installation would cost $11,900, after the owner took an available 30 percent federal investment tax credit. The state of Maine currently has no solar tax credit.

The system described by Efficiency Maine would save the owner an estimated $900 a year on electricity payments, for a simple payback period of 13 years.

A group of three dozen people representing lawmakers, utilities, the solar industry, installers, consumers and other interests met for six months in hopes of finding consensus on the solar power issue in Maine. The group was formed by direction of the Legislature last year, after a wide-ranging solar energy bill failed to pass and overcome opposition from LePage.

The group found common ground on several important areas, such as how to encourage growth in commercial and industrial settings, community solar farms and utility-scale projects. And they did reach some agreement on a potential way to redesign net metering, based on a long-term contract approach developed by Tim Schneider, Maine’s public advocate.

But in a report the group sent to the Maine Public Utilities Commission early this month, it’s evident that the group’s members couldn’t agree on crucial details of how to transition to that net-metering alternative or how to price long-term contracts with customers.

That leaves lawmakers with no clear path for legislation.

“Getting an agreement (on net metering) is just so challenging,” said Rep. Sara Gideon, D-Freeport, a solar advocate who introduced the failed bill last session. The assistant majority leader in the House, Gideon plans to develop a new proposal that captures areas of agreement and to present it to the Legislature’s Energy, Utilities and Technology Committee. A public hearing and work sessions on the bill, which hasn’t been written yet, would precede a vote this spring.

The solar bill Gideon sponsored last year contained a number of provisions to stimulate the growth of solar energy. It would have required electricity suppliers to include solar generation in their power portfolios; offered financial incentives to help homeowners and businesses more quickly pay off their solar installations; and lifted a cap that prevents groups of more than 10 partners from investing together in community-scale solar projects.

Gideon’s pending bill may have more urgency this year. Maine has a law saying that the PUC will review net metering rules when solar generation hits 1 percent of a utility’s load. That threshold was crossed last year in Central Maine Power’s service area, on one hot day in August. Gideon said she’s concerned that if the Legislature fails to act, the PUC could take steps that will kill net metering.

The PUC has three members, all appointed by the governor.

ALTERATIONS TO NET METERING

There’s pressure on utility regulators across the country to tweak net metering, and actions have ranged from one extreme to the other.

In Nevada, net metering hit a state-imposed cap last year when the market grew more quickly than expected. In December, Nevada’s PUC cut the credit utilities pay for solar power and tripled fixed charges over time for rooftop customers. That led two large solar installers to announce that they would leave the state and lay off 550 workers. Last week, an opposition group announced a signature drive seeking a constitutional amendment to roll back the net metering changes.

In California, home to the country’s largest solar industry, solar backers and investor-owned utilities fought for months over a proposal to gradually reduce the credit to rooftop generators. In late January, the PUC sided with the solar industry and agreed to keep the net metering credit at the retail rate until 2019.

This battle is being waged in Washington, as well, with a Maine angle. Sen. Angus King, I-Maine, has teamed up with Senate Minority Leader Harry Reid, D-Nevada, to introduce an energy bill amendment that would protect existing rooftop solar customers from changes in their net metering rates. This federal proposal is opposed by utility and business interests, as well as a trade group representing utility commissions.

Maine’s solar capacity is modest right now, just nudging the 1 percent mark on a hot summer day. The state has roughly 20 megawatts of solar installed, 16 megawatts of it at 1,900 homes and 200 small businesses or institutions in CMP’s service area. But the PUC recently approved the rates for a 20-year contract with Dirigo Solar, which wants to build arrays that could generate up to 75 megawatts and serve 10,000 homes. Other large projects also are planned around the state.

During its discussions, the solar group estimated Maine could boost its total solar output to 255 megawatts in five years, which would represent more than 2 percent of the state’s overall power needs. The group’s report to the PUC says that 49 percent, or 125 megawatts, could come from the home and small-business markets.

UTILITIES BACK MORE GRID-SCALE PROJECTS

But growth in that market share, and the degree to which more solar homes benefit all ratepayers, will be open to debate in the Legislature. Some lines of reasoning were previewed at a solar energy forum sponsored by the E2Tech business group early this month.

Schneider, whose office represents utility ratepayers, called net metering “rough justice,” in that it only maximizes value for homes and small businesses that install solar. If you own a house without a good southern exposure, or rent an apartment, you can’t take advantage of net metering, he said.

But Fortunat Mueller, a co-founder of ReVision Energy, noted that the home and small-business sector was the major market for the state’s solar installers. The first priority of policymakers, he said, is to not hurt that market, which employs roughly 400 Mainers. He and others say that if any alternative is developed for net metering, it should run side-by-side with the existing program for a test period, to evaluate each approach.

But CMP and utility interests will counter that the best way to grow solar in Maine, without shifting costs on to ratepayers, is to encourage more grid-scale projects. A presenter for CMP’s parent company, AvanGrid, didn’t address policy issues in his E2Tech presentation. But the company’s filings at the PUC solar case make its position clear.

“If Maine’s public policy is to increase solar generation in the most cost effective manner,” CMP wrote on Jan. 5, “then programs that implement such policy should promote a greater percentage of grid scale solar development that benefits a larger segment of utility customers at a reduced rate.”

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