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Gwen Brown
Author

Gwen Brown

Gwen Brown is Content Marketer at Aurora Solar. Previously, she was a Senior Research Associate at the Environmental Law Institute. She graduated Phi Beta Kappa from Gettysburg College.

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The 2018 State Solar Policy Changes You Need to Know

Gwen BrownGwen Brown

[Editor's note: This article was originally published on May 16, 2018. It was updated to reflect new policy developments on August 27, 2018.]

The solar industry is always dynamic, and keeping track of the latest developments around the nation can be tricky. Although this year got off to a rocky start with the federal government’s decision in January to impose a 30% tariff on foreign-manufactured solar components, there have since been a plethora of state-level policy developments that paint a more positive picture for the industry.

Actions by California, Hawaii, and New Jersey are especially noteworthy. The striking decision by California—the world’s fifth largest economy—to make solar standard for new homes will help normalize solar technologies and massively expand the solar market. Hawaii’s redesign of utility incentives provides a model for how utilities can benefit from solar growth. And New Jersey’s new solar and clean energy mandates bring it into the ranks of the states with the top three most ambitious clean energy targets.

Not all of the state-level actions thus far in 2018 have been supportive of solar, however. In particular, rollbacks of net metering may dampen the solar markets in Michigan and, if approved, Connecticut. Despite these setbacks, overall these changes show that many states recognize the value of solar and other renewable energies and are ready to take action.

State-level solar policy changes around the country from January through May 2018.

Just interested in a particular state? 
Click on one to jump ahead:

CaliforniaColoradoFloridaHawaii
New JerseyUtahConnecticutMassachusettsMichigan

The Good News

California

By far the biggest state policy update, in terms of impacts for the solar industry more broadly, comes out of California. On May 9th, the California Energy Commission mandated that nearly all new homes have rooftop solar starting in 2020. The changes are part of the state’s newly approved 2019 Building Energy Code.

The decision will significantly increase demand for solar energy; Greentech Media predicts a 14% increase in total U.S. solar sales over the next four years as a result! It also represents an important shift in making solar energy a new normal for consumers. Resulting industry changes may also contribute to falling costs for California solar installations.

(For a detailed overview of the policy and related business opportunities for  solar contractors, check out our on-demand webinar!)

This announcement will spur further growth in the California solar market, which has more installed solar than any other state by a factor of five according to SEIA. It also will contribute to the state’s commitment to sourcing 50% of its electricity from renewables by 2030.

California solar policy change: rooftop solar required for all new homes in 2020

Colorado

Colorado became one of the first states to designate energy storage as a consumer right when Colorado Governor John Hickenlooper signed SB 18-009 into law in late March. The law states that residents should be able to install, use, and interconnect energy storage systems without unnecessary restrictions or discriminatory rates. It calls upon the Colorado Public Utilities Commission to establish rules governing customer-sited energy storage.

Colorado solar policy change: energy storage deemed consumer right

Florida

In a notable development for the Florida solar market, the Public Service Commission issued a statement in late April declaring that residential solar leases are allowed in the state. Previously, solar leases were deemed “third-party electricity sales,” which are prohibited in Florida.

Sunrun successfully argued to the commission that solar leases should be allowed because the payments are fixed and not contingent upon the amount of solar electricity the system produces. Florida solar customers now have a new financing option to choose from and solar companies in the state can offer a new product.

Florida solar policy change: Solar leases are now legal in Florida

Hawaii

Hawaii is changing the revenue model for investor-owned electric utilities to better align their incentives with the growth of solar and energy storage. The measure, signed into law in April, is expected to aid the process of modernizing the state’s electricity grid because utility revenues will now be linked to performance metrics. The use of distributed energy resources like solar, rather than investment in costly new utility-owned infrastructure projects, will be incentivized.

This is big news. Utilities are a major player in the power sector, and their support or opposition is a major determining factor in solar market growth. Better aligning utility incentives with solar growth, as states like Hawaii and New York have endeavored to do, presents new opportunities for utilities to support the growth of renewable energy.

[Note: For related insights on how new revenue models for utilities can advance the growth of solar, see Aurora’s interview with Dr. Varun Sivaram.]

Hawaii solar policy change: utility incentives now favor solar, storage

Additionally, in July, regulators ruled that existing solar customers in Hawaii who have net metering agreements (from prior to the state’s elimination of net metering in 2015), may now add energy storage systems without voiding the terms of their metering agreement.

