By David Thill, Energy News Network

A stakeholder group tasked with helping lawmakers incentivize distributed generation and plan grid upgrades is expected to issue its first of two reports by Jan. 1.

Two years after opening the gates for small-scale renewable development in Maine, officials now have to figure out how to situate new projects in prime spots on the grid.

A group of industry members, advocates, utility stakeholders and state officials is preparing to issue the first of two reports that will help lawmakers in Maine craft new renewable incentive policies and plan grid upgrades for the coming years. This comes after the legislature in 2019 lifted project size limits for the state’s net metering program and implemented other policies that led to a crush of new project applications awaiting utility approval.

That high level of interest by developers “was very robust and possibly beyond initial expectations” when the laws were passed, said Dan Burgess, director of the Governor’s Energy Office.

“I think it’s fair to say we didn’t know exactly what we would see when the law was passed,” said Jeremy Payne, executive director of the Maine Renewable Energy Association. “What is clear is that the policy has made Maine a highly desirable place to deploy capital, create jobs and bring in new taxable value.”

Few projects have actually come online since the 2019 laws were passed, partly due to interconnection delays and the pandemic, as well as the typical timeline for project development. 

The laws mostly paved the way for new solar generation development. As of now, developers have sought interconnection approval from Maine’s two investor-owned utilities for about 2,400 megawatts of solar, including 1,350 megawatts under the state’s net metering program — which in Maine is called “net energy billing” — according to the Governor’s Energy Office. 

It’s likely many of those projects won’t be built, Payne said. Central Maine Power, the larger of Maine’s two investor-owned utilities, this year recorded annual peak demand of 1,810 megawatts. Versant Power last recorded 382 megawatts, in 2019.

Adjusted for service territory size and the number of customers, “we’re exceeding anything that any utility has seen before in terms of processing 1- to 5-megawatt [photovoltaic] projects,” said Jason Rauch, a policy manager at Central Maine Power.

With high interest and long wait times for developers seeking approval, officials and industry members now want to find ways to make the process by which utilities study project viability more efficient. They want to make it easier for developers to propose solar and other renewable installations in places where they’ll benefit the grid, particularly by avoiding transmission costs for consumers.

But that will also likely require changes to the data utilities collect, and to the access developers have to that data. Discussion of what those changes would entail is still very early on, but members of the stakeholder group hope their meetings can advance progress toward a solution.

“I think it’s clear that we’re going to need some upgrades to the grid, and those upgrades need to consider both the clean energy development that’s happening and also the electrification that’s coming in the transportation and building sectors in particular,” said Phelps Turner, a senior attorney at Conservation Law Foundation and a member of the new group.

The group was established by law this past summer and is known as the Distributed Generation Stakeholder Group. “Distributed generation” refers to renewable and storage projects up to 5 megawatts in size. Such projects, Turner noted, have implications most immediately for the distribution grid — though they ultimately affect the transmission grid too.

The group began meeting in September and must deliver the first of two reports to the state legislature by Jan. 1. That report will include preliminary recommendations for grid upgrades and new distributed generation incentive programs, like net billing, to begin in 2024. The group is supposed to determine a target amount of distributed generation under a new incentive program that would account for 7% of the state’s anticipated electric load. The law passed this summer set a non-binding goal of having 750 megawatts of commercial distributed generation projects 2 to 5 megawatts in size operating by the time the current net billing program is over.

Other expert groups have made recommendations over the past year and a half for grid modernization and renewable development in Maine. The new stakeholder group will build on that work, said Burgess, who’s a member of the group.

“What we’re going to do is seek to take what we’ve heard and learned from all these processes and also look at what is already being done and try to understand where the gaps are,” Burgess said.

“We’re dealing with a grid that was not designed for a lot of distributed generation,” said Philip Bartlett, chair of the Public Utilities Commission and a member of the stakeholder group. The group’s discussions, as well as a complementary docket at the commission, aim to help figure out how to incentivize resources where and when they’re needed, he said.

Both of Maine’s investor-owned utilities are conducting assessments to evaluate both distribution- and transmission-level impacts. But Bartlett noted it’s unclear whether all these studies are necessary to comply with requirements by ISO-NE, the regional grid operator.

He added that these questions could be avoided to some extent by identifying from the beginning where projects can be placed on the grid to reduce transmission impacts — thus reducing the need for ISO-level assessments. That is, after all, the point of distributed generation, he said: building generation where demand is, rather than building it in one location and then delivering it to another via transmission lines.

“It would benefit everybody to locate these projects in places where they can connect the easiest and not impact the system negatively,” said Catharine Hartnett, manager of corporate communications at Central Maine Power.

“Certainly we want to provide the information, the data that would be helpful, that could move this along the most efficiently for everybody,” said Hartnett, who noted the stakeholder group discussions are still in their early stages. “We’re just not quite sure what that is and how we can best provide it.”

Payne, at the Maine Renewable Energy Association and a member of the stakeholder group, said the renewable industry would like more transparency and efficiency from Central Maine Power in its interconnection study process. 

“As we have said to CMP time and time again — and I truly believe this — their success is our success,” Payne said. “If they’re doing their jobs more efficiently … that’s better for everyone, including ratepayers as well as developers.”

The possibility that new distributed generation projects will necessitate grid upgrades raises a longstanding question of who should pay for the upgrades: developers, or utilities — and therefore ratepayers. Critics also argue that programs like net metering drive up electric bills for customers who aren’t able to pay for solar panels or subscribe to community-based programs that offer bill credits.

“Versant Power is willing and eager to support the state’s energy policy goals,” Arielle Silver Karsh, director of legal and regulatory affairs at Versant Power, Maine’s other investor-owned utility, wrote in emailed comments. She’s also a member of the stakeholder group. “If the stakeholder group can set forth a list of agreed-upon priorities and acknowledge the likely costs associated with implementing solutions, then the utilities will have some certainty about moving forward. We need to chart a course forward and do so methodically and strategically to soften any rate impact to the greatest extent possible.”

Disagreements over costs tend to hinder discussions on how to plan distributed generation development, said Rebecca Schultz, a senior advocate at the Natural Resources Council of Maine who’s been observing the stakeholder group meetings. “Cost,” she noted, can include program administrative costs and bill credits under net billing, as well as grid upgrades necessitated by distributed generation projects.

“I think there has been a tendency to use misleading and inaccurate ways of communicating the impacts of these programs, whereby program costs equate to lost revenue for the utilities,” Schultz said.

Costs as they’re reported often don’t reflect the benefits of these programs to individual participants or to ratepayers generally, she said. For example, she said, some benefits of distributed generation, like avoided costs in the regional capacity market, accrue to ratepayers naturally through reduced electric rates.

“Clean distributed resources also help fortify us against fossil fuel price volatility, like what we’re seeing in Maine and across the region, where electricity rates are skyrocketing due to our reliance on natural gas generators,” Schultz added.

Having a method of evaluating program costs and benefits will make it easier for stakeholders to decide what projects to incentivize and how to allocate costs, she said. Turner, at Conservation Law Foundation, noted that as part of his work on the group, he’s pushing for a more comprehensive analysis of project costs and benefits.

After the stakeholder group delivers its initial report, it will have another year to develop a second, more in-depth report, which is expected to have more detailed recommendations for new programs to incentivize distributed generation development in Maine.

By the time that report comes out, there should be more clarity about how many of the projects currently waiting for approval will actually move forward, Payne noted. He said that in the coming year and a half, the state will likely see many more projects come online.

“I think what we have is tremendous amounts of investment capital poised to flow into Maine,” he said. “We’re just in the early process.”