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

Below, we have included excerpts from the Q1 2019 edition. To receive future Journals, please subscribe or email SOURCE@solsystems.com.

STATE MARKETS 

Washington, D.C. - On March 22, the DC Council’s Clean Energy DC Omnibus Amendment Act became law, making it one of the nation’s most aggressive clean energy laws, including a 100 percent renewable portfolio standard (RPS) and a 10 percent solar carve out goal. This law is not only among the strongest of its kind in the United States with the biggest solar carve out, but it also goes into effect the soonest: the District must meet its RPS goal by 2032 and its solar carve-out goal by 2041.

The amount of solar generation located within the D.C. region is expected to skyrocket quite quickly as soon as the legislation goes into effect. As reported by pv magazine, Washington D.C. generated 52 gigawatt-hours of electricity from solar in 2017, which is equivalent to less than 0.5% of the district’s demand. The new law requires that Pepco add 10x as much solar capacity to its generation mix by 2032.

In addition to the RPS and solar carve out goals, the legislation takes swift strides toward decarbonizing Washington, D.C.’s economy writ large: fleet vehicles must meet stringent new emissions standards and commercial buildings must meet Energy Star energy efficiency requirements and other standards based on building size.

This ambitious legislation has major implications for all energy consumers in Washington, D.C., particularly our customers who are commercial real estate owners. Reach out to us for more information about how the new law will impact you, and how Sol Systems can help you to achieve its targets.

Maryland - For the third year in a row, Maryland’s state legislature is considering an overhaul and expansion of the state’s Renewable Portfolio Standard (RPS). HB 1158/SB 516, the Clean Energy Jobs Act of 2019, increases the RPS goal from 25% to 50% and increases the solar carveout to 14.5%, which is equal to about 5 GW of solar. This is a significant boost from the current 2.5% carveout, and it’s sorely needed. The state SREC market is significantly oversupplied, installations are down, and The Solar Foundation’s Solar Jobs Census reveals the state lost 800 solar jobs last year, ranking 47th in the United States for job growth.

As of this writing, the legislation has passed the Senate 33-13 with bipartisan support. The bill has now been sent to the House Rules Committee and is awaiting a hearing from the House Economic Matters Committee, which is responsible for reviewing the bill and sending it to the floor.

The bill’s chances are unclear. MDV-SEIA’s perspective is that political inertia is the bill’s greatest foe, as the legislature is also considering other meaty issues this session and lawmakers prefer to space out major bills. At this point, the bill’s path to passage appears to be complicated. However, a strong coalition of renewables advocates, environmentalists, faith leaders, and manufacturers have coalesced around the legislation, and if it doesn’t pass this year, it will undoubtedly be back (and hopefully better than ever) during next year’s legislative session.

Other relevant bills with a chance of passage include a measure requiring the state Public Utilities Commission to create a customer choice website for electricity customers, a bill establishing an energy storage pilot program, and an effort to establish a commission to study solar energy’s impacts on land use and farm land.

South Carolina - Last month, the South Carolina Energy Freedom Act (H3659) passed the SC House unanimously and moved to the Senate Judiciary committee for consideration. The committee has held two hearings thus far to hear stakeholder feedback on the measure. The legislation, which is considered a compromise bill between clean energy advocates, the solar industry, and utility companies, extends the state’s existing net metering system until June 1, 2021, effectively lifting the net metering cap. When the existing net metering program ends, the state PSC will become responsible for determining net metering rates for solar customers.

Despite efforts to bring all parties to the table to develop a bill that would garner broad support, Duke Energy remains opposed to some bill language related to how large-scale solar projects are contracted under PURPA, instead preferring for the state to shift toward a competitive bidding structure. As written, the bill would enable some queued solar projects to secure 10-year contracts with utilities at future, PSC-approved avoided costs rates.

Those aren’t the only changes for large-scale solar projects. If the bill passes, the PSC will be become responsible for determining methods for calculating payments to solar developers that are “commercially reasonable” and compliant with PURPA. It also establishes a new process for interconnecting large-scale solar projects to the grid, which includes PSC enforcement and conflict resolution. Solar developers have complained that hundreds of megawatts of solar projects are backlogged, awaiting interconnection in Duke’s territory.

The legislation also increases competition in the energy sector by increasing scrutiny of new utility power generation proposals, launches a renewables program for commercial and industrial energy customers, creates new consumer protections for solar customers, and establishes the framework for a community solar program.

Solar Chatter

• Illinois, building off of the progress being made as a result of 2016’s Future Energy Jobs Act, is now pursuing a bill that sets a 100% renewable portfolio standard in its state legislature. SB2132/HB3624, titled Clean Energy Jobs Act (Maryland’s 50% bill shares this name), will require the state to be powered by 100% renewable energy by 2050. If passed, Illinois would join California, Hawaii, New Jersey, and New York in 100% clean energy goals, though New York and New Jersey’s goals came by way of executive orders.
• Following the steep module price drops that we wrote about throughout 2018 due to changing solar policy in China, in 2019 we're seeing a slight increase of a few percent in module prices over the first quarter of 2019. The primary cause for this appears to be increased demand from US developers looking to meet the IRS Safe Harbor criteria by procuring 5% of project costs in 2019 to secure the 30% ITC before it begins to step down in 2020.
• We’re seeing an increase in acquisitions of early-stage development assets in the market. As more competitive capital comes into the market, buying early has arisen as a new differentiator for buyers. Early capital commitment is, in turn, giving developers execution certainty when pricing out much of the project costs.
• As battery deployment increases and the associated costs decrease, the question for many developers has continued to focus on which market segments are the most economical for the technology. Currently, state incentives, namely those in Massachusetts and California, are providing the most attractive environment for batteries. Capacity rights, as well as shifting of peak load charges, continue to be key considerations for financiers when pricing out storage-incorporated projects.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last ten years, Sol Systems has delivered 800 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com