The Massachusetts utility-scale solar market starts moving
Last week was a watershed moment for the Massachusetts solar market. Governor Deval Patrick joined Greenfield, MA Mayor William Martin and Paul Curran, Executive Vice President of Axio Power, in signing two contracts for the Greenfield Solar Farm – a 2 megawatt solar photovoltaic (PV) project on Greenfield’s capped landfill. Greenfield Community Television published a video of the event, which is available on their WEBSITE.
I am interning with AXIO POWER for the summer to assist with their solar projects in the Northeastern markets, with a specific focus on Massachusetts. Prior to the announcement of the Greenfield Solar Farm, the only significant, larger-scale solar developments in Massachusetts were completed by the regulated utilities, especially National Grid. Other commercial and residential projects have occurred, but on a smaller scale with higher installation cost, and therefore a higher cost for electricity.
Why is this a significant moment? Massachusetts drafted the regulations for the Renewable Portfolio Standard’s Solar Carve-out during 2009. The rules were ‘finalized’ at the beginning of 2010, and were amended slightly last month to avoid potentially lengthy litigation with TransCanada. The full program is available on the MA DOER SOLAR WEBSITE, but here are some basic highlights:
- The goal is to have 400 MW of installed capacity prior to 2020 (currently there is about 8 MW of capacity)
- The regulation promotes distributed generation, with a maximum project capacity of 2 MW DC
- There is a stated goal of “supporting residential, commercial, non-profit and public entities in developing solar PV”
- And, the regulation requires that regulated utilities and competitive electricity suppliers (i.e. TransCanada, Con Edison, Constellation) procure an increasing portion of their electricity from solar PV until 400 MW capacity is reached. The utilities do this by purchasing Solar Renewable Energy Certificates (SRECs).
The Greenfield Solar Farm will be the first project under the Solar Carve-out where the municipality runs a Request for Proposals (RFP), selects a developer and then purchases 100% of the project’s electrical output. On the heels of this, other municipalities in Massachusetts have drafted RFPs and put them out to bid; decisions are due on some of these RFPs in the next few weeks. So, while the Greenfield Solar Farm is not the first utility-scale PV project in Massachusetts, it marks the start of many years of strong market development in order to reach the 400 MW goal. I am proud to be part of this process, and will use future blog posts to discuss the policy, development and financing associated with PV projects in MA.
–Brian
I’m glad the state of Massachusetts is making steps to solidify its renewable energy future. I agree that the Greenfield Solar Farm will be one of many projects. Although I commend all efforts to move to photovoltaic energy, I tend to believe more in microgrid generation. I included a post from my blog where I talk about why it microgrid generation makes more sense: http://www.brightstarsolar.net/2010/05/microgrid-generation-is-the-solution-to-the-energy-crisis/
I encourage all of you to read the blog post linked above. I think that residential and commercial solar installations are a great thing, and will have a place in the future energy mix. However, I believe there are some benefits to larger solar projects, which are outlined below. This is the comment that I posted on his blog:
MA Solar Installer,
Thanks for your comment on my blog post (http://environment.yale.edu/blog/2010/06/30/the-massachusetts-utility-scale-solar-market-starts-moving/), and for pointing me to this post. I agree with most of what you say above, though I have a few points that I think are important:
1. Massachusetts circumvents the transmission upgrade issue for “utility scale” projects by limiting project size to 2MW. This can easily be handled by the distribution network.
2. Concerns about use of rural landscapes is valid, but I think you’ll see most of the utility scale projects in MA happening on land that has otherwise been “used and abused,” like landfills.
3. Larger-scale projects require lots of panels, which increases manufacturing capacity, which lowers prices. That’s good for the entire solar industry.
4. “Small wind” is a terrible investment for 99% of locations. Just check out the performance data on the Vermont small wind site (http://www.vtwindprogram.org/). I think only one of these projects will ever pay back enough money to the owners. The wind resource is even worse in most of CT and MA.
5. The cost for power goes down as project size goes up, with residential rooftop and carports being by far the most expensive. That said, I believe that ultimately residential, commercial and utility solar projects will all have a place in our energy mix.
