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Solar's rise in the Northeast not without doubters

Despite several announcementsin recent days on the progress solar resources are making in the northeasternU.S., its long-term viability in the region has its doubters.

"Solar in the Northeastis ludicrous," said Jim Carson, CEO of RisQuant Energy, an energy marketconsultancy based in St. Paul, Minn. "Politics is driving this, certainlynot economics."

Timothy Fox, a researchanalyst at ClearView Energy Partners, an energy industry consultancy,acknowledged that politics are a factor.

"[We] think constituentsin the Northeast largely support renewable power, thereby providing politicalcover for policymakers to pursue clean power programs that could, eventemporarily, increase electricity costs or grid disruptions," Fox said.

However, in celebrating theinstallation of the 35,000th solar project on Long Island, N.Y., Presidentand COO David Daly in a prepared statementSept. 28 emphasized the role of economics.

"PSEG Long Island'scommitment to renewable energy is allowing customers all across Long Island save money on their energy bills," Daly said. PSEG Long Islandis a unit of Public ServiceEnterprise Group Inc.

OnSept. 26, the U.S. EnergyInformation Administration's Electric PowerMonthly report included estimates of how much power from solar sourcesnortheastern states generated in July, the most recent month for which completedata is available: 261 GWh in New England and 398 GWh in the mid-Atlanticstates. At a heat rate of 7.5 MMBtu/MWh, that is the natural gas equivalent ofabout 2 Bcf and 3 Bcf, respectively.

For the first seven months of2016, New England solar resources produced about 1.3 TWh, which would equate toabout 10 Bcf of natural gas, and mid-Atlantic solar resources produced about2.1 TWh, which would equate to about 15.7 Bcf.

'Clean energy is our future': Cuomo

"Clean energy is ourfuture, and Long Island is leading the state in growing our clean tech economyand achieving our climate change goals," New York Gov. Andrew Cuomo saidSept. 28 in a statement marking the Long Island solar installations. "Thecontinued success of the solar market is fueled by the economic andenvironmental benefits of clean energy as we reduce emissions, help residentssave on their energy bills, and drive local job growth across the state."

spokesman David Flanaganlisted Cuomo's $1 billion NY-Sun incentive program and the New York PublicService Commission's set standard of 50% zero-emissions electricity by 2030among factors fostering solar power growth in the Empire State.

On Sept. 23, MassachusettsGov. Charlie Baker unveiled a straw proposal to replace the state's existing solarincentive program with a tariff designed to support the addition of 1,600 MW ofsolar capacity in the Bay State.

To meet the solar carve-outportion of its renewable portfolio standard, Massachusetts utilities must buyenough solar renewable energy credits to equal a percentage of the state's priortotal retail load. For 2016, those SRECs must equal 2.14% of each utility'sload, according to the state's Executive Office of Energy and EnvironmentalAffairs.

Solar generators make oneSREC for each megawatt-hour they produce, which are sold to utilities.

As of July, Massachusetts hadabout 1,100 MW of solar PV capacity in the state, EIA data shows, which is thesecond-largest capacity among northeastern states, after New Jersey with about1,400 MW. Of those totals, utility-scale solar made up 338 MW in Massachusettsand 452 MW in New Jersey.

Baker's proposal would allownet metering for existing systems, and tariffs would work by providing a setrate to be paid for solar power, minus the value of the energy produced. A pageof the presentation about the program labeled "illustrative tariffvalues" included initial tariff rates ranging from $150/MWh for owners ofsystems of 1 MW to 5 MW of capacity up to $350/MWh for low-income owners ofsystems with no more than 25 kW of capacity, which drew derision fromRisQuant's Carson.

'Hamsters ... on a treadmill' suggested as alternative

"Wow!" he said inan email Sept. 28. "For that much money, we should consider feeding cornto hamsters to generate power on a treadwheel."

The U.S. National RenewableEnergy Laboratory on Sept. 28 reported that solar PV costs in the first quarter of2016 were down from the fourth quarter of 2015 by 5% in residential, 4% incommercial and 20% in utility-scale sectors.

The Massachusetts draftproposal, which the Department of Energy Resources emphasized is "subjectto change," would provide for eight blocks of resources of 200 MW each,and the tariffs for each subsequent project would decrease by about 5%.

"SREC programs have successfullyincreased solar deployment in Massachusetts," the presentation states."DOER believes that a tariff-based incentive program would be [the] bestmechanism to continue supporting solar at the lowest cost to ratepayers."

At a distributed energy resourcepanel discussion Sept. 28 at the University of Pennsylvania's Kleinman Centerfor Energy Policy, experts indicated that ratepayers would benefit, ultimately,as solar resources reach economies of scale.

Carson noted that NewEnglanders currently have "very high electricity rates compared with therest of the U.S. and Canada."

"Once the ratepayersfigure out how much this costs, they will become much less enthusiastic,"Carson said. "A small amount of solar will not affect their average rate much,which is how advocates usually present these proposals. However, that is adisingenuous way to look at this. On a strict cost for energy basis analyzed onthe margin, solar costs several times more than conventional resources. Thecost of solar energy is at least double the retail rate."

High rates enhance solar's attraction: consultant

ClearView's Fox said solarpower is gaining in the Northeast partly because the region's high power pricesprovide "renewable energy with an economic opportunity."

Another factor in solar powergrowth may be environmental roadblocks for expanding natural gas pipelinenetworks into the Northeast, Fox said in an email.

"The Marcellus Shale iscurrently providing natural gas to the Northeast for most of its electricitygeneration, but incremental deliveries are being waylaid by environmentalgroups that oppose new pipelines that would bring the resource to market,"Fox said. "Solar may be one of the few resources available for the regionto generate electricity close to home."

Mark Watson is a reporter for S&P Global Plattswhich, like S&P Global Market Intelligence, is a division of S&P GlobalInc.