New Jersey

The New Jersey solar industry also got good news this year. Governor Phil Murphy signed into law several key energy bills, including one that updates the state’s Renewable Portfolio Standard, requiring 35% of its power to come from renewables by 2025 and 50% by 2030. In addition, the law establishes the most ambitious solar-specific target in the nation, requiring that utilities source ~5% of their energy from distributed solar by 2021.

The law also includes a 600 MW energy storage target and establishes a community solar pilot program for the state. It also establishes a planned phase out of New Jersey’s SREC program in 2021 but calls on regulators to establish a successor program to support distributed New Jersey solar projects. 

In other positive news for clean energy advocates, Governor Murphy also signed an executive order requiring the development of an Energy Master Plan providing a comprehensive plan for the state to reach 100% clean energy by 2050.

NJ Renewables Target graphic-updated

Utah

Two new policies with important implications for the Utah solar industry were signed into law by Utah Governor Gary Herbert in late March. One extends a $1,600 tax credit for residential Utah solar customers for an additional two years. The credit will begin to be phased out in 2021 over a period of three years. The other is a consumer protection measure that requires solar companies provide all residential customers with a disclosure statement to help ensure they understand the terms of their contracts. SEIA has applauded these developments.

These developments, particularly the tax credit, are welcome news for Utah’s solar industry, particularly since recent data show a slowdown in its rooftop solar market, likely stemming from a 2017 change to the state’s net metering approach.

Utah solar policy update: tax credits extended, consumer protection measure passed

The Bad News

Connecticut

Despite vocal opposition from the Connecticut solar industry, the state recently eliminated net metering for solar customers. The bill, which advocacy groups had decried as a serious threat to 2000+ Connecticut solar jobs was signed into law by Governor Dannel Malloy in June. 

As written, the policy would set a new flat rate for solar compensation, though the exact structure that will be implemented remains to be seen. The decision now goes to the state Public Utilities Regulatory Authority for review and rate setting. One bright spot in the bill is that it establishes a target of 40% renewable energy by 2030 under the state’s renewable portfolio standard by 2030.

Connecticut Net Metering Elim graphic- revised Aug. 2018

Massachusetts

In one of the first blows to solar energy this year, Massachusetts approved new charges for new solar customers in January. At the same time, the state became the first in the nation to approve demand charges for all residential net metering customers starting in 2019, a “charge without a cause” according to industry groups.

Demand charges, which typically only apply to commercial customers, are based on the maximum amount of energy the customer used during any (usually 15-minute) interval during the month. They are very difficult for customers to control and, as we discuss in a commercial case study in California, can significantly reduce solar savings.

A bill passed by the Massachusetts Senate in June raised hopes that the demand charge might be repealed. Unfortunately, the version ultimately agreed upon by the House and Senate and signed into law by Governor Charlie Baker on August 9th, did not contain the repeal language. It upholds the charges, stating that a ”distribution company may assess a demand charge if it is based on system peak demand during the hours of a day determined to be peak hours of system demand and if the distribution company regularly informs affected customers of the manner in which demand charges are assessed and of ways in which said customers might manage and reduce demand.”

Mass solar policy update: Massachusetts applies fees and demand charges to solar customers

Michigan

Michigan dealt a serious blow to solar by eliminating net metering. In late April, the Michigan Public Service Commission elected to replace net metering with a new approach. Under this policy, solar customers will buy energy from the grid at the retail rate but be compensated for the solar energy they send to the grid at a significantly lower rate. That rate will be based on an estimate of how much the utility would otherwise pay to procure that power, an “avoided cost” calculation. Fortunately, current Michigan net metering customers will retain their current rates for 10 years, but the shift is a big loss for future Michigan solar customers.

[Note: For an overview of related trends, check out Aurora’s blog post on how net metering is changing—and being scaled back—around the country.]

Michigan Solar Policy update: In April 2018, Michigan eliminated net metering for future solar customers, significantly reducing savings from solar.

Although not all of the state policy changes to date this year are favorable for solar, it’s great to see that many states are recognizing the value of solar and working to make it more accessible. We’re excited to see what other pro-solar policies emerge in the remainder of 2018!

Are there policy developments we missed?  Let us know in the comments below!

Gwen Brown
Author

Gwen Brown

Gwen Brown is Content Marketer at Aurora Solar. Previously, she was a Senior Research Associate at the Environmental Law Institute. She graduated Phi Beta Kappa from Gettysburg College.

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