6. Finally, we should accept the fact that individuals “keep the profits” from power generation because other tax payers pay for them to install their system. All renewable projects are subsidized, but the larger solar projects will help move us away from that reliance on subsidies by bringing down prices.
Again, thanks for the comment on my post. I should be adding something again soon.
Brian
Brian,
I would be interested in an economic analysis of the Greenfield installation from the town’s perspective. For example:
What are the up front costs for the solar plant, including design and regulatory reviews, materials and construction costs? Will Axio be funding all of those costs? How about the state? How much will the town be paying?
What are the anticipated maintenance costs such as cleaning, repair, replacement and insurance? Who will bear those costs – Axio, MA or the town?
What does Greenfield pay for power now (high-low range)? What will it be paying Axio under the long term contract? Will the state be subsidizing the rate?
Just trying to get a sense of whether this is an economic win for the town, and if so over what time period, or whether it requires a willingness to pay higher energy prices to be green.
Thanks for any answers you can provide.
Green_in_Belmont,
Thanks for your note. As you can imagine, I cannot really answer many of these questions, since we consider some of that information to lead to our competitive advantage in the MA solar market.
One thing I can say, is that the Town of Greenfield is not paying any costs for the project, with the exception being costs to build the Request for Proposals, review bids to the RFP and execute legal agreements. Axio will pay for all design, permitting, construction, maintenance, etc., while the town gets to purchase reduced rate electricity for 30 years.
There is one state program in place that will help the Greenfield Solar Farm. It is not a grant or cash award as in other markets (Canada, Germany, New Mexico), and instead is a market mechanism whereby Axio can sell the Solar Renewable Energy Certificates associated with the power generated on site. I hope to write something about that market tonight, as it is very interesting.
To answer your overarching question, this is an economic win for Greenfield.
B
I just moved to Europe, and it surprised me how much more popular solar energy is here. The U.S. is slow, in comparison, on using alternative energy in place of oil. I hope that other states follow Massachusette’s footsteps!
I think solar energy is more popular in the south of England than the north and Scotland. Most of the time here we don’t get enough sunlight to fully power the garden solar lights that a lot of people have.
LONDON – The world’s largest offshore wind farm opened off the southeast coast of England on Thursday, as part of the British government’s push to boost renewable energy.
With the opening of the Thanet wind farm, Britain now has the capacity to produce 5 gigawatts of wind-powered energy — roughly the amount of energy needed to power all the homes in Scotland, Energy Secretary Chris Huhne said.
Britain gets only 3 percent of its energy from renewable sources but is aiming for a target of 15 percent by 2020. The nation ranks 25th of 27 European Union countries on action on green power.
“We are an island nation and I firmly believe we should be harnessing our wind, wave and tidal resources to the maximum,” Huhne said at a ceremony at sea as he officially opened the Thanet wind farm.
Especially the Greenfield Solar Farm seems to be a very promising project. However, the US govenment should install a federal feed-in tariff in order to assure the development of renewable energy.
H. Tieben,
I agree that a feed-in-tariff is probably the best way to rapidly develop renewable energy. However, there are significant risks associated with FIT programs. The most glaring is the appropriations risk that congress will not allocate the money to the program. This is why we have incentivized renewable energy in the US with tax credits, as they do not require directly spending money.
Lots of positives and negatives to each approach. I would like to see a system where we allow individuals to invest in solar projects, like they can in oil and gas infrastructure via master limited partnerships. I think that could circumvent the tax credit limitations, and open up vast sources of funds.
Thanks for your comment,
B
Dear Mr. McCurdy,
I agree, that renewable energy projects providing investment opportunities for municipalities or private persons are most likely to become successful. In Germany most of the (large) wind and solar projects are organized in the form of limited partnerships (GmbH & Co. KG). I wrote an article about the legal and tax treatment of community wind projects in Germany and the UK. You will find it on the english version of our website, if you are interested.
Best regards,
H. Tieben
Nice Job done by state of Massachusetts..