PORTLAND, Maine — Solar power in Maine is in for some growing pains.

As the industry matures and solar generation gets cheaper, Maine policymakers are considering what to do about a system of incentives set up to encourage solar’s earliest adopters.

A group including the state’s two major utilities, the public advocate, in-state solar installers and environmental groups on Thursday unveiled a plan to make that transition for solar power, replacing current small solar project incentives with a competitive bidding process.

The plan aims to thread a needle on energy policy that would keep the solar industry on track to grow 12-fold by 2022.

That amounts to adding 250 megawatts of new solar capacity, a projection Public Advocate Tim Schneider said the group received from the National Renewable Energy Laboratory, based on the current incentive system that’s under review by state regulators.

The Natural Resources Council of Maine praised the plan for maintaining the pace of growth for the solar industry and for associated jobs.

For the average ratepayer who doesn’t have rooftop solar panels, Schneider said there’s money at stake.

“I’m confident that the proposal that we developed will save ratepayers money,” Schneider said Thursday, during a hearing before the Legislature’s Energy, Utilities and Technology Committee.

Schneider has had concern that as more solar comes online, the current system will have other customers picking up more of the tab for the costs of delivering power.

It has a regional impact, too. New England faces a need for new power generation sources and solar can help, particularly by lowering how much quick-to-fire generation, such as natural gas, is needed to meet the region’s peak summer demand.

That can stall need for power line upgrades that would otherwise raise the transmission and distribution part of customers’ bills.

Advocates of the plan hailed it as carving a new path for solar energy incentives, out of a months-long negotiation between various groups. But at least one large-scale solar installer opposes the plan, and the political road ahead could be bumpy.

If the bill makes it to the governor’s desk, solar installer ReVision Energy said in a statement Friday it expects the bill will need support of two-thirds of lawmakers to clear a likely encounter with Gov. Paul LePage’s veto pen.

To know where solar policy’s going, it’s helpful to know where it’s been. When homeowners or businesses generate more power than they consume, it goes back onto the local grid and the owners get a credit on their power bill.

It’s a straightforward compensation system called “net metering,” with the price set at the standard retail rate for power, updated annually after an auction state regulators run.

The basic problem is that other types of power generators don’t get paid in that rather straightforward way, but with prices that fluctuate as often as every five minutes depending on demand across the grid. Others bid on a daily basis to serve up the next day’s power load.

Schneider argued the proposal gives distributed power generators, including small solar installations, a way into the regional power market with more dynamic pricing enabled in part by smart meters.

“Net metering that is an … old system that was based on meters that we could read once a month,” Schneider said. “Now, we have ones we can read hourly, so let’s do smart policy.”

Utilities and Schneider’s office have concerns about the costs of net metering sticking around. Solar energy companies and environmental groups are concerned about it going away.

Those interests led to the proposal presented Thursday that blends competitive bidding with long-term contracts most often used to support renewable power sources and serve as a hedge against electric generation that depends on more volatile fuel costs.

The course leading to the present proposal’s arrival before lawmakers demonstrates how complicated getting such a policy change into law will be.

Rep. Sara Gideon, D-Freeport, plans to sponsor the latest bill, returning again to a fight over solar policy that started with a bill last year to expand the state’s net metering incentives.

The bill turned into a directive to study alternatives to net metering, leading to the stakeholder meetings, months of discussions and the draft bill unveiled Thursday.

Like most things, money is the cause of the sore spot. The policy proposal would scrap the current net metering system and call for the Maine Public Utilities Commission to run auctions at least every year, then directing the state’s two utilities to enter 20-year contracts with small-scale solar power projects.

The utilities would also receive the renewable energy credits associated with that power, which it could sell.

The plan sets goals for buying 60 megawatts of “grid-scale” projects, up to 5 megawatts each; 45 megawatts of community-based solar projects, up to 5 megawatts each; 25 megawatts of commercial or industrial projects, up to 1 megawatt each; and 118 megawatts of residential and small business projects, up to 250 kilowatts each.

The proposal calls for the Public Utilities Commission to establish rules for verifying whether a bidder is capable of actually building the project and for calling off an auction if there are not enough credible bidders to make it competitive.

Alan Richardson, chief operating officer of Emera Maine, and John Carroll, a spokesman for Central Maine Power Co., said in statements that their companies support the proposal Richardson called “a fair balance.” Carroll said it “moves the debate into the next generation of clean energy production.”

The PUC provided some additional background for that discussion when it valued solar power at 33 cents per kilowatt-hour, over a 25-year period.

But the Governor’s Energy Office has expressed reservations about the plan. Lisa Smith, a senior planner in the Governor’s Energy Office, wrote in testimony to the PUC in early January that the proposal was both overly ambitious and would be too costly to ratepayers in setting prices for 20-year terms.

Either way, there’s a fight over net metering coming. Maine’s net metering rules call for the state to review the rate impacts of the policy once solar generation topped more than 1 percent of peak consumption either for Emera or Central Maine Power Co. customers.

Central Maine Power Co. notified the PUC in January that it hit that mark and requested a review of the policy. If the Legislature provides direction on an alternative, the fight over whether and how to change net metering won’t play out at the PUC.

Chris Rauscher, public policy director for SunRun, said he “reject(s) the conventional wisdom that the PUC will just get rid of it. There is a massive public support for net metering.”

His firm and The Bernstein Shur Group organized delivery of a petition in support of net metering to lawmakers and regulators earlier this month to make that point.

Rauscher’s company has advocated for Maine keeping net metering alongside the new alternative.

“If Maine wants to try a new mechanism for a solar market, we should do so with net metering as a side-by-side option and don’t do that for a new untested proposal,” Rauscher said in a telephone interview Thursday.

The proposal put forward Thursday calls for Maine to review the policy after 18 months or after the installation of 21 megawatts of solar capacity has been installed, to determine whether net metering is preferable.

Until then, advocates of the plan are gearing up for contentious hearings early next month as the proposal moves through the Energy, Utilities and Technology Committee.

Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.