Five Takeaways from Maine's Comprehensive Solar Bill
After four years of efforts by solar advocates to remove arbitrary barriers to the development of solar projects, the Maine legislature passed LD 1711, An Act To Promote Solar Energy Projects and Distributed Generation Resources in Maine. A bipartisan bill sponsored by Senate Minority Leader Dana Dow of Waldoboro, LD 1711 achieved three significant advances for segments of the solar market that have been inhibited due to an antiquated regulatory environment.
With passage of the bill, Maine homes, businesses, and municipalities will have more effective means to access the benefits of solar energy. Some of these changes are expected to be implemented prior to the end of 2019, while others won't see real implementation until next year.
Insource Renewables has been heavily involved in state solar policy during the past five years, and we are optimistic about the opportunities that are likely to be catalyzed by the success of LD 1711. Below are our top five takeaways from the bill.
1. Maine businesses finally have the opportunity to compete in the region - just in time.
In 2006, the federal government introduced the federal investment tax credit. This solar tax credit allows businesses to claim a 30% federal tax credit for certain renewable energy investments, including solar photovoltaics (PV). Businesses also have the ability to take accelerated depreciation on their solar investments. Across the country, this has catalyzed significant investment in solar.
This growth has been particularly striking in states that recognized the opportunity to leverage the investment tax credit to drive economic development. Maine has not been one of those states. Due to a design of commercial electrical rates that has included little consideration of the changing nature of electricity generation, Maine businesses receive roughly half of the benefit from solar that is received by residential customers.
LD 1711 resolved this issue by allowing businesses to received their credits in dollars instead of kilowatt-hours. While this may seem to be a subtle difference, it allows many Maine businesses to increase the return on their solar investment by 50% or more by allowing them to apply these monetary credits to their demand charges. With the favorable change in economics, this change also gives businesses without significant tax liability the opportunity to partner with outside investors to benefit from solar.
With the investment tax credit scheduled to decrease from 30% to 26% in 2020, LD 1711 gives a short window for Maine businesses to get a system installed during 2019 with the most favorable economics. For businesses wanting to take advantage of both the solar tax credit and the new compensation mechanism but unable to meet the timeline to get their project built in 2019, there are "safe harbor" provisions that allow projects to be completed in 2020 while still qualifying for the full 30% federal tax credit. (We can chat with you more on this point, should you need more details.)
Just. In. Time.
2. Community solar projects in Maine are now viable.
Community solar projects involve the installation of a large solar energy system where the electricity generated from the project is allocated to multiple household (or commercial or municipal) electricity bills.
The mechanism in LD 1711 that opens up Maine's community solar industry is the elimination of the existing limit of applying net energy billing credits to no more than 10 meters. The Maine legislature eliminated this cap. The size of a community solar project (CSP) is now limited by the maximum system size - 5 megawatts. How large is a 5MW system as defined in the bill? Roughly 20,000 solar panels. This is a huge change, as the previous limit led to a maximum practical size of about 250-400 solar panels.
The bill also allows for much larger systems that are developed a bit differently than the CSPs with which Maine is familiar. These projects could be as large as 100,000 solar panels.
With this increase, economies of scale come into play. There are a number of administrative costs associated with these projects, and the ability to spread these costs across a much larger project means a lower unit cost. To date, CSP's have required investors to pay a premium for their share of energy. Those days appear to be coming to a close.
3. Solar in Maine is much more accessible to low income homeowners and residents.
One of the frequent criticisms of solar energy is that the technology is too expensive for low income households. While the declining costs of solar have made solar accessible to those with a solid credit score and federal tax liability, there is a large swath of the Maine population that rents, has credit issues, lives on a fixed income, or doesn't report income to the feds (you know who you are!).
Community solar projects (CSPs) help address these limitations by attracting investors with tax appetite to back the projects. In this model, customers typically pay less for electricity from the CSP than they would otherwise pay to the utility. Credits are received on their utility bill, and they don't need to worry about having the space, the money, nor the tax liability to install the system themselves.
Short version: if you have an electricity bill in Maine, you will soon have the option to benefit from solar installed in Maine with limited concerns about your site or financial situation.
4. Maine's electricity mix just got a lot sunnier.
Another provision in LD 1711 requires Maine to procure a minimum of 375MW (that's a million solar panels!) in the next 5 years and spells out exactly how to do so. While this is a huge expansion of Maine's current solar capacity (the state currently has an estimated 55MW of installed capacity), it is just a drop in the bucket of Maine's generation capacity. The diversification of domestic electrical generation in the state provides significant long-term benefits, especially amidst a fast-changing utility climate. This is especially important as we shift our heating and transportation sectors to heat pumps and electric vehicles and increase the demand for electricity generation.
5. Be ready to see a lot more solar trucks and vans rolling down the road.
It has been estimated that it will take 500 more workers than we currently have in Maine to build the amount of solar that is likely to result from this bill. These are electricians, engineers, sales professionals, financiers, bookkeepers, etc. The technical aspects of these jobs leads to good paying careers with significant growth potential. Since this work is distributed generation, it also requires distributed labor. Expect to see job growth across the state - in urban areas, rural areas, along the coast, and in cozy little hamlets like Pittsfield (nudge, nudge).
Some of the projects that are built as a result of LD 1711 will be out-of-state companies that invest in Maine, and many of the projects will be built by a talented industry that is already established here in our fine state. The results of this bill have some significant economic development ramifications, and we are excited to help develop the next generation of solar workers that can stay here or move back.