Click here to read the Sol SOURCE June 2022.

The Sol SOURCE is a renewables journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains trends and observations gained through interviews with our team, incorporating news from a variety of industry resources.

Below, we have included excerpts from the June 2022 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS

California – California has seen some changes to long-planned energy policy decisions this spring, including potentially keeping its last nuclear plant open while shelving (for now) plans to recalculate net-energy metering (“NEM”).  After industry objection, celebrity intervention, and Commissioner turnover, the highly contested NEM 3.0 proposed decision was suspended, likely until after the November election. On May 9, 2022, the California Public Utilities Commission (“CPUC”) issued a ruling formally reopening the NEM 3.0 docket and requesting feedback on a transition approach in the form of a fixed electric bill credit adder on top of the hourly export credits. In addition, the Commission is seeking feedback on whether the successor tariffs should be extended to include community solar as well as the viability of access for renters and low-income ratepayers. Comments are due June 10, 2022, and reply comments are due June 24, 2022.

On April 21, 2022, the California Independent System Operator (“CAISO”) and Western Energy Imbalance Market (“EIM”) announced that cumulative benefits for entities participating in the rapidly growing real-time energy market have exceeded $2 billion, suggesting neither entity intends to halt efforts to expand.

District of Columbia – After considering a range of options, the DC Public Service Commission will allow existing customer-sited solar projects to continue operating on estimated production. However, effective April 1, 2022, all new systems must have a revenue-grade production meter or inverter-based production measurement equipment. This is part of a broader effort to ensure that customers’ REC production can be tracked.

There remains no word yet on nominees for the DC Public Service Commission vacancy, which continues as the DC election heats up. June elections will see competition for Mayor, Attorney General, and several rarely open Council seats.

Florida – On April 27, 2022, Governor Ron DeSantis (R) shocked the solar industry by vetoing a bill backed by Florida Power & Light that was widely expected to gut the rooftop solar industry in Florida (SB1024/HB741).  Gov. DeSantis, in several high-profile disputes with other Florida corporations, cited inflation and other cost concerns in his surprise veto.  This adds Florida to states that have rescinded (or at least delayed) drastic changes to NEM in recent weeks.

Illinois – Illinois continues working to implement myriad regulatory and other requirements stemming from last year’s landmark Clean Energy and Jobs Act(“CEJA”).  After revising the Long-Term Renewable Resources Procurement Plan based on stakeholder feedback, the Illinois Power Agency submitted its final plan to the Illinois Commerce Commission (“ICC”) on March 21, 2022.  ICC is expected to issue a proposed order by June 8, 2022, which will provide guidance on future block operations and REC pricing. Per CEJA, the ICC must issue a final order by July 19, 2022. The IPA will be running its second Indexed-REC RFP for electric supply and renewable energy products this fall. The program website and guidebook are valuable resources.

Indiana – Indiana saw the first, but likely not the last, delayed closure of a fossil fuel power plant due to the Commerce investigation that created new uncertainty for the solar industry.  On May 4, 2022, the Northern Indiana Public Service Company (“NIPSCO”) announced that the planned shutdown of a coal-fired power plant would be delayed to 2025, citing “uncertainty and delays” in the solar panel industry.  NIPSCO representatives stated on an earnings call that they expect the investigation to delay solar projects by six to 18 months.  As a result, the utility expects to delay the retirement of two coal‑fired units by two years.  NIPSCO previously calculated that replacing its coal with renewables could save customers billions of dollars over three decades.

Maine – Maine continues to attempt to develop a wider variety of clean electricity options in the state while wrestling with its role in the national transmission system. The Governor’s Energy Office is expected to reconvene the distributed generation stakeholder group now that Maine’s legislative session has ended. We expect a straw proposal later this fall to contain more successor program design details in advance of a final report due January 2023. On May 10, 2022, developers of the New England Clean Energy Connect (NECEC) transmission project argued in court against the constitutionality of a ballot measure approved by state voters in November that sought to nullify the project. The NECEC project would carry electricity from Canadian hydropower to the New England grid.

Maryland – While most observers expect next year to be a watershed year for climate and clean energy legislation if the Governorship flips, Governor Larry Hogan (R) allowed the Climate Solutions Now Act of 2022 (SB 528) to become law without signature.  The law requires the State to reduce statewide greenhouse gas emissions, establish a net-zero statewide greenhouse gas emissions goal, and develop building energy efficiency and building and transportation electrification requirements.  

Massachusetts – The Baker Administration continues to push forward several energy-related items in its last year. On April 15, 2022, the Massachusetts Department of Environmental Protection (“MassDEP”) published proposed amendments to the Clean Energy Standard (“CES”). The proposed amendments include setting the CES alternative compliance payment (“ACP”) and Clean Energy Standard-Existing (“CES-E”) ACP to $35/MWh and $10/MWh respectively for years 2022 through 2050. Comments are due on June 3, 2022, and we expect a final decision in the coming months. On May 20,2022, the Massachusetts Department of Energy Resources (“DOER”) issued an email notice to stakeholders identifying two errors affecting the minted supply of 2021 Clean Peak Energy Certificates (CPECs).

