Toward 20% Solar by 2025 in Vermont
Net Metering and Alternatives
Policy Brief
Carl Linvill, RAP
May 13, 2015
Background
Reaching the VEIC Study goal of solar meeting 20 percent of energy will require planning, tariffs and
procurement mechanisms that do not exist in Vermont today. While the individual and group net
metering tariffs and the solar adder have attracted solar investment to Vermont, current solar capacity
is approximately 65 MW which is far short of the approximately 1,000 MW of solar that will be needed
to produce 20% of energy from solar. This policy brief explores the current and future mechanisms that
will be required to facilitate a 20 fold expansion in solar deployment over the next 10 years.
Net Metering in Vermont today
Vermont has favorable tariffs and payments that have attracted increasing amounts of solar to Vermont
since 1999. The Vermont Department of Public Service staff produced Figure 1 in late 2014.
Figure 1: Net Metering Permits Granted as of September 2014 (Vermont PSB)
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Vermont law had limited solar expansion to 4% of peak capacity until recently but as some utilities
reached their 4% cap, the Vermont legislature voted to increase the cap to 15% of capacity. Net
Metering is offered to individual customers (net metering) and groups of customers (group net
metering), and the size of installed facilities range from a few kW to systems up to 500 kW. Figure 2 to
shows the distribution of system size in Vermont. The figure indicates small residential systems
between 4 and 6 kW predominate.
Figure 2: Distribution of DG systems by kW size of system
The Vermont PSB Act 99 Study (November 2014) shows that current compensation is “fair” from the
perspective of society where net social benefits are consistently positive. The tariffs are also
approximately “fair” from the perspective of all ratepayers where the net benefits for ratepayers range
from small and positive to small and negative depending on the technology and size of system. From
these perspectives, some tweaking may be in order, but one would have to say that individual and group
net metering are inducing increased investment and are approximately fair to all ratepayers and society.
Vermont has generally done well to date.
However, much greater carbon reduction will be necessary to meet Vermont’s 2050 carbon reduction
goals, and it is worth thinking about what an aggressive contribution toward carbon reduction from
solar generation might look like. From this perspective the tariffs in existence today have produced a
total of approximately 64 MW of solar and therefore are clearly inadequate.
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Solar Portfolios to Reach 1 GW
Reaching 1 GW solar in Vermont will come from a portfolio of resources ranging from rooftop net
metered solar, group net metered solar, community virtually net metered solar, commercial solar and
procured solar. The amount of solar that will come from each of these sources is uncertain but limits on
the amount that can come from small systems are evident. Stakeholder discussions to date have
produced a strong predisposition of stakeholders toward meeting the 1 GW goal with small distributed
systems to the maximum extent possible. Stakeholders are skeptical that few systems larger than 5 MW
will be able to be sited in Vermont. Taking this as a starting point, it is worth thinking through how
much solar can come from smaller systems and what will need to happen to tariffs and procurement
mechanisms to maximize the small system build out.
According to NREL, 22 to 27% of all rooftops are candidates for solar installation. The remaining 75% or
so are not candidates because they are not south or west facing, they are shaded or the structure is not
sound enough to safely carry a solar installation. With approximately 300,000 (VERIFY THIS NUMBER)
residential meters in Vermont, if one assumes that all of these rooftops are candidates then one can
therefore surmise that about 75,000 are suitable for solar. If an average installation is about 5 kW then
about 375 MW could potentially sit on residential rooftops. It is questionable that all 75,000 customers
with a suitable rooftop would be willing to carry a solar roof, so this is clearly an upper limit, and I will
refer to this as the residential behind the meter “technical potential”. What is interesting about this
upper limit is that we know that at least 625 MW will need to be on something other than a residential
rooftop.
Approaching this 375 MW technical limit will require a favorable tariff that compensates incremental
participants at their marginal opportunity cost of participating. The marginal cost will grow as the
predisposition of customers toward solar drifts from enthusiastic to willing to indifferent to reluctant to
recalcitrant. The net metering tariff available today is attracting enthusiastic and willing customers, it
will need to evolve to attract those further along the spectrum if maximizing residential, individually
metered installations is a goal. One would expect that at some point the marginal cost of attracting
individual residential customers with viable rooftops will exceed the marginal benefit produced, but it is
uncertain at what quantity of residential rooftop this will occur. Designing the individual residential
tariff to elicit substantial participation is the first critical question we need to address.
Large commercial rooftops, multi-family housing rooftops, parking lots, ground mounted residential
systems and over-sized residential roof top systems (net exporting systems) will also make a significant
incremental contribution toward the 1 GW goal. An estimate of the technical potential that these
resources can meet is needed, but it is a safe bet that the technical potential of these systems will fall
well below 625 MW gap of remaining need. Considering how owners of these systems will need to be
compensated to elicit participation is a second critical question.
