McClaughry: FERC ruling on solar subsidies could help Vermont ratepayers

By John McClaughry

Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority called an effort to “preserve competition” and give states more “flexibility” in implementing the federal rule.

Changes include allowing states to set the rates paid to qualifying facilities (solar installations) at a variable wholesale rate rather than a fixed cost, reducing the size of a project that is subject to such rates from 20 megawatts to 5 megawatts, and modifying the 1-mile spacing rule to prevent aggregation.

So what? Solar PV supporters say the new rule could hurt the ability of small solar projects to secure the financing they need, while utility groups said the changes would prevent customers from paying excess costs to make up for the utility paying way above market prices for solar electricity.

A utility association spokesman said:

For years, electricity customers have been paying billions of dollars in excess energy costs as a result of PURPA provisions enacted in the 1970s that allowed well-financed big developers to lock in guaranteed long-term, inflexible contracts at the expense of other more-competitive and cost-efficient renewable energy projects. By updating these rules, FERC has helped to ensure that renewable energy can continue to grow without forcing electricity customers to pay a premium to the developers that learned how to game the system.

One likely result: less contributions to VPIRG from Vermont’s solar barons.

John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Michael Bielawski/TNR
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5 thoughts on “McClaughry: FERC ruling on solar subsidies could help Vermont ratepayers

  1. Peter,

    It may not be obvious to many people, but the US imports at least 50% of all solar panels from CHINA, plus all sorts of rare earth metals that are essential for electrical and electronic systems, including US military systems.

    If the people of the US elect Democrats to the presidency, then they might as well have voted to put the Chinese Communist Party in charge of the US.

    There won’t be much difference, except the American socialist/communists will speak English, whereas the Chinese socialist/communists will speak Chinese. The policies of suppression/mandates/control will be the same for both countries.
    Look at the dysfunctional/hooligan behavior in Democrat-controlled cities.

    The Democrats tried to overturn the 2016 presidential election by various litigations.
    Shifty Schiff and his band of Democrat lawyers come to mind.

    If those same people are put back in the Oval Office and the House and Senate, they will correct their mistakes.
    They will accomplish the theft of the American Republic in perpetuity by means of a decades-long NEW ENERGY DEAL, COSTING TENS OF TRILLIONS OF DOLLARS.

    If you vote for Joe “Ukraine/China” Biden, you might as well be voting for China’s Xi.

    Biden will be totally manipulated by the Democrat Party leftists, who seek to “command and control” every aspect of your lives, whether you like it or not.

    They will control every aspect of your life, if they are given the power.
    Don’t vote the slave masters into Office; it is like giving them a whip.

  2. HOUSE BILL TO INCREASE IN-STATE SOLAR FROM 8.6% IN 2009 TO 20% IN 2032

    This section has information from this Seven-Days article.
    https://www.sevendaysvt.com/vermont/solar-flares-call-to-double-vermonts-renewable-energy-capacity-ignites-debate/Content?oid=29876195

    The Bill mandates utilities buy 20% of their electricity supply, about 1.2 BILLION kWh/y, from in-state RE sources which effectively means solar, even though solar:

    – Is, by far, the most expensive electricity in the portfolio of GMP. See Appendix.
    – Imposes the greatest threat to the stability of the grid, due to ever-larger DUCK-curves, as have happened in southern Germany and southern California
    – Would make the use of EVs and heat pumps prohibitively expensive.

    The Bill appears uncomplicated to pro-RE lay people, and some legislators eager to please Vermont solar businesses, but is far from it, according to energy systems analysts at VT-DPS.

    – Vermont had installed 364.24 MW ac, or 438.84 MW dc, at end 2019, per ISO-NE/VT-DPS, which had a legacy capital cost of about $2 billion.
    – In 2019, solar electricity generation was about 482,000 MWh, or 482/6000 = 8.03% of supply to utilities, or 482/5600 = 8.6% of consumption via wall sockets.
    – Vermont installed solar would need to increase to about 20/8.6 x 438.84 = 1021 MW dc, at end 2032, per House Bill. See Note.
    – The additional capital cost would be about (1021 – 438.84) x $3 million/MW = $1.747 BILLION, or $134 million/y for 13 years, excluding:

    1) Grid extension/augmentation to connect solar systems
    2) Increased connections to nearby grids to minimize disturbances due to solar
    3) Any storage to deal with midday DUCK-curves
    4) Any inverter replacements in about year 12 and O&M

    Historically, items 1, 2 and 3 have been charged to ratepayers, taxpayers, and added to government debt.
    If they had been charged to owners of solar systems, they would be a lot less eager to have solar.

    NOTE: Legislators, and pro RE-entities, may offer the usual “easy-talk/hand-waving” option of “we do this and that, by that date, and Vermonters will save lots of money, and save the climate”.
    However, the experts at VT-DPS have no choice, but to evaluate the A to Z picture of cost and physical implications of increased solar on:

    1) Electric rates, c/kWh
    2) Stability of the grid
    3) Expansion/reinforcement of the grid
    4) Substations on grids with solar systems needing to be arranged to receive and send power.

