The State of Solar Energy in Belmont

Since 2011 when the Municipal Light Advisory Board (MLAB) first announced a plan to reduce the rate Belmont Light buys back energy from solar hosts, the state of solar in Belmont has been in confusion.  Until 2011 Belmont Light, like the rest of Massachusetts, had a policy of retail net-metering.  In 2011 they announced a plan to first reduce payments to avoided cost on excess generation (Phase 2) and then to reduce payments even further to avoided cost on all generation (Phase 3).  Phase 3 would have made Belmont Light’s tariff one of the poorest paying tariffs in the country, paying on the average about 40% as much as retail net-metering, the current standard in Massachusetts.  Although the new tariffs were never put into the effect, the very existence of these plans put a chill on solar installations in Belmont.

Things have changed.  In the summer of 2015 the Selectmen appointed a Net-metering Working Group to examine the issue of solar tariffs and make recommendations on a tariff that “will not discourage the growth of solar power in Belmont and that is equitable for Belmont Light ratepayers.”  The result of their deliberations is discussed in detail here.

Simply put, Belmont’s new tariff, while not paying as well as net-metering, still allows solar to be a good investment for many Belmont residents.  The Working Group specifically recommended that the Selectmen sponsor a Solar Challenge to allow a group-buy from a designated installer allowing for a discounted price and a better return for Belmont residents.  The Selectmen followed the Working Group’s advice and asked the Energy Committee to sponsor the Solar Challenge.  The result is Belmont Goes Solar, a working group of residents spearheaded by the Energy Committee, who are working with a designated installer, Direct Energy, to make going solar a very attractive proposition for many Belmont residents.  The rest of this site has much more information.  Individuals interested in going solar can email admin@BelmontGoesSolar.org to stay up to date about all current developments.

 

Solar Policy to be debated at the 2015 Belmont Town Meeting

Town Meeting representatives will vote on a non-binding article supporting net metering for distributed solar hosts at the 2015 Town Meeting.

Article 9 is not-binding resolution that asks our state representative and state senator to support legislation that would require municipal utilities like Belmont’s to implement the same net-metering tariff currently applicable to residents in areas served by the investor-owned utilities and to adopt policies that do not impose financial or technical impediments to customers who seek to generate their own electricity from solar power.

The policy is similar to the one passed in Hingham with 70% approval.  Hingham is another town with a municipal utility that imposed a solar tariff that reimburses solar hosts at a much reduced rate compared to residents in the rest of Massachusetts and also requires solar hosts to pay a substantial fee for solar production used by the hosts themselves and never sold back to the utility.

The issue of net-metering and other policies that affect distributed generation are being discussed by many states including Massachusetts.   In fact the the Massachusetts legislature ordered the formation of a committee called the Net-Metering Task Force to make recommendations regarding future solar tariffs and incentives that will be acted upon later this summer in upcoming legislation. The Task Force issued their report at the end of April, 2015.  A large majority of members did not agree that it is evident that net metering necessarily imposes unfair cross-subsidies.  They recommended that solar hosts should receive fair compensation for the value that solar provides to the grid and to the Commonwealth overall and that fair value should be determined through a comprehensive solar benefit/cost study.

 

Why Belmont Clean Energy

Why Belmont Clean Energy?  Because living in a town with a municipal utility means it is up to the residents of Belmont to manage the utility in a way that is responsible to future generations.  Our utility, Belmont Light, does not have to follow many of the state and federal regulations regarding clean energy policy that the Investor Owned Utilities, which provide electricity to most of Massachusetts, have to follow.   Our Board of Selectmen—who are the ultimate decision makers regarding Belmont Light policy—took advantage of this freedom from regulation to enact one of the most anti-solar tariffs in the United States.   Strange as it may seen we now live in one of the most anti-solar communities in the country which happens to be in one of the most pro-solar states in the country.

This website grew out of the discussions a group of residents have been having about how to try convince the Selectmen and fellow Belmont residents that this decision is bad for Belmont and bad for future generations.  Certainly the issues go beyond solar panels.  Residential solar is just one way to produce clean energy and this website will try to consider other issues that Belmont Light should deal with in terms of climate change action.

The issues involved in clean energy can be somewhat technical and difficult to quickly grasp.  As a result it can be tempting to leave decision making to experts.  The problem with this approach is that the important decisions that we must make regarding the management of our utility often require value judgments about how to consider the impact of our actions on future generations which the expertise of industry insiders can do little to inform.  In fact, there is the danger that industry insiders may have biases—conscious or unconscious—that lead their decisions in directions that residents—if they fully understood the issues—may not ultimately feel is best.   It would be similar to leaving healthcare reform completely in the hands of insurance industry executives—not necessarily the best idea.  The interests of insiders don’t always match the interests of the public. The opinions of industry experts are important but these issues are too important to simply leave to experts.  We must inform ourselves and make decisions for ourselves.

This website is an attempt to provide some basic information about the issues involved so Belmont residents can make up their own mind.  Of course the website itself has its own biases.  That is inevitable when issues that are so value-laden as climate change action are dealt with.  But hopefully the website will start conversations that will benefit everybody.   At least that is the hope.