Omnibus energy legislation focused on advancing offshore wind is expected to make it through the legislature before the July 31, 2022 end of session. A conference committee has been appointed to merge HB 4524 (previously HB 4515) and SB 2842. The House version contains specific offshore wind provisions, including tax incentives, grid modernization, and a target of 5,600 MW by June 2027. The Senate version is slightly broader and includes energy efficiency and transportation goals. We likely will not see much movement until July.

On May 24, 2022, the Commonwealth’s highest court ruled Attorney General Maura Healey can pursue a lawsuit charging ExxonMobil with violating state consumer protection laws.  Healey, a candidate for Governor, alleges ExxonMobil knew about the threat of climate change but downplayed it publicly while selling fossil fuels.

New Jersey – The Board of Public Utilities (“BPU”) continues to broadly deny extensions for projects unlikely to meet Transition Renewable Energy Credit (“TREC”) deadlines while smoothing the process of moving projects from the TREC to the Administratively Determined Incentive (“ADI”) successor program.  On April 26, 2022, BPU issued a Straw Proposal for the Competitive Solar Incentive (“CSI”).  Staff will hold three virtual Stakeholder Meetings this summer to discuss the CSI Straw Proposal, with comments due June 20, 2022.  On May 18, 2022, the BPU adopted a rule to implement the requirements of Section 38(d)(2) of the Clean Energy Act of 2018, as amended, which establishes a cost cap on certain Class I renewable energy incentives. Additionally, the BPU calculated the Cost Cap for Energy years 2021, 2022 and 2023 and noted that they are not forecasted to exceed the cost cap in 2022 or 2024. In the same order, the BPU also released the megawatt allocations in the ADI for Energy Year 2023 (as a reminder, the energy year and capacity allocations close with new blocks opening on June 1, 2023).

Legislation related to interconnection (S431) and energy storage incentives (S2185) will be heard and voted upon at the next Senate Energy and Environment Committee meeting, which is scheduled for June 6.           

New York – New York’s gubernatorial drama continued this spring, with Lt. Gov. Brian Benjamin resigning over alleged campaign finance violations in his previous position.  After last-minute legislation to allow him to replace Benjamin on this year’s ballots, Antonio Delgado was sworn in as lieutenant governor on May 25, 2022. A special election to fill his congressional seat will be held at the same time as the August 23, 2022, primary. 

On April 14, 2022, the New York Public Service Commission issued a final order approving a new framework for the state to achieve at least ten gigawatts of distributed solar by 2030 (often referred to as the “10GW Roadmap”). The adopted framework includes an investment of $1.5 billion in ratepayer-funded incentives to extend the NY-Sun program. It also adds prevailing wage requirements for projects 1 MWac or greater. NYSERDA released an updated NY-SUN operating plan on May 31, 2022.  Incentive programs will officially open on June 7, 2022.

North Carolina – North Carolina has begun to implement HB 951.  On May 16, 2022, Duke Energy submitted its proposed plan to the North Carolina Utilities Commission (“NCUC”) as required by HB 951.  This plan will be a key component NCUC will use to compose the overall Carbon Plan as required by December 31, 2022. 

Ohio – Ohio energy policy continues its recent ambivalence toward clean energy.  On March 8, 2022, the Public Utilities Commission of Ohio argued to the Ohio Supreme Court that its approval of the Solar Generation Fund established by 2019’s scandal-mired HB6 was proper.  The Ohio Manufacturers’ Association Energy Group has argued the Commission erred in designing the rate mechanism. 

The Ohio Public Siting Board is expected to issue new rules this year to require solar setbacks of 100' from roads and 300' from residences. We also expect additional requirements around fencing and vegetative screening, as well as bills to require larger setbacks to be introduced.

Pennsylvania – Pennsylvania’s as-yet unresolvedprimary will see a dramatic gubernatorial contest between Attorney General Josh Shapiro (D), a vocal proponent of solar and other clean electricity, and conservative State Senator Doug Mastriano (R).  The Senate race for the seat currently held by retiring Senator Pat Toomey (R), which will help determine control of the U.S. Senate, will see Lt. Gov. John Fetterman (D) versus the winner of a recount between Dr. Mehmet Oz and David McCormick. 

After several showdowns between Governor Wolf (D) and the Republican-controlled Legislature, including a last-minute stay on publication, regulations establishing Pennsylvania’s participation in the Regional Greenhouse Gas Initiative(“RGGI”) were published April 23, 2022, setting up a start date of July 1, 2022.  Litigation continues. 

The PUC’s annual AEPS compliance report includes discussion of the Hommrich lawsuit that invalidated regulations around virtual meter aggregation and contains a recommendation to reform net metering “to curb excessive wholesale generation from being compensated at retail rates…” In the report, the Commission recommends that “the General Assembly consider modifying the structure of net metering by placing reasonable bounds to curb excessive wholesale generation from being compensated at retail rates.”

