Energy

Renewable Energy Legislation Raises Question: Is R.I. Ready for Increase in Solar Connections?

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Rhode Island’s goal is to meet its electricity needs with 100% renewable energy by 2033. (Frank Carini/ecoRI News photos)

Described as the most-ambitious legislation of its kind in the country, a new law signed by Gov. Dan McKee at the end of the last legislative session will require utility companies to buy more power from renewable sources. The goal is to meet Rhode Island’s electricity needs with 100% renewable energy by 2033.

But there is one major challenge to overcome in achieving that objective: a lack of infrastructure enabling solar-energy installations to connect to the state’s power grid.

In an article in the trade magazine, Solar Builder, Jeremy McDiarmid, vice president for policy and government affairs at the Massachusetts-based nonprofit group Northeast Clean Energy Council, explained developers’ concerns regarding the capacity of the grid to accommodate additional interconnections.

“It’s a huge issue that reflects an under-invested grid that is not ready for the volume of distributed generation that we’re seeing and that we need, particularly solar,” he said.

Contacted recently by ecoRI News, McDiarmid repeated those concerns.

“We have an ongoing dialogue with Rhode Island Energy, with the [state] Office of Energy Resources, the governor’s office, and our members, many of whom are developing projects in Rhode Island and across the region,” he said. “We helped set up a technical council of utility representatives and developer members that meets, I think, every month, to work through some of the more specific technical issues around interconnection, but I think we need to have a bigger conversation about how we pay for upgrades, how we decide where to prioritize those upgrades, and how we actually get them done.”

Rhode Island Energy spokesperson Ted Kresse said the utility was conducting studies known as affected system operator (ASO) to assess the capacity of the transmission network.

“These undertakings look at Distributed Generation [DG] saturation in certain regions and at certain substations to determine if these projects would cause any adverse impacts to the electric power system,” he wrote in an email to ecoRI News. “Mitigation plans to address adverse impacts would include modifications or significant investments to the transmission and distribution systems to allow the interconnection of this DG.”

Only larger solar projects, greater than 1 megawatt, are subject to the studies, which are taking place on a regional level that extends beyond Rhode Island. The ASO study currently underway covers a large area of New England.

“The current ASO study area covers the Western RI power supply area, which we define as south of West Farnum to the Connecticut border,” Kresse wrote.

The big question is: Who will foot the bill for the required upgrades to the grid? With electric bills expected to increase by up to 50% next year, ratepayers would not take kindly to having to cough up even more for infrastructure improvements.

McDiarmid noted the anticipated electric rate increase is the result of higher fossil fuel costs, making renewable energy produced in Rhode Island an even smarter choice.

“Homegrown renewables are a hedge against the volatility of fossil fuel markets, and it sort of puts eggs in a lot more baskets and makes long-term economic sense, so you’re not as exposed to those price spikes of natural gas and oil,” he said.

Rhode Island’s newly appointed interim energy commissioner, Christopher Kearns, said it was important to understand that the state’s ambitious renewable energy goal includes procuring energy from other states.

“We’re going to ultimately meet our renewable energy goals annually by both projects in Rhode Island, but also, projects in Massachusetts, Connecticut, Vermont, and other eligible states,” he said. “I think there’s a confusion, just for people that aren’t in the trenches on this subject, thinking that the 100% renewable energy standard is just Rhode Island projects.”

Solar energy might be the largest component of the renewable energy initiative now, but Kearns said wind power will become a much bigger player in the coming years, as offshore wind projects come online.

“A big component of meeting our renewable requirements this decade and going into the 2030s is going to be met by offshore wind projects,” Kearns said. “So, for example, you have the 400-megawatt Revolution offshore wind farm that is currently going through its state and federal environmental-related permitting requirements for that project. That project is scheduled to start construction and be operational in the second half of the 2020s.”

(The General Assembly, during the last session, also passed a bill securing an additional 1,000 megawatts of offshore wind power.)

“The 100% is going to be met by a combination of land-based wind, ground-mounted solar, rooftop solar, offshore wind, and then, to some extent, small-scale hydropower and biomass energy production,” Kearns said.

A bill passed during the 11th hour of the last General Assembly session changed the way the land under renewable energy projects is taxed.

Bill supports solar developers, angers local officials

A bill that lowers property taxes for commercial solar energy developers became law at the end of the legislative session, infuriating some municipal officials.

