The legislative session is over and the bill was tabled, so New Mexico will be better known for its Energy Transition Act (and its liabilities) for now. But the community solar language that passed the state House in February could set a new standard for community solar program design.
Three Notable Improvements
The amended bill includes several notable best practices gleaned from other community solar programs. The biggest is the best, modeled after the nation-leading program in Minnesota––no cap. With projects allowed to be up to 10 megawatts (sufficient to serve nearly 2000 homes) and no cap, an approved New Mexico community solar program could quickly become one of the larger ones.
The bill also focuses on participation in two ways: for residential customers and low-income customers. In addition to limits on one subscriber controlling most of a project, the bill also caps the percent of a project’s energy that can serve customers with large subscriptions (25 kilowatts or more), effectively reserving space for residential subscribers in each project. Additionally, the program offers several strategies for including more low-income participation:
- Setting a goal of 25% participation by low-income subscribers
- Allowing community solar projects to offer subscription discounts to low-income subscribers
- Offering priority access to grid connections for affordable housing providers or other projects targeting low-income customers
- Allowing use of energy assistance funds to be used for community solar subscriptions
Finally, the bill requires that a utility must include community solar program impacts “in its loads and resources tables, integrated resource planning processes and integrated resource plans.” This requirement should cement the savings from community solar (offsetting the need for additional centralized power delivery) into the utility planning process.
Curious about the challenges of doing community solar in a state without supportive policy? Listen to a podcast interview with Peter Hansel about a solar project on a local co-op in New Hampshire, or the struggle of a municipal utility in Minnesota to add community solar when their wholesale energy provider doesn’t think it fits in the contract.
Three Out of Four Stars
How well does the New Mexico bill align with the four principles for community renewable energy? As we often say in Minnesota, “not too bad.”
Tangible Benefits––Half a Star
The bill credits provide a tangible, financial benefit for participants, although a key question is whether the credit is worthwhile when it is computed by, “deducting the qualifying utility’s distribution cost component from its total aggregate retail rate.” How much less than the retail energy rate would this be, and how would that compare to the benefit for a customer who has the wherewithal to receive net metering credits on a rooftop solar installation? Prior to amendments, the bill had a variety of bill credit boosters modeled on value of solar policies, including payments for renewable energy credits, energy, capacity, and line losses.
Flexible Ownership––One Star
The bill scores high for flexible ownership structures, allowing non-utility organizations as well as utility affiliates and public utilities.
Increase Renewables––One Star
The bill would definitely increase renewable energy deployment, without any program cap and allowing project sizes up to 10 megawatts.
Access to All––Half a Star
On access, the program––like many across the country––still struggles to identify a pathway for participation by low-income residents. The program allows projects to offer specific discounts to low-income subscribers, but it appears those benefits would have to be provided out of reduced benefits for market-rate participants. The bill also asked the Public Service Commission to consider carve-outs for low-income participation, targeting a goal of 25 percent low-income participation program-wide within five years. The one relatively novel inclusion was “allowing funds available for low-income energy-assistance programs” to be used to pay for subscriptions, unlocking a new source of financing for low-income participants.
One Minnesota community solar developer has voluntarily made low-income access a priority. Listen to a podcast with Cooperative Energy Futures’ general manager Timothy DenHerder Thomas
The key missing element is how most low-income residents, who often have poor or no credit, would pay for a subscription. Only a small proportion of eligible customers receive energy assistance funds, so while tapping this pot of money is important, it’s also insufficient.
A potential solution, on the agenda in Minnesota, is requiring utilities to offer on-bill repayment. This is already common practice among many utility-sponsored community solar programs, but they key to universal access is removing the credit score screen (an immediate cut-off for nearly half of Americans, and a disproportionate number of low-income ones). Instead, program data suggests that default rates are similar when utilities use alternative criteria such as on-time utility bill payment history, and yet allow much greater participation.
Overall, New Mexico’s proposed program makes improvements over some of the best programs in the country, including Minnesota. Here’s hoping the New Mexico legislature sees it through in 2020!
For more on low-income access to solar and community solar, check out the The Low-Income Solar Policy Guide. For more on overcoming the obstacles to community solar generally, see ILSR’s 2016 report, Beyond Sharing.
This article originally posted at ilsr.org. For timely updates, follow John Farrell or Marie Donahue on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update. Also check out over 70 episodes of the Local Energy Rules podcast!
John Farrell is the Director of Democratic Energy at the Institute for Local Self-Reliance and widely known as the guru of distributed energy.John is best known for his vivid illustrations of the economic and environmental benefits of local ownership of decentralized renewable energy.John Farrell can also be found on Twitter @johnffarrell, or at firstname.lastname@example.org.