Virginia – On April 11, 2022, Governor Youngkin signed multiple bills related to renewable energy. SB 502 and HB 1087 allow localities to assess projects 5 MW or less for either Machinery & Tools or Revenue Share tax (not both). The bill does not apply to projects 5 MW or less that were approved by a locality prior to July 1, 2022. SB 537 and HB 206 give localities the option to require developers to replace or preserve existing trees in a particular site. For example, a developer could be required to ensure that 10 percent to 20 percent of their site is covered by tree canopy, depending on how the site is zoned and how many units there are per acre. Trees that are planted have 20 years to grow into a canopy that exceeds 5 feet in height. Trees can be planted elsewhere if there is not enough on-site, but they must be in the same locality.

In March 2022, the Virginia Department of Environmental Quality (“DEQ”) announced that—effective immediately—it would define solar panels as impervious surface areas. On April 14, 2022, DEQ released additional guidance that pushed implementation out to January 1, 2025 for all projects that have not received interconnection approval.

Public comment for the draft Virginia Energy handbook for renewable energy and energy storage development on brownfields and previously coal-mined lands were due on May 23, 2022. A draft copy of the report can be found here. The final report is scheduled to be released by July 1, 2022.

In April 2022, the Virginia Department of Energy and the Virginia Solar Initiative at the Weldon Cooper Center for Public Service at the University of Virginia released the Virginia Solar Survey.  The first such survey in Virginia offers data regarding each county and city’s experience with and readiness for solar development.

On April 14, 2022, the Virginia State Corporation Commission opened a docket to establish a self-certification process for DG resources seeking to qualify as low-income projects and consider additional GATS-related questions. Comments are due June 8, 2022.

SOLAR CHATTER

• In the wake of the trade complaint brought on by Auxin Solar, the Solar Energy Industries Association (“SEIA”) is projecting the 27 GW expected to be brought online in 2022 could drop all the way 10 GW, with an additional 70 GW over the next three years at risk of failing to come to fruition.
• In a late-May study released by the RMI, detailed analysis projected $5 billion in annual savings for electricity customers if the Investment Tax Credit (“ITC”) and Production Tax Credit (“PTC”) were extended and expanded. The study adjusted its model for both recent inflation and fossil fuel price volatility.
• Renewables Forward announced the hiring of its first executive director, Chris Nichols, to champion the DEI initiative started by leading U.S. clean energy companies and partners, of which Sol Systems is a founding member. Nichols brings an impressive track record spearheading DEI work from within and outside the clean energy industry.
• The solar business landscape is always changing, and May was no different with large-scale developer Borrego announcing the sale 8.4 GW of their solar portfolio along with 6.4 GW of their battery storage footprint. While Borrego moves on from developing, French energy company TotalEnergies announced the purchase of 50 percent of developer Clearway in TotalEnergies’ latest move to increase its role in the U.S. market.
• After fits and starts, the Securities and Exchange Commission (“SEC”) recently proposed how public companies should disclose risk from climate change and climate change regulation.  Under the proposal, companies would be required to disclose information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, as well as to disclose certain climate-related financial statement metrics in a note to their audited financial statements. The goal is to require the disclosures necessary to properly evaluate investor risk, the core mission of the SEC.  The risks of not doing so are highlighted in a number of fora, including the recent decision allowing Massachusetts’s lawsuit against ExxonMobil under state consumer protection laws to move forward.  Massachusetts alleges the company knew about the threat of climate change but downplayed it publicly while selling fossil fuels. 
• The “social cost” of a pollutant, such as carbon dioxide, quantifies the cost to all of us of adding one more ton of emissions – in other words, how much damage does a pollutant cause.  All pollutants have these metrics, but the “social cost of carbon” has proved particularly contentious in the U.S. lately - after numerous attempts to block its use through the courts, the Supreme Court recently declined to take the case, allowing the White House to finalize (and likely significantly increase) the metric.  New York State recently completed a similar analysis, and now uses $121 per ton CO₂, significantly increasing the calculable benefits of clean energy and climate programs. 
• Congress left town for the Memorial Day holiday weekend without meaningful progress on alleviating Senator Joe Manchin’s opposition to passing a reconciliation bill that includes an ITC extension and expansion (all Republicans remain opposed).  When Congress returns, the focus will be on the July 4th holiday as a soft deadline to reach an agreement to use reconciliation to pass a party-line climate, energy, and deficit reduction package.  We do expect Democrats to use the reconciliation process before the August recess to extend Affordable Care Act (“ACA”) subsidies; if not extended, notice of premium increases would go out just before the November election, hampering an already potentially dismal election for Democrats.  

About Sol Systems

Sol Systems is a leading national solar energy firm with an established reputation for integrity and reliability across its development, infrastructure and environmental commodity businesses. To date, Sol has developed and/or financed over 1 GW of solar projects valued at more than $1 billion for Fortune 100 companies, municipalities, counties, utilities, universities and schools. The company also actively shapes and trades in environmental commodity and electricity markets throughout the United States. The company was founded in 2008, is based in Washington, D.C., and is led by its founder. Sol Systems works with its team, partners, and clients to create a more sustainable future we can all believe in. For more information, visit https://www.solsystems.com