Is Solar Dead in Belmont?

Solar Panels on House
Photo by USFWS from Flickr

On December 15, 2014 the Board of Selectmen—who function as the Light Board of the Belmont Light municipal utility—approved a new solar tariff that will  make Belmont one of the most anti-residential solar communities in the Northeast.  Belmont Light will buy energy from residential solar hosts at approximately 40% the price of what solar hosts in every neighboring town receive and impose a stiff tax on solar production used in a host’s own house.   As a result the yearly electric bill for a host with an average solar array in Belmont  would be approximately $780 while in Arlington a host with an identical array would have a yearly bill of $127.    The difference in total payments over a twenty-five year lifespan of the solar array would likely total over $16000.

Mark Davis Graph Of ProposalsThe graph explains this in more detail.   The various solar tariffs listed on the vertical axis are described here.   For now there are 3 tariffs to focus on:  1. Phase 3, at the top,  is the original proposal by the Municipal Light Advisory Board (MLAB) which values residential solar in the lowest manner possible—wholesale rate on total solar production.  2. Retail net metering, at the bottom,  is the current way of paying solar hosts in a vast majority of communities in Massachusetts.   3. Sami’s 50% (named after Selectman Sami Bagdady), which was offered as a compromise measure, turns out to be far closer to Phase 3 than to retail net metering and is in fact a watered-down version of Phase 3.  This tariff was approved in spite of the fact that Selectman Andy Rojas, the chairman of the Light Board, explicitly told Belmont residents, at a hearing on the matter that the Phase 3 tariff was “off the table.”  Residents were told that a compromise measure would be somewhere between net metering and Phase 2.   As it turned out the Selectmen weren’t being honest.

The Selectmen have offered a “green credit” to offset a small portion of the initial cost of the array—the amount of which is to be determined by the Advisory Board before April, 2015.  While such a credit may decrease the length of time to pay back any loans, the residual payments for solar production in Belmont will be less than half of what residents in the rest of Massachusetts receive.

Solar in Belmont—for the time being—continues to be supported by ratepayers in the rest of Massachusetts through SRECs purchased by their Investor Owned Utilities.   This means ratepayers in the rest of Massachusetts will support solar hosts far more than Belmont ratepayers will support their own hosts.  These SREC payments may allow solar investment to continue in Belmont for the time being but, without doubt, Belmont’s new solar tariff will restrain the growth of solar in Belmont.  And if residents of the municipal utilities are taken out of the future solar subsidy system—a possibility the state legislature has seriously considered—the new tariff imposed by the Selectmen may stop solar installations in Belmont completely.

 

How much does Belmont Light pollute and what can Belmont do about it?

When it comes to Climate Change the main pollutant to consider is carbon dioxide and in New England the major source of carbon dioxide from electricity production is natural gas.  While natural gas produces less than half the carbon dioxide per kWh of energy as coal, natural gas in New England is a much larger energy source.  In fact in 2012, which is the most recent year that Belmont Light has published its energy sources, natural gas supplied 44.6% of our electricity and coal supplied 2.7% of our electricity.  So while world-wide coal is a much greater source of greenhouse gasses, in New England natural gas is a much greater problem.  In much of the world replacing coal as an energy source with natural gas would contribute to decreasing greenhouse gas production.  In New England, however, our job will be replacing natural gas as an energy source with wind, solar, hydro, and—depending on your viewpoint— nuclear sources.  (Nuclear energy will be discussed in other posts.)  As former Secretary of Energy and Nobel Prize winner, Steven Chu, said, “Natural gas is part of the problem and part of the solution.”  In New England, however—at least in terms of electricity production–it is the major problem.

How should we proceed in calculating the damages done by emissions produced in the procurement of energy by Belmont Light?  The monetization of damages done by CO2 pollution is called the social cost of carbon and is given in dollars per metric ton of CO2 emissions.  It is a crucial step in driving  climate change policy.  The number is often given as a range since it involves the prediction of damages done in the future and so is uncertain.  A middle-of-the-road value used by the Environmental Protection Agency is $37/metric ton.  Many environmental groups think the number to use should be much higher.   Ways of calculating the social cost of carbon will be considered in another post but for now let’s use EPA’s $37/ton value.

Next we need to know how many tons of CO2 emissions are produced in a year procuring electricity for Belmont Light. By taking a look at its annual report we find that Belmont Light sells about 130 million kWh of electricity in a year.  About 50% of this electricity comes from natural gas.  (I am doubling the 2.7% from coal and adding it to the 44.6% from natural gas to get “natural gas equivalents.”)  50% of 130 million is 65 million kWh of electricity from natural gas generators.  Natural gas turbines produce about 0.8 to 1.2 lbs of CO2 for each kWh produced.  We’ll use 1 lb to make the math simple.  That means 65 million lbs or about 30 metric tons of CO2 are produced each year to provide Belmont Light with its electricity needs.

Using $37/metric ton for the social cost of carbon we come up with $1,100,000 worth of damages to future generations by a year’s worth of procurement of electricity by Belmont Light.

