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| Some 13,000 solar panels sit atop a former landfill in East Providence. It’s Rhode Island’s first landfill solar project and the state’s largest solar-energy system. (Tim Faulkner/ecoRI News) |
After lagging behind neighboring states for several years, Rhode
Island is poised to become a major job creator in the solar- and wind-energy
sectors.
With the Public Utilities Commission’s recent approval of a key
incentive program, the state now has a stable of discounts and tax breaks that
make solar panels as affordable as any in the nation.
“We’re in a good place, we feel we have the incentives lined up,”
Marion Gold, director of the Rhode Island’s Office
of Energy Resources (OER), said
in a recent interview with ecoRI News.
If demand for solar in Rhode Island matches that of Massachusetts,
which ranks second in the United States for solar jobs, according to the Solar Energy Industries Association, then significant employment and economic growth is sure
to follow, predict state officials.
“We’re making great traction in Rhode Island,” said Scott Milnes,
president of Econox
Group Inc., a solar- and wind-energy developer based in Winchester,
Mass.
In 2014, Econox designed and installed the photovoltaic solar
array atop Newport Vineyards in Middletown, R.I. The project took advantage of
several financial incentives, including a federal grant for farmers, to help
fund a green retrofit of the 38-year-old vineyard. The work included major
energy-efficiency upgrades, as well as a system that converts grapevine
trimmings into fuel for a wood-pellet furnace.
These enhancements, in turn, boosted several traditional economic
sectors important to Rhode Island: tourism, agriculture and construction.
Renewable energy also plays a part in boosting emerging sub-industries such as
“agritourism” and “ecotourism,” as well as the local food and beverage
movement. All of which offer the back-to-nature experiences sought by many
tourists and shoppers to southern New England.
Green catalyst
One potential boost for the renewable-energy sector — and the
economy in general — is $60 billion from the U.S. Department of Energy to help
finance wind turbines on farmland. The Wind Powering America Initiative is projected to create 80,000 jobs during the next 20
years.
Renewable energy is a catalyst in the local economy movement. And
a vital local renewable-energy incentive is Rhode Island’s distributed
generation (DG) tariff program, according to Milnes. The program offers
fixed-price purchasing for electricity generated from solar, wind, food
digesters and small hydro products. The fixed pricing locks in a stream of
steady revenue for the owner of the renewable-energy system, which allows for a
rapid payback on the cost of the project and long-term savings on electric
costs.
“It’s bankable,” Milnes said. “Once people understand the
economics, they realize they are a cash cow.”
After a four-year test of the DG program, the General Assembly
approved, in 2014, a four-fold expansion of the program’s electricity allotment
and opened it to smaller, residential-sized solar systems, as well as small
hydro-energy projects.
Econox already has $4 million worth of new solar projects lined up
for this enhanced DG program. The company also incorporated in the state,
showing its commitment to the Rhode Island market. Other solar companies, such
as SunWatt Solar, are
opening offices in Rhode Island to take advantage of the anticipated demand.
“That program will be a big boost,” said Peter Hughes, business
director for SunWatt Solar of Providence.
SunWatt has expanded from Massachusetts, where it participated in
the wildly popular net-metering programs that allow renewable-energy systems to
sell electricity back to the power grid.
Massachusetts is expected to roll out a new loan program this year
to meet the state’s appetite for solar energy. Hughes expects similar growth in
Rhode Island.
“I think you are going to see a lot more solar in the next three
to four years,” he said. “It’s an exciting time in this area.”
A
pipe running between two dams on Ten Mile River in East Providence could
reactivate the dormant Hunt’s Mills hydropower facility, thanks to Rhode
Island’s distributed generation program. (Tim Faulkner/ecoRI News)
Job growth
Rhode Island, Massachusetts and Connecticut all mandate annual increases in the amount of renewable electricity that comes out of a wall socket. These renewable portfolio standards create demand for regional projects that add wind, solar and hydropower energy to the electric grid.
Connecticut has a renewable portfolio goal of 20 percent by 2020.
