Opinion: Electric rates are spiking. Do renewables help or hurt?

Published: 10/18/2022 6:00:22 AM

Dan Weeks is a co-owner and vice president at ReVision Energy.

For years, state lawmakers and Gov. Sununu have been locked in a heated debate about the costs and benefits of renewable energy in New Hampshire.

On one side, bipartisan majorities in the State House and Senate have sought to increase net metering so that solar and other homegrown renewables can compete with fossil fuels. Their argument? Lower costs and carbon pollution. On the other hand, Gov. Sununu has vetoed nearly a dozen such clean energy bills, claiming they raise costs for other ratepayers. He even went so far as to insult clean energy companies like my own.

Now, the verdict is in thanks to a long-awaited report from Sununu’s Department of Energy. The results were consistent with a long line of studies on the value of solar net metering on the grid, conducted by energy regulators and analysts in other states. As a father of three young kids who stand to inherit a badly damaged climate, and as a member of our state’s budding solar industry, these findings hit close to home for me.

But first, a word on how the study came to be. Back in 2017, the New Hampshire Public Utilities Commission (PUC) implemented a new net metering program which pegged the value of renewable energy from small-scale generators to the variable electric rates offered by our main utilities Eversource, Unitil, and Liberty. When the utilities raised or lowered their default rates, the value of excess net metered electricity from solar arrays and hydro dams would go up or down accordingly. The tariff prohibited “cost-shifting” between utility customers with and without solar panels and charged the PUC with carrying out a value of distributed energy study to inform future net metering.

Although the formula was straightforward, the resulting value of clean electrons delivered to the grid was substantially less than neighboring states, which based their net metering rates on empirical studies of the actual costs and benefits of solar. Not surprisingly, New Hampshire has by far the lowest level of solar investment and penetration in the region at 1.2 percent of total electricity, compared to 5 percent in Maine, 17 percent in Vermont, and 20 percent in Massachusetts as of mid-2022. New Hampshire also has the region’s highest electric rates.

Fast forward five years to the new report presented last week by the NH Department of Energy and independent experts Dunksy and Power Advisory LLC. Although the complete study has yet to be released, the detailed analysis of hourly avoided energy costs attributable to net metering showed a pronounced cost-shift is, in fact, occurring but not in the direction claimed by clean energy opponents.

Specifically, the report found that the average unit of net metered solar electricity was worth at least 21 cents per kWh in 2021, including 5 cents of environmental benefits from reduced air pollution and improved public health. When multiplied by the total amount of solar generation in New Hampshire, as documented in the report, the aggregate value of solar came to $27 million last year.

By contrast, families and organizations with solar in New Hampshire actually received just 12.6 cents per kWh, on average, for their electrons in 2021 under the state’s net metering rules. That’s 60 percent less than their empirical value of 21 cents, amounting to a total loss of roughly $11 million. Although the report methodology is conservative on several counts, the findings are in alignment with prior studies of local solar power, such as a 2020 report which found an average annual cost-shift of $17 million from solar to other ratepayers before environmental benefits are taken into account.

How do solar arrays lower energy costs for everyone? According to the report and a growing body of research approved by the PUC, solar panels reduce onsite demand and deliver excess power to the grid at periods of highest need like hot summer afternoons when the sun is shining and everyone is using AC. When paired with battery storage – an increasingly common approach – solar arrays can continue offsetting peak demand into the evening hours. As more electric vehicles hit the road and utilities start allowing bidirectional charging, such savings will only grow.

Thanks to these and other benefits in the solar “value stack,” utilities are less reliant on expensive and polluting “peaker” power plants, which deliver power inefficiently over long distances. A local case in point is Merrimack Station in Bow, the last remaining coal-fired power plant in New England, which is currently receiving $189 million in “forward capacity” payments from ratepayers just to remain on standby from 2018-2023, allowing it to then sell power at premium rates a few weeks out of the year. In one hour of operation, Merrimack Station releases as much carbon pollution as the average American does in 26 years. It has been the subject of multiple lawsuits relating to water discharges and greenhouse gas emissions.

Looking forward to 2035, the new study also found that increasing deployment of solar in New Hampshire will reduce energy bills for the average ratepayer even under the most conservative assumptions, which disregard the clear trend of increased electrification of the building and transportation sectors, as well as the documented public health and environmental benefits of reduced carbon emissions. In one extremely conservative scenario, the report found that renewables could increase rates to other customers by roughly 1% – a statistic that has featured prominently in coverage of the study but is sadly misleading because it conflates high-value solar with lower-value hydro and ignores many of the accompanying benefits of solar identified elsewhere in the report.

Taken together, the new report confirms what numerous other value of solar studies has shown over many years: net metering is a net good not just for those with solar panels but also for society at large. As Granite Staters gird ourselves for spiking electric rates, our leaders would do well to follow where the data leads and finally let solar compete.




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