Supported by two large commercial solar developers — Green Development and Revity Energy — the bill (H8220) initially passed in the House but failed in committee in the Senate. The bill’s proponents got it assigned to a different committee, which recommended passage, and the Senate passed it in the final days of the session.

Renewable energy equipment is taxed based on kilowatt capacity under a state regulation, adopted as a compromise between municipalities and renewable energy developers after a 2016 Rhode Island Supreme Court decision said such equipment is tax-exempt under state law.

However, the regulation applies only to the tangible tax on the equipment, not the property tax on the land under the equipment. Cities and towns continued to tax the land under the equipment as land used for manufacturing, but the new law changes the way that land is taxed.

Beginning next year, the land must be assessed as if its use has not changed. The only exception is land taken out of the farm, forest, and open space tax-reduction program for construction of renewable energy facilities, which cannot be assessed as if they were still in the program.

Critics say the law also deals a blow to efforts to discourage commercial developers from clearing forests for solar arrays and build instead on already-disturbed or developed land.

More than 1,000 acres of Rhode Island forestland have been cleared to make way for solar energy projects. In a small, densely populated state, that’s a lot of trees and loss of the carbon sequestration they provide.

Officials in rural towns such as Hopkinton, which has seen about 200 acres of forest clear-cut for solar developments, are incensed. Town Council President Steve Moffitt said he felt betrayed by developers, who dangled the promise of additional tax revenue as an incentive for approving their applications.

“Definitely, the rug was pulled out from underneath us,” he said, “… it’s clear as day. I mean, developers’ attorneys sat there and promised — they even threw numbers out — ‘This is how much in taxes this project is going to bring.’ A specific number, and it included the tangible and the property tax.”

In a June 20 letter to Hopkinton town manager Brian Rosso, tax assessor Tiana Zartman noted the legislation creates a disparity between commercial solar developers and other property owners.

“Another issue with the legislation is that it would treat the investors of the solar projects differently than all the other property owners, since the assessment of the property would not be based on the actual use of the property,” she wrote.

In Rhode Island and Massachusetts, where incentives for solar energy development have promoted a proliferation of projects, McDiarmid said the cost of interconnections has skyrocketed, with the utility — then National Grid, now Rhode Island Energy — passing along not only the interconnection costs, but also operation and maintenance expenses, known as “direct assignment facility” charges.

The new legislation, he said, would ease some of the uncertainty developers face.

“This bill creates a little more certainty for developers, who are building projects,” he said. “I think in general, this bill does a good thing for the solar industry, in a way that’s fair and predictable.”

Before its 11th-hour push through the Senate, the House version of 8220 was opposed by several organizations, including the Rhode Island League of Cities and Towns.

In a letter to the Senate Committee on Judiciary, policy director Jordan Day described the legislation as “preferential treatment” for solar developers.

“[W]henever the General Assembly establishes special treatment for one population or industry, those lost revenues are pushed to other property taxpayers,” he wrote.

In his letter opposing the bill, Grow Smart Rhode Island executive director Scott Wolf noted Rhode Island taxpayers already subsidize renewable energy.

“According to RI Energy, nearly $30 million will be collected from Rhode Island ratepayers to support renewable energy for their program year ending in March 2023,” he wrote.

Scott Millar, Grow Smart’s director of conservation, said the bill’s passage was the result of effective lobbying by solar developers and places a financial burden on cities and towns.

“This law comes in and says once they’ve developed the solar, you have to maintain, whatever it was assessed previously, you have to maintain that, which, in my opinion is outrageous, because utility-scale solar has been determined by Rhode Island courts to be a manufacturing use, so it seems logical to me, and to many others, if you’re going to convert land to a manufacturing use, that land should be logically taxed as manufacturing, not undeveloped forestland,” he said. “If the General Assembly believes that the establishment of renewable energy needs a tax break, that’s fine, but cities and towns should be reimbursed for that lost revenue, just as they are with the loss of the car tax.”

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  1. Here’s an example with numbers. Due to the new legislation, if you buy a $1 million plot of land and put a $5 million solar project on it then the developer pays taxes on $1 million for land and $5 million for solar. Before this bill, the town could increase the value of the land after the solar was installed. You could buy a $1 million plot of land, put a $5 million solar project on it, and then the town could say the value of the land has increased to $3 million, so the developer would have to pay taxes on $3 million for land and $5 million for solar. After this legislation, if you buy land for $1 million and put solar on it then the developer pays taxes on $1 million worth of land after the project is built, the town can’t increase the value of that land. The bill didn’t change the fact that the developer also pays taxes on the value of the solar project.

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