PSNH solar proposal sparks objections

A proposal to allow Public Service of New Hampshire to divert money it pays into a state-controlled renewable energy fund to build a solar-powered generation facility at Manchester’s capped landfill has generated controversy in the local alternative energy industry even before it has reached the daylight of public scrutiny.At issue is whether the utility should be able to keep a quarter of the money it is supposed to pay into the fund because it has failed to meet renewable energy standards – and what that change may have on the New Hampshire renewable energy industry.Critics are saying that PSNH is trying to get out of its obligations toward paying into the fund and strangling an already under-funded effort to create a home-grown renewable energy industry in New Hampshire before it is even a year old.“It’s a concern at this stage of development of the fund, when it is barely in existence. We haven’t even developed all the programs,” said Clay Mitchell, president of the New Hampshire Sustainable Energy Association. “It’s a lot of money in one party, and we want to stay at the level to get these small business started.”But PSNH spokesman Martin Murray argued that the whole idea behind the program is develop alternative energy, and this would “give a jump-start and a boost for a fairly significant solar project” as well as result in jobs.Smaller projects for residents and small businesses would still be funded, he said, “but you need a lot of tools in the tool belt, and this would benefit all PSNH customers, not only those that can afford their own funds for their own project on their own home.”The PSNH-Manchester project is just in its concept stage, and nobody is quite sure how big it will be, how much it could cost, and how much electricity it would produce.“We are in preliminary negotiations, the due-diligence phase,” said Tim Clougherty, Manchester’s deputy public works director.Current law limits utilities to undertaking renewable projects of less than 5 megawatts. That’s small compared to most power plants, but more than 1,000 times greater than most solar roof panels and 100 times bigger than the solar array PSNH recently installed on its roof — the biggest such array in the state.The cost of such a project would be about $40 million and would take some 300 workers to put up, but it likely is to start out much smaller, because of both geographic and financial considerations.PSNH is about to undertake a study – by the same Massachusetts consultant who advised the utility about its roof — on how large an array the 70-acre Manchester site can support. Only certain portions of the landfill may be conducive to such panels, depending on how much weight it could hold and how much sun it soaks up.There also is the question of how to pay for it. Murray said that the utility envisioned building it in phases – perhaps as small as a half a megawatt at a time – resulting in a cost of $4 million rather than $40 million.And that’s where the new renewable energy fund comes in.Homeowner demand

The fund was created by the state’s Renewable Energy Act of 2007, which requires 24 percent of the state’s energy to come from renewable energy sources by 2025. To reach that goal, utilities annually have to produce an increasing number of Renewable Energy Certificates, or RECs, each representing 1 megawatt of renewable energy.Utilities can obtain these RECs by producing or buying the energy themselves, or they can buy it off other utilities that have more RECs than they need.If a utility can’t buy enough RECs, it pays a penalty — called alternative compliance payments — into the renewable energy fund.When the law was first enacted, supporters thought it would generate some $10 million a year, easily enough money to fund perceived demand for rooftop solar panels, solar gas hot water heaters, and commercial and industrial projects.But all of those projections turned out to be wrong. First, the economy tanked, and conservation increased, slowing electricity usage. With fewer sales, utilities had to produce fewer RECs. Second, there were more RECs available than anticipated. Instead of $10 million, the fund only received $4.8 million the first year. And there is no telling how much it will receive in subsequent years.Finally, the demand among homeowners for solar panels and other renewable energy projects, has been “wildly more successful than we had imagined,” said Mitchell. “Instead of 50, we have 200.”
(Actually, the program has thus far funded some 190 solar projects and about 34 residential windmills.)Under the solar panel program, homeowners are eligible for rebates of as much as $6,000. Combine that with a federal tax credit, and homeowners can end up shelling out about $5,000 for a $16,000 system, dramatically shortening the payback period.“It tipped the scales among people who have been thinking about it for a long time,” said Pablo Fleischmann, owner of Green Energy Options in Keene. “It was like free money.”Thus a program that began on July 1, 2009, has roughly $2.4 million in January, with no idea what the demand will be for its funds the rest of the year or how much will be coming in the next.The PUC held technical hearings on Feb. 26 and public hearings are scheduled for Friday, March 18, to try to figure out how to allocate existing funds in the future. But the subject of PSNH’s proposal is sure to come up.Even more attention will be focused on the proposal in a proposed amendment to Senate Bill 334, which is aimed at encouraging the installation use of small-scale renewable energy resources by homeowners and businesses.The amendment – which has not yet been introduced — would allow utilities like PSNH to able to divert money going into the fund for its own projects.“It’s too soon to mess with the fund,” said Fleischmann of Green Energy Options in Keene. “Rather than local contracts going to local jobs, you have a huge amount going to one big project with no guarantee to employ any New Hampshire residents. For all we know, a company in New Jersey is going to install it.”But Murray of PSNH argued it’s simply not fair that all the money that is coming out of ratepayer funds should be going to projects that benefit individuals homeowners.“I’m paying into this fund, to benefit my neighbor putting a solar panel on his roof. I’m spending money, and you are getting something,” he said.Under the amendment, such projects will still be funded “on a more moderate level” but some will be diverted “to projects like this, that benefit all PSNH customers,” said Murray.Weissflog, whose KW Management has done work for PSNH as well as residential projects, said he sees nothing wrong with a “healthy mix” of large- and small-scale projects. Indeed, he said, a larger-scale project might be a more energy-efficient way to spend that money.But there might be a better approach: to force utilities to pay extra for RECs from out of state, which currently sell for less than they cost in New Hampshire. That would result in more money going into the pool, and more local businesses being helped, said Weissflog.“That little extra contribution would be very helpful to local businesses,” he said.Bob Sanders can be reached at bsanders@nhbr.com.