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Will Michigan cash in on community solar or get left behind?

Solar power is on the precipice of a major transformation. The U.S. Environmental Protection Agency just released details of the $7 billion Zero-Emissions Technology Fund, a program created by the Inflation Reduction Act (IRA) that will give out around 60 competitive grants to states, tribes, municipalities, and eligible nonprofit entities to build residential rooftop solar, community solar and storage in low-income and disadvantaged communities. These funds will allow distributed energy to go to new places. People who cannot afford solar panels, or who do not have the space to install panels, or rent and do not have the option, can subscribe to a community solar project where they buy the output of a solar array placed in their community.

For context on just how much this program will exponentially boost community solar, in 2022 the amount of investment by developers into community solar totaled $1.3 billion, according to Wood Mackenzie.

But in many states, community solar faces legal and regulatory roadblocks. Communities in those states are likely to be at a big disadvantage when competing for billions in grants from the Zero-Emissions Fund. Michigan is, unfortunately, one of those states. To avoid this big missed opportunity, lawmakers need to take advantage of the current momentum in Lansing to pass legislation that would create a path forward for far more community solar.

Fortunately, bills that would do exactly that were just introduced into the Michigan legislature by state Sens. Jeff Irwin (D-Ann Arbor) and Ed McBroom (R-Waucedah Township). This bipartisan legislation consists of two bills: SB 152 would require the Michigan Public Service Commission (MPSC) to issue new regulations ensuring all customers have opportunities to participate as subscribers to a community solar facility, among other provisions. No less than 30% of the electricity produced by each community solar facility would be reserved for low-income households and service organizations. Meanwhile, SB 153 would establish rules for those customers to receive proportional bill credits for the output of the community solar facilities to which they subscribe.

There is another reason community solar is particularly important right now: DTE and Consumers Energy are putting forth their own proposals for utility-owned “community solar” programs. It would be a problem if the future of community solar in Michigan is only utility-owned. The current existing utility programs are small, not offered in communities across the state, and expensive – all issues that could be addressed with more competition and broader opportunities for community solar.

In the six states where growth of community solar is strongest (Colorado, Illinois, Massachusetts, Minnesota, New Jersey and New York), customers who participate in a community solar project can actually save money on their electric bills. The solar array produces electricity which the customers can claim as a credit on their monthly bill from their utility. Because the operating costs of solar arrays are so low, customers can often save money in these arrangements.

But in Michigan and many other states, utilities are not required to enable this type of bill crediting, known as “virtual metering,” As a result, utilities, who do not want to see their customers buying power from other sources, tend not to cooperate with community solar projects.

The lack of virtual metering will also make it hard for federal dollars to go toward communities in Michigan that could benefit from solar power. Why? The IRA declares that a goal of the Zero-Emissions Technology Fund is to “deliver benefits to low-income and disadvantaged communities” who otherwise are not likely to have direct access to solar energy. Grants are going to be prioritized for community solar programs where participants can save money, and those tend to be difficult to build without virtual metering.

Yes, there have been some successful community solar projects, even in Michigan, in areas with municipal and cooperative electric utilities. Since December 2018, the East Lansing Community Solar Park, consisting of about 1,000 solar panels, has generated around 400,000 kilowatt-hours of electricity a year and serves subscribers who are customers of the Lansing Board of Water and Light (BWL) who developed the project in partnership with Michigan EIBC members Michigan Energy Options and Pivot Energy. Subscribers receive an annual credit that represents the output of the solar panels.

Pivot Energy’s community solar capacity in Illinois now stands at 51 megawatts, making the company one of the leading providers in the state. One of these projects includes a 2.8-megawatt system in Kankakee, Illinois (shown above). (Courtesy: Pivot Energy)

As successful as this project has been, the fact that it is one of the few community solar success stories in Michigan demonstrates the problem. This is just one project that was made possible by the cooperation of the Lansing BWL, a municipal utility much smaller in size than the large investor-owned utilities, DTE and Consumers Energy. Those investor-owned utilities provide the vast majority of Michigan residents with electricity, and have, for the most part, not offered customers affordable, local, community solar programs.

That leaves Michiganders who want community solar stuck, and there are a lot of them in this position, as a recent study from Michigan State University found. But projects in other states continue to move forward while similar projects are not possible in Michigan. For example, there is Michigan EIBC member AC Power’s project to go from “trash to treasure” by building solar arrays on old landfills in New Jersey so those sites can be used to benefit community members that subscribe to their output. Or Michigan EIBC member Sunnova, which has helped communities in California avoid expensive grid upgrades by offering them solar-powered microgrids that allow those communities to “island” off the grid. Michigan EIBC member AES Corp. has a portfolio of hundreds of megawatts of community solar in states like New York, Illinois, and Massachusetts.

Projects like these show people want community solar. We need to change the law to allow more access to affordable community solar projects located in communities across Michigan.

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