RI green energy program approaches its end

R.I. Renewables Program Heads Into Final Year
By TIM FAULKNER/ecoRI.org News staff

PROVIDENCE — As Rhode Island's renewable-energy incentive program for larger wind, solar and anaerobic digester projects moves into its final year, it will likely expand to include hydroelectric projects. It also will be paying more to make wind turbines more viable.

Since 2011, 23 projects have been awarded contracts using the state’s the distributed generation (DG) contracts program. Solar energy accounts for 21 of those projects; two contracts went to wind.

The Distributed Generation Contracts Board recently approved next year’s electricity allocation for renewable-energy projects. The state Public Utilities Commission (PUC) must approve the new numbers. It's scheduled to first consider the proposal Dec. 16.

In all, 12.5 megawatts of electric capacity have been set aside for 2014 for new solar, wind, organic scrap digesters and, for the first time, hydroelectric projects. The amount could increase if projects previously awarded contracts aren’t built.

The proposed prices decreased between 4 percent and 6 percent for new solar projects. Wind prices increased 18 percent to make up for the end of some federal tax incentives, higher financing costs and increased costs for connecting to the power grid. The first wind project, awarded in 2011, received a price of $13.35 per kilowatt-hour. Solar prices have declined from a peak of $33 to as low as $17.50 per kilowatt-hour.

The proposed ceiling prices for 2014:

• Solar 500 kilowatts to 3 megawatts, $23.50
• Solar 201 kilowatts to 499 kilowatts, $27.30
• Solar 50 kilowatts to 200 kilowatts, $27.10
• Wind 50 kilowatt to 1.5 megawatts, $17.50
• Anaerobic digester, $18.55
• Hydropower, $17.90

The DG program was approved by the General Assembly in 2011 as a pilot program to boost Rhode Island's renewable-energy sector. Developers like the program because it offers 15-year fixed pricing for the sale of electricity generated by the renewable project. National Grid buys the electricity at the fixed price, providing a predictable revenue stream that helps attract financing for renewable-energy projects, which can cost several million dollars.

Critics of the program say the electricity carve out is too small to ignite the state’s renewables sector. Only 40 megawatts have been set aside for the four-year DG program. The 1.5-megawatt cap on wind projects is also considered too small for building more than a single turbine.

“It’s not large enough to support a robust market,” Julian Dash of Clean Economy Development LLC said during the Dec. 2 meeting of the DG board.

Dash called the overall DG program a success, but echoed a common criticism that developers of small renewable projects aren’t getting a big lift, especially compared to solar programs in neighboring states.

“Small solar is in a hard place no matter which way you go,” Dash said to the DG board. The board is considering allowing smaller solar projects access to the medium solar class electric allotment.

Seth Handy an attorney for Wind Energy Development, the company that built the North Kingstown turbine and has two under construction in Coventry, said wind energy is still a bargain compared to solar energy. However, many costs are unpredictable, such as connecting to the grid, property taxes and paying for inspections of bridges that carry turbine materials, a rule most other states don't have.

“Wind’s been pulling its weight in the history of the (DG) program and it now needs concessions to remain viable,” Handy said.

The current DG program expires at the end of 2014. New legislation is expected next year to extend and broaden the program. A bill to continue the program died in committee this year. National Grid said it prefers to wait and see if the state’s renewable-energy sector needs the incentives.

An economic impact study of the DG program is due to the General Assembly in March.