Another Review of IREC’s Community Renewable Best Practices

Date: 24 Nov 2010 | posted in: Energy | 0 Facebooktwitterredditmail

Last week I briefly reviewed IREC’s new (almost) Best Practices for Community Solar and Wind Generation.  Craig Morris provided another review this week that provides a very good perspective.

For one, Craig notes that there’s an unhealthy focus on net metering to the exclusion of other policies (like feed-in tariffs) that can provide a higher value for community projects.  I think he illustrates one of the biggest problems with continuing to rely on net metering for distributed renewable energy projects:

Generally, under net-metering the utility company gets your “excess” solar power for free, say, at the end of the calendar year – solar power that offset the most expensive power on the spot market during times of peak demand in the early afternoon during the summer. You give that to your utility for free under net-metering. [emphasis added]

The report also misses a chance to highlight the global best practices for community renewables, or even the best practices in the U.S.:

Perhaps unsurprisingly, when IREC went looking for best practices, it did not look at leading global markets, but stayed within the confines of US borders. The study is typical of US analyses in that respect (see this report at Renewables International). Clearly, the dominant global policy to incentivize renewables is feed-in tariffs, especially in ramping up community projects. IREC even ignores FITs within the US, comparing policies in Massachusetts, California, and Maine, for instance, while Vermont, which has successful, but rather limited feed-in tariff scheme, is mentioned only in terms of its “group billing program.”

Craig also notes the glaring issue of ownership.  The IREC report defines community ownership as “direct ownership, third-party ownership, and utility ownership.” 

Which begs the question of what kind of “community” system can be owned by a utility. Certainly in Germany, a community system is by definition one owned by the community.

IREC goes on to state a preference for utility ownership, an idea I find appalling.  As I noted in my review, utility-owned community solar projects have often asked community participants to pay more for electricity, at a time when most people going solar are making a return on investment. 

Overall, I think I agree with Craig’s conclusion:

Given the current policy framework in the US, the report is probably useful. For instance, it discusses how community projects can avoid having to pay income tax on the power generated and how federal tax credits can be utilized. In other respects, IREC’s thinking is clearly still bound to net-metering; if you switch to feed-in tariffs, for instance, the question of “demand charges,” which seems to be an important issue for IREC, becomes completely irrelevant. In effect, the proposals basically show how progress could be made within the current legal framework without any major changes.

IREC’s report provides a good perspective of how to advance community renewables under a “business as usual” policy framework.  If you agree that we might be able to find better policy, however, you might want to read [shameless promotion alert] Community Solar Power: Obstacles and Opportunities instead.

Follow John Farrell:
John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.