Rhode Island is aiming for a 14.5 percent renewable-energy mandate by 2019 and
new legislation looks to increase the amount to nearly 40 percent by 2035.
In fact, southern New England’s expansion of renewable-energy
incentives and initiatives is expected to create a surge of low-tech, high-tech,
white-collar and blue-collar jobs, according to both government and business
officials.
“One of the challenges we have in Rhode Island,” OER’s Gold said,
“is will the companies be able to keep up with demand for these programs?”
A more accurate assessment of Rhode Island’s renewable-energy
demand, growth and jobs is expected this summer, when an economics report
commissioned by the OER and the Commerce
RI is scheduled to be
released.
Here are the reasons for why the study is expected to offer an
optimistic assessment of the state’s renewable-energy sector:
Room to grow.
Currently, 98 percent of the electricity generated in Rhode Island
is fueled by natural gas. No more than 1 percent is created by renewable
energy, according to the U.S.
Energy Information Administration. The OER
wants to diversify Rhode Island’s energy portfolio and solar and wind power can
help lessen the need for natural gas.
The good news for economic growth advocates is that this push for
locally generated energy creates local jobs and supports local businesses.
Extending the state’s renewable-energy mandate, said Rep. Deborah
Ruggiero, D-Jamestown, “means it’s jobs here in Rhode Island, it’s tax dollars
in our local communities. ... It tells renewable developers that Rhode Island
is committed to this important economic sector.”
The cost.
A new residential or small commercial solar system costs between
$10,000 and $40,000. Larger commercial and utility systems can cost millions.
Right now incentives pay for about half. These incentives include a federal tax
credit of 30 percent and state grants can cover up to 25 percent.
Additional
breaks are available for schools, farms and group purchasing programs, such as
the recent Solarize
Rhode Island program —
similar programs exist in both Connecticut and Massachusetts.
A report issued last
year by the OER and Commerce RI showed that expanding the state’s DG program,
combined with the state grant program, would cost ratepayers $17.25 million per
year, or about $1.43 more a month on the average electric bill. The economic
benefit is about $30.65 million per year, according to the 50-page report.
This cost, of course, is higher for businesses and large energy
consumers, and many are already unhappy with the big increases they will pay
for Deepwater Wind’s Block Island Wind Farm, especially since the energy from the five turbines will
have limited benefits for ratepayers on the mainland.
But companies and municipalities that have embraced renewable
energy, along with energy-efficiency upgrades, have seen big savings.
Manufactures such as Toray Plastics in North Kingstown, R.I., and Hodges Badge
Co. in Portsmouth, R.I., have dramatically cut their energy bills and improved
their bottom line with large utility-scale projects.
A solar farm built atop a landfill in East Providence in 2014 is
one of the biggest solar arrays in Rhode Island. The 22-acre project saved the
city the expense of capping the landfill and brings in more the $100,000
annually from lease fees and other payments. East Providence is looking to
expand the solar field, and is studying a hydropower project for a dormant dam
on the Ten Mile River.
West Warwick and Providence also are planning to invest in
renewable energy.
Residential solar is a good investment.
Solar panels can be bought with an upfront payment, leased for
little or no down payment or funded through a loan. All of these options offer
a return on investment by shrinking energy costs.
The payback for a new installation is between 4 and 10 years.
Leasing simply reduces the monthly electric bill for the life of the lease,
which is typically 20 years. The lessee often has the option to buy the panels
at the end of the contract.
Leasing isn’t available in Rhode Island, but the option will be
investigated this year by the OER. Many of the players in the leasing market,
however, are big national solar installers such as Solar City, so leasing tends
to reward shareholders more than local businesses.
Subsidies.
The federal government gives tax breaks to both renewable energy
and fossil fuels.
An investigation by Mother Jones magazine found that the renewable-energy
sector gets about $7.3 billion in annual subsidies compared to $4.8 billion for
oil. Renewables also get another $6.2 billion in direct subsidies, research and
development funds and loan guarantees. Renewