A New York-based energy company recently bought 15 solar projects from Bangor through southern Maine because of handsome state incentives.
But efforts to cut those incentives are giving the company, Aspen Power, which is backed by prominent private equity firms, second thoughts about expanding further in the state.
Maine’s solar incentive program started with a new law in 2019 that generated so much interest from prospective projects that it was revised in 2021 to cool demand and make smaller projects more attractive. Last week, the public advocate, who represents consumer interests, restated his position that the incentives were still too generous and will harm ratepayers. He asked the Legislature to change the law again.
Those changes worry Dan Gulick, senior vice president of community solar and asset acquisition at Aspen. Of the 15 projects, the one in Berwick is already operational, and the others will be by the end of next year to meet state requirements.
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“The constant legislative changes they keep making retroactively make us question whether we will advance beyond the projects we already have,” Gulick said. “We’ve invested a lot of money so far, and we continue to invest a lot of money to build up this portfolio of projects.”
Retroactive laws was an argument used by Avangrid and its subsidiaries, including Central Maine Power Co., to restart the $1 billion New England Clean Energy Connect hydropower corridor project, which had been hung up until it won a major court battle in April. On Tuesday, it cleared its final big hurdle, a restored Maine Department of Energy permit.
The revised solar bill placed a moratorium on new projects between 2 to 5 megawatts and reduced compensation paid to developers for projects over 2 megawatts. Certain community solar projects under the original program were grandfathered in under the initial rate structure.
Gulick said those revisions caused his company to resize to smaller projects of around 2 megawatts rather than the original 5 megawatts it had hoped for. He said it costs about the same to develop either sized project, but the smaller project will have about 60 percent less capacity and thus generate less income.
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Under the existing incentives energy suppliers can sell electricity to CMP and Versant for 20 cents per kilowatt hour, twice the amount that it costs to generate the power. Consumers who sign up for community solar can save about 15 percent off of their electric bill. Those who don’t sign up pay the cost difference that the electric companies pay to the solar suppliers.
Public Advocate William Harwood wants the Legislature to revert to the more modest subsidies that existed before the 2019 law change and allow regulators to reduce the compensation rates for current projects.
His proposal would not be retroactive, he noted, but would change the rate for next year, as the projects already have benefited from the current year’s subsidy.
“They should understand the risk that statutory language can be changed,” Harwood said of Aspen. “The proposal to the Legislature would make sure the subsidy is sufficient for solar owners to cover their costs and make a reasonable profit.”
The prospect has caused Gulick to think twice about plans beyond Aspen’s initial 15 ground-mounted community solar projects. Ten of the Aspen projects are within an hour’s drive of Bangor, with three in Searsmont, two each in Kenduskeag and Prospect and others in Belmont, Corinth and Orrington. It has other projects in Berwick, Livermore Falls, Mechanic Falls, North Berwick and Stockton Springs. The company would not comment on how much it will be investing in total on the projects.
The project in Berwick went online a couple weeks ago. It can generate 2.36 megawatts of direct current power, enough to power 380 homes for a year. The other projects will go online by the end of 2024, which is the timeline set by the state.
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There were about 8,500 operational community solar and rooftop projects in Maine as of April 30, according to a CMP spokesperson. Some 32,000 customers have subscribed. Of those, 82 are active larger projects greater than 2 megawatts and another 434 projects are active with pending interconnection requests to the grid.
Aspen Power operates in Maine, Massachusetts, Maryland, New York and Virginia. It buys and develops projects using a pool of funding from private investors and venture capital firms including The Carlyle Group, Energy Impact Partners and Redball Ventures.
Carlyle, which is one of the world’s biggest private equity funds, invested $350 million in Aspen last November. Its chief investment officer, Pooja Goyal, said at the time that Carlyle wants to invest broadly in both large utility-scale renewable energy and community solar.
Gulick said Aspen also will pay for upgrades to connect its energy supply to the grid. That includes new wires and other changes that can cost anywhere from $100,000 to $1 million. He cited other benefits, including discounts for subscribers, using less fossil fuels to power the grid and distributing the electric supply more broadly to make the grid more reliable.
“Community solar is a very efficient economic model,” he said.