Regulatory roundup: Maine and Maryland both pass pro-solar legislation

signing bills

Maryland and Maine are moving two pieces of legislation through their halls to keep their solar momentum going.

Maine kills gross metering

You may recall the previous governor of Maine Paul LePage working feverishly to charge solar customers more through a gross metering rate structure. In this setup, the Public Utility Commission set the valuation for distributed solar power, even for the amount consumed on-site, in which solar customers ended up being charged an extra fee. This regressive policy would also require the installation of a second smart meter at all homes. This was the part challenged by a petition started by Insource Renewables, which showed just how expensive this entire setup would be for all ratepayers despite it being sold specifically as a solution to avoid “cost shifting.”

Anyway, regulators came to their senses at the end of last year and suspended gross metering and now the Maine legislature has approved a bill that will eliminate it. The former governor LePage also famously vetoed similar legislation in 2016 that local solar installers thought was a good bipartisan compromise at the time.

The bill is expected to be signed by Gov. Janet Mills.

Maryland boosts RPS

The Maryland Senate has passed the Clean Energy Jobs Act (CEJA), which is going to also boost the state’s renewable portfolio standard (RPS) to 50 percent by 2030 along with providing millions of dollars for workforce development programs. This would jump solar’s mix in the state from 2.5% under current law to 14.5% by 2028.

“We applaud the Senate for its passage of the Clean Energy Jobs Act,” states David Smedick, campaign and policy director for the Maryland chapter of the Sierra Club. “Now it’s time for the House of Delegates to show the same leadership to combat climate change and pass the Clean Energy Jobs Act now. Maryland still has six large, polluting coal-fired power plants that contribute to climate disruption and the state’s continued failure to meet health-based air quality safeguards set by the Environmental Protection Agency. This bill will bring significant growth to the state’s clean energy economy helping us transition away from harmful fossil fuels like coal.

This comes not a moment too soon. An analysis conducted by the Maryland Solar Energy Industries Association (MDV-SEIA) compared projected federal tax dollars to Maryland under scenarios in which CEJA is passed into law in the current 2019 legislative session vs. delayed a year and passed in 2020 as is currently being considered by Maryland’s legislative leaders. The impact of a delay would not be pretty.

At the heart of the analysis is the Federal solar investment tax credit, or the ITC. The ITC, which is on a schedule to sunset over the next 3 years, provides a 30% tax credit for solar projects that start construction by the end of 2019. The tax credit is reduced to 26% for projects that start construction in 2020. The tax credit is further reduced to 22% for projects that start construction in 2021 and sunsets for projects that start construction in 2022.

For the typical residential installation, each annual decline in ITC represents $1,200 per Maryland homeowner. And because of the “construction start” requirement that allows a solar projected to qualify for the tax rate in the year they started construction, numerous commercial solar farms that start construction in 2019 but are come online in 2020 will earn the full 30% ITC, a benefit that accrues directly to the Maryland ratepayer.

The baseline for MDV-SEIA’s analysis is the current stagnant Maryland solar market, with anemic solar additions and hemorrhaging of good paying solar jobs – 800 jobs lost in 2018 alone, representing 15% of Maryland’s homegrown solar industry. CEJA sets the stage for a decade of solar growth in Maryland, ramping up the state’s share of solar from 2.5% under current law to 14.5% by 2028. By delaying passage of CEJA until 2020, Marylanders can expect approximately 464 fewer megawatts (MW) of solar constructed in the state through 2022.

Developing 464 fewer MW of solar would mean Maryland would lose out on approximately $247 million in Federal tax credits between 2019 and 2022 if CEJA is delayed by 1 year (based on $2/Watt average solar facility cost). Because the delay of CEJA will result in continuation of the current stagnation through the remainder of the full 30% ITC period, most of the approximately 464 MW of solar that will be delayed by 1 year would have qualified for the full 30% ITC.

For much of the last year and through the current legislative session, Marylanders, and a majority of their representatives in the Maryland General Assembly, have called for expanding Maryland’s share of renewable energy to 50% via the proposed Clean Energy Jobs Act, or CEJA. Yet despite the clear majority support for the bill, the tens of billions of dollars in economic benefits, including the hundreds of millions in federal tax credits CEJA would bring to Maryland’s economy, and the catastrophic cost of delay both in Maryland’s ailing home-grown solar industry as well as in terms of our state’s environment, some state leaders are considering punting passage of this important legislation to 2020.

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