This is an invited guest post from Virginia Rutter of Eutectics.
By the end of 2019, Rhode Island has a goal to have 200 MW of distributed renewable energy generation in the state, most of it solar. The primary means by which Rhode Island means to meet this goal is through the use of standardized cost-based contracts—a feed-in tariff—for electricity generated from renewable energy sources.
Phase I: Distributed Generation Standard Contracts Program
In 2011, Rhode Island created the Distributed Generation Standard Contracts (DGSC) Program to encourage distributed generation of electricity through renewable sources and to realize the associated benefits, both economic and environmental. The DGSC Program is available for wind, solar photovoltaic, and anaerobic digester technologies. Interested project owners and developers apply during several two-week enrollments throughout the year, and projects are selected based on the lowest cost. Projects awarded contracts will receive a set payment per kWh from the electric utility, National Grid, for the electricity produced for the fifteen-year term of the contract.
In 2014, the ceiling price for small solar systems (50-200 kW), for example, was 25.75 cents per kWh. In contrast, the average price of electricity for residential customers in Rhode Island in 2014 was 12.5 cents per kWh. Producers therefore earn twice as much for solar electricity from National Grid, with that price guaranteed for fifteen years.
The ten-member Distributed Generation (DG) Board administers the program. Members are appointed by the Governor and hold public stakeholder meetings to determine program details. The DG Board sets ceiling prices, rate classes, and enrollment targets for each type of renewable energy, as well as the standard contracts. National Grid creates the application form and manages the enrollment process. The Public Utilities Commission (PUC) provides final approval and program oversight.
The DGSC Program got off to a quick start – an initial 5 MW project quota was met in the year of the program’s enactment. Annual enrollment targets increased each year thereafter, with a final goal of 40 MW by the end of 2014. This goal was nearly met; through the third enrollment in 2014, 38.6 MW of renewable energy projects have been awarded contracts. Solar installations comprise the vast majority of the projects, at 88%, with three large wind projects and three anaerobic digester projects.
Phase II: Renewable Energy Growth Program
In 2014, the Rhode Island Legislature established a new Renewable Energy Growth Program, to expand the distributed generation contracts by an additional 160 MW, for a total of 200 MW. National Grid has proposed the new tariff structure to the PUC; on November 14, the utility submitted the final rules and tariffs. The draft documents propose separating the tariffs into two categories: residential and non-residential. The residential program is for small-scale solar projects of up to and including 25 kW at residential premises, served under the residential rate classes. The non-residential program includes all other retail customers.
The new program as proposed by National Grid has some other significant changes. First, successful applicants to the program would no longer sign contracts with National Grid but would instead receive Certificates of Eligibility. These certificates would detail the terms of the incentive payments, which would also be spelled out in the tariff and supplementary documents. Second, the residential program would operate under continuous open enrollment, whereas the non-residential would continue to be limited to a two-week window for applications. Third, applicants to the residential program can select 15- or 20-year terms for the program, and third party ownership for small solar systems is allowed, with a separate incentive structure. Lastly, National Grid will recover the costs of this new program through a rider on each customer’s utility bill, estimated at 12 cents per month for residential customers.
Benefits for the State
Increasing distributed generation within the state has significant benefits for Rhode Island. A Brattle Group study found that increasing the DGSC program by 160 MW, the exact size of the RE Growth Program, would lead to a $253 million net positive economic impact to the state, including ratepayer impacts, economic output, tax impacts, and criteria pollutant emission reductions. Further benefits include an average annual gain in full time employment of 246 jobs. The DGSC program has attracted substantial out-of-state investment into the state as well; approximately 60% of the projects developed through the program have been by developers located outside of Rhode Island, with 20% outside of the New England region.
Overall, it seems that Rhode Island’s policies to increase the use of distributed generation sources are a success; the program that will end in December 2014 is on track to meet goals, and there is enough interest to increase the program to five times the original capacity.
- Rhode Island General Laws, §39-26.2 Distributed Generation Standard Contracts
- National Grid
- RI PUC Dockets 4277, 4288, and 4536
- Brattle Group Study
- Conversation with RI OER
- U.S. Energy Information Administration
Photo credit: Montgomery County Planning Commission via Flickr (CC BY-NC-SA 2.0 license)
Virginia Rutter is the Research Analyst for Eutectics, where she works on solar and other clean energy financing and policy. Recently she has been focused on community solar gardens in Minnesota, both in tracking the program development and assisting subscribers in navigating subscription options.