These natural gas generators, however, did pay about $4.50/metric ton CO2 for permits to pollute under the Regional Greenhouse Gas Initiative.  This would cover about $140,000 of the damages leaving $950,000 of uncovered damages.

How can we understand this number?  It means that future generations will have to pay $950,000 to clean up the climate change damage caused by the CO2 emissions from the procurement of a years worth of Belmont Light’s electricity.   The Municipal Light Advisory Board often considers issues like this in terms of cross-subsidies; using this language one could consider this $950,000 a cross-subsidy from future generations to fossil fuel electricity generators.   The fossil fuel generators create the pollution that causes the damages and should pay for it.  The future generations who have to deal with the damages of climate change will end up paying for it. That is the cross-subsidy.

Climate Change policy options are discussed in a separate post but for now we can consider a few of the things we in Belmont can do to respond to the damages our energy procurement causes and keeping this $950,000 figure in mind will serve as a guide.

The primary way ratepayers in the rest of state account for this cross-subsidy is by paying incentives to new clean energy generation sources helping to slowly decarbonize the economy.  Some people think of these incentive payments as negative taxes.   This incentive system involving Renewable Energy Certificates is discussed here.  The  amount of money it would cost Belmont Light to pay the same amount of clean energy incentives as the Investor Owned Utilities is discussed here.  It is worth noting that we could meet the Massachusetts RPS standard and still not completely account for the cross-subsidies to fossil fuel plants.

Besides directly incentivizing renewable energy by buying RECs we can encourage clean energy by buying energy from renewable sources in ways that encourage their construction.  This is the idea behind the net metering solar tariff.  Net metering may or may not be an completely accurate way of valuing solar electricity but it is definitely easy for potential solar hosts to understand and it has been an important way of encouraging residential solar across the United States.

It turns out that at low solar penetrations—when only a small amount of energy comes from residential solar—accurate valuation of solar is not that important.  That is because any possible cross-subsidy that might occur from a possible overvaluation of solar is tiny compared to the $950,000 cross-subsidy going to fossil fuel plants.  There are currently 20 homes with solar panels in Belmont producing about 150,000 kWh of electricity per year.  If there were, for instance, a 10 cents per kWh cross-subsidy the annual cross-subsidy would come to $15,000—small potatoes compared to the nearly $1,000,000 of cross-subsidies going to fossil fuel plants.

Town Meeting Passed a Climate Action Plan in 2009. When will Belmont act?

Photo by WWF France from Flickr.
Photo by WWF France from Flickr.

In 2009 the Town Meeting approved a plan calling for a 80% reduction in greenhouse gas emissions by 2050.

This lofty goal is similar to the goals set by other political entities—towns, states, and nations—and led many of them to set short term interim milestones to help them map a course to reach their long term goals. The state, for instance, set a goal for 2014 that 9% of all energy used by the Investor Owned Utilities come from renewable sources that were built after 1997 and that this number increase by 1% per year until 2020 where the goal would be that 15% of energy come from new renewable sources.   The state also set a goal for 2020 that Massachusetts have 1600 MW of generating capacity from solar panels.  These short term goals have resulted in an increase in the construction of new renewable energy generation capacity.

Belmont, and in particular our municipal utility, Belmont Light, has yet to set any specific milestones for meeting the 2050 goal of 80% reduction in greenhouse gas emissions or for increasing the purchases of energy from renewable resources.   In fact the Selectmen have chosen instead to set policies that actively discourage the adoption of distributed solar by residents in Belmont.

Furthermore the Selectmen have chosen to make all renewable energy purchases secret.  There is no way a Belmont resident can know whether energy purchased from a wind or hydro source includes the accompanying REC.   According to both the state and federal government it is the REC that confers the “renewable” attribute to the energy.   The EPA policy can be looked at here.  Certainly we can all agree that it makes no sense for the Town of Belmont to have a definition of renewable energy that is completely at odds with both federal and state policies.

As a result of the Selectmen’s policies, Belmont residents are completely in the dark about how much—if any—renewable energy we currently purchase and setting renewable energy goals for the future is rendered impossible.   Of course each of us will have his/her own opinion about renewable energy but there is no way we can rationally discuss our opinions if we are clueless about what we are doing.  Thwarting public discussion about one of the most important issues of our time is simply unacceptable.

The irony here is that while we in Belmont have a lot of knowledge about how much renewable energy National Grid and NSTAR purchase (because they are required to meet the state’s Renewable Portfolio Standard) none of us knows a thing about how much renewable energy our own utility purchases.

The way to begin to move forward is simple.  The Selectmen should order a renewable energy audit to be done by the same state agency that audits the Investor Owned Utilities.   We don’t need to meet the state Renewable Portfolio Standard but we do need to know how much renewable energy we are using so we can have a public discussion about policies we can enact to meet our environmental goals.

Massachusetts has been a state that has led the way on renewable energy policy nationally.   Much of Europe has had policies to encourage renewable energy for over a decade.  Even developing countries have been willing to set specific goals for dealing with greenhouse gas emissions during the latest meetings in Lima, Peru. But in Belmont the Selectmen have left us completely in the dark.