Residential and commercial systems sited at a particular meter to serve the customers behind that
meter may make up 500 MW of the 1 GW goal, but it seems likely that systems to serve multiple
customers will play an important role. These systems may be group net metered systems, community
solar systems, or large scale systems that sell into the regional market. Additional critical questions
therefore include: how should group net metering be expanded? What should community solar tariffs
look like? How much of the 1 GW will be met with grid scale systems that sell into a regional market?
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Toward 375 MW: The Evolution of Net Energy Metering for Residential Customers
The current mechanism for interconnecting residential DG is net metering. Stakeholders were quick to
point out that the first step toward approaching the technical potential of residential rooftops will
involve raising the 15% of peak limitation on net metering. Vermont’s peak electricity consumption is
about 1,000 MW today and is projected to grow to about 1,200 MW by 2025 (check). Limiting net
metered DG to 15% of 1,200 MW would limit the contribution from this portion of the solar generation
fleet to 180 MW, far below the technical potential of the residential sector.
In addition to considering raising the cap on net metering as it exists today, policy makers will want to
consider evolving the structure of the net metering tariff. As distributed solar grows the value that solar
provides and the costs it imposes will change and net metering will likely need to evolve as well.
The next version of this policy brief will compare several alternatives for moving to higher levels of roof
top adoption:
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Keep the net metering tariff as it exists today in place
Modifying the existing net metering tariff terms to keep the terms aligned with the evolution of
value and cost
Adopting a two way distribution tariff
Adopting a value of solar tariff
Adopting a feed-in tariff
Evolving the mechanisms for higher levels of residential, behind the meter solar will move residential
rooftop toward the 375 MW “technical potential” limit. Therefore this policy brief will have to identify
other mechanisms that engage other segments of the customer base.
Shared Renewable Programs
Shared renewable programs are larger scale projects where residential, public and commercial
customers may own or lease a portion of a project. Shared renewable programs are targeted at the
development of solar and other renewable energy installations in the 50 kW to 5 MW range where
electricity users have the opportunity to buy or subscribe to a share of the project to meet some or all of
their electricity needs. Solar shared renewable programs have come to be called “community solar
programs.” A community solar project may be developed, owned and maintained by a utility, by a third
party provider or by a group of customers in a community. A community solar project is most often
located in or proximate to the customers who subscribe or buy shares. Community solar projects have
many benefits but the most important benefit for the purpose of this policy brief is it greatly expands
the pool of Vermonters who can own or lease a share of a project. Community solar projects have also
been developed to serve under-served communities so these projects even extend participation beyond
the segment of the population who have an interest and are financially able to invest, to those who are
willing but may not have the discretionary income to invest.
Vermont has a head start on many states in developing shared renewable programs for solar.
Vermont’s Group Net Metering program is cited by DOE and solar advocates as one example of a
“shared renewable program.” The tariff, ownership and contracting terms of shared renewable
programs varies widely.
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The next version of this policy brief will summarize shared renewable and community solar options for
Vermont and suggest how much of the 1 GW goal might feasibly be met by these projects. The limit on
how much of the goal might be met by shared ownership approaches will be a function of available
space for siting community projects and the proportion of Vermonters who are interested in an
ownership option. Answering these latter two questions is beyond the scope of this policy brief and will
need to be taken up in scenario specification.
Agricultural, Commercial, Industrial and Public Sector Projects
Shared renewable projects are one avenue for engaging the non-residential sector, but other options
exist as well.
The purpose of this section of the policy brief will be to briefly summarize the potential for nonresidential sector installations under 10 MW to contribute to the 1 GW goal.
Grid Scale Solar
The final section will discuss the possibility that grid scale solar installations greater than 10 MW may be
needed to meet an aggressive goal like 1 GW by 2025. Solar requires 6 to 10 acres per MW, so a 10 MW
installation would require 60 to 100 acres, and a 50 MW installation would require 300 to 500 acres.
Stakeholders have said that siting a project in this range in Vermont will be extremely difficult and the
focus of the scenarios should be on maximizing the contribution of smaller sized systems.
This final section of the brief will discuss how grid scale solar is built and marketed in other places.
Conclusion
The purpose of this policy brief is to provide a context for considering how 1 GW of solar might be
achieved in Vermont. A portfolio of solar will be necessary. Residential, shared solar, and nonresidential solar will be the primary contributors toward the 1 GW goal. Structuring tariffs, markets and
procurement for each of these three segments will be important. The primary purpose of this policy
brief has been to present alternative mechanisms for maximizing the contribution from these three
segments. In addition, some grid scale solar greater than 10 MW might contribute to meeting the goal.
A secondary purpose of this brief is to suggest what a grid scale program might look like if Vermont were
to decide that one or more grid scale projects is in the public interest.
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