Virginia Community Solar RFI responses

Secure Futures LLC

9/20/16

The following bullet point summary of Secure Futures’ comments regarding the Community Solar RFI fall outside of the suggested RFI question/response format. The RFI format responses begin on page 3.

Summary of Comments — complementing RFI topics

  1. Simultaneously support removing barriers to community net-metering and community-owned solar.
  2. Simultaneously support third party owned solar PPA’s throughout the state (i.e., expand the PPA Pilot Program, that also excludes the green tariff).
  3. Secure Futures’ largest concern about this proposal is that it could potentially undermine the continued support for the current PPA Pilot program for third party owned distributed solar.
  4. Any proposed “community solar” utility owned and operated program ought to provide for a simultaneous expansion and support for the Dominion PPA Pilot program for third party owners throughout the state, as recommended by the Hearing Examiner regarding APCo’s recent RGP rider filing PUE-2015-00040

3. Without the above, the proposed program effectively becomes a “green tariff” barrier to further development of third party-owned solar.

  1. The “green tariff” allows utilities to prohibit third party renewable generation sales in their territory.
  2. A work-around would be to simultaneously change the green tariff legislation to allow third party PPA’s throughout the state, as applies now to the PPA Pilot Program.

4.Billing and credit concerns include the following:

  1. Customers should not carry a fuel rider, which would otherwise negate the benefits of renewable energy.
  2. Tying participants’ bill credits to the price of fossil fuels would reduce the economic savings that the community solar system would otherwise provide.
  3. Further, such bill credit assigns risk to the customer that has nothing to do with a source of renewable fuel where the price would be fixed under a community solar PPA between the developer and the utility.
  4. The utility will administer the billing/maintain the relationship with the customer-subscriber:
  5. Does ‘customer-subscriber’ encompass residential customers only, or does it include commercial and industrial customers? We believe this would be more appropriate to residential customers but not commercial customers who would benefit more from distributed solar on their side of the meter to offset demand charges, and also more likely to have greater flexibility with roof-top and ground-mounted solutions.

g.Program rates will be set annually and will be reflective of average costs across all community solar facilities. Customers in a rate class will play a blended rate. Customers will pay the same rate:

  1. What are the specific rate classes?
  2. Will there be multiple rate classes for residential customers? Are you including commercial customers?

g.Customers bill credit will be tied to fuel/LMP

  1. Why are customer bill credits tied to fuel/LMP?
  2. This puts all risk to the customer for a source of renewable fuel that should be fixed price under a PPA.
  3. The market appeal for renewable energy is that it offers a fixed price from a clean fuel source.
  4. Attaching a fuel rider could result in negative market reaction by mixing green with brown energy.
  5. Customer bill credits tied to the price of fossil fuels should not be part of the program parameters because this could negatively impact the savings of the system owner, or in this case, participants in the community solar program, that are otherwise attributed to solar energy.

g.Utility earns margin/return, cost recovery, and/or administrative fees

  1. If customer’s savings are tied to a dynamic price, and the utility providing the service is guaranteed a fixed price PPA and a fixed ROI, what net benefit is there for customers who subscribe to the community solar program?
  2. Customers should see a net savings over grid price, without price risk.

5. Maintain the emphasis on small scale solar by small businesses, without carve-outs for utility scale developers who would otherwise drown out competitive opportunities for small business.

  1. This would provide a guaranteed market for utility scale projects that would profit by arbitraging the difference in economics between utility scale and small scale projects, while putting out the smaller supplier — effectively the “Walmartization of Solar” that small business have experienced when displaced by big box companies in their markets.
  2. Utility scale solar projects would enjoy an unfair economic advantage, and thus create a “spiral down” race to the bottom, making it increasingly difficult for small businesses to compete in the market for small scale solar, and creating a disincentive to participate.

RFI Topics and Responses

RFI Question #1: Measures of Success, Length of Pilot, and Low-Income Inclusion

Measures of Success:

  • Market penetration: We believe this program would have limited market penetration and potential negative PR due to having Customer pay for a fossil fuel surcharge for what is purportedly a renewable fuel source. Surveys and focus group research by an indepre and post should seek evidence-based findings on how and if adding a fuel factor may discourage program participation.
  • Economic development: Jobs created in Virginia should be a key measure of success. Small business generates more jobs per Watt installed, according to U.S. DOE Jobs and Economic Development Index. The program should track jobs created in accordance with JEDI.

Length of Pilot:

  • There should be no time limit if there is a MW limit. The very act of calling it a “pilot” creates uncertainty for making capital investment decisions by private sector interests seeking to participate in the program.

Low income participation:

  • The program should strive, for all classes of customer, to deliver renewable energy at or below the cost of traditional grid electricity.

RFI Question#2: Program Size, Facility Size Caps, and Inclusion of Large Scale Facilities

Facility Size Caps and Inclusion of large facilities:

  • Carve-outs from utility scale (over 5 MW) facilities should not be allowed in this community solar program or treated as a separate program
  • If large commercial or utility scale solar projects were able to allocate a portion of the facility to the community solar program, this could create a disincentive for participation in the program by in-state small solar developers.

RFI Question #3: PFR Key Terms and REC/Carbon Treatment

RFP Key Terms & Structure: term, price escalator, qualification requirements:

  • Should PPA’s have a buy-out option?: Yes, PPA’s should have a buy-out option. Allowing a buy-out option would create incentives for competitive third party developers to own and operate a system financed by the participating utility for a minimum of five years

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