    If they did not, all hell may break loose, such as costs/kWh going through the roof, and the grid becoming unstable, especially on sunny days and variable-cloudy days, at some future date.
    http://www.windtaskforce.org/profiles/blogs/vermont-solar-market-pa….

    Subsidized Solar Profiteers Aided and Abetted by Legislators

    James Moore of SunCommon wants to build-out solar for solar’s sake, because he makes good money installing solar systems. He does not care about:

    1) Midday, grid-disturbing, Duck-curves, and grid-disturbing downward output spikes due to variable cloudy weather
    2) Expensive grid extension/augmentation to physically connect solar systems and subsequently deal with their output variations
    3) Net-Metered solar and Standard-Offer solar charged to the utility rate base at up to 21.7 c/kWh, whereas such solar is worth to a utility about 8.5 c/kWh
    4) Owners of other generators, mostly gas turbine plants, having to rapidly decrease their outputs to let solar onto the grid, starting around mid-morning, and then rapidly increase their outputs to fill the void as solar nods off to go to sleep, starting late-afternoon/early-evening (a period with peak demands), until about mid-morning the next day
    5) Ratepayers, taxpayers, etc., paying through the nose, while they are being told various fables/fantasies about Vermont fighting climate change. See explanation of cost-shifting in Table 4.
    6) His subsidy-fueled solar job creation causes increasing costs, decreasing job creation, and anemic growth in other sectors.

    • It would be interesting to hear VPRIG’s, CLF, the renewable industry’s lobbyists and Vermont legislature rebut Willem’s comments…..Let’s hear them point out where Willem is wrong.

      Most likely crickets from the advocates and nothing from the law makers as the renewable energy lobbyists speak for them because they have no rebuttal.

      So, let’s go back a few years and recall Gov. Shumlin, his Commissioner of Public Services, the renewable energy advocates and lobbyists telling us how solar and wind power were going to lower electric costs for Vermonters and reduce CO2 emissions…….How are those promises working out for Vermonters?

      Meanwhile the Climate Change Solutions Bill, which significantly ups the ante on the failed promises from Shumlin’s handy work, heads to Gov. Scott for his signature…….What will be do?

      • Peter,

        Here are some comments on the PURPA ruling.

        1) “Solar PV supporters say the new rule could hurt the ability of small solar projects to secure the financing they need”.

        Owners of solar projects, under Vermont’s “Standard Offer”, usually are paid S-O rates of about 11 c/kWh for 25 years.
        Owners are allowed to make a 9% return on investment
        Where else can you get such high GUARANTEED rates?

        These VT-PUC rates used to be much higher, up to 30 c/kWh!!!!
        Ratepayers were screwed big time.
        The multi-millionaire owners could not believe the good deal.
        They flocked from all over the country to Vermont.

        2) “Utility groups said the changes would prevent customers from paying excess costs to make up for the utility paying way above market prices for solar electricity.”

        It will become much harder for states, such as Vermont, to have programs with high solar feed-in rates.

        EAN, VEIC, and VELCO have been agitating to increase Vermont solar 438.84 dc, at end 2019 to at least 1000 MW dc, at end 2025. Those self-serving goals are totally unrealistic, and they likely know it, but agitate anyway.

        Their goals appear to be extremely dubious with:

        1) The Federal EV tax credit having been cancelled
        2) The solar Investment Tax Credit expiring in 2022
        3) The multi-year recession and high unemployment due to the virus economy.
        4) ASHPs Marginally Effective for Reducing CO2 in Average Vermont Houses. See URL
        5) EVs Minimally Reducing CO2 Compared with Efficient Gasoline Vehicles. See URL
        6) The recent FERC PURPA update to ensure proper competition, i.e., no sweetheart deals.

        Major increases of taxes, fees and surcharges on ratepayers, taxpayers, and adding to government debt to pay for their self-serving, dubious claims, likely would not be a palatable option.

        1) Net-Metered Solar Charged to Rate Base at a Legacy Cost of About 21.7 c/kWh; cost shifting to ratepayers about $11 million in 2019
        2) Standard Offer Solar Charged to Rate Base at a Legacy Cost of About 21.7 c/kWh; cost shifting to ratepayers about
        $38 million.
        3) Utility and Privately Owned Solar Charged to Rate base at a Legacy Cost of About 21.7 c/kWh; cost shifting to ratepayers about 14.6 million.

        NOTE: A cost of 21.7 c/kWh was assumed, because no published value is available to the public, due to “proprietary business data”, even though high levels of federal and state subsidies are involved.
        What is the cost/kWh of legacy systems?
        What is the cost/kWh of new systems?
        Who are these private, multi-millionaire owners riding the UTILITY solar-subsidy gravy train for decades?
        Vermonters paying through the nose, but are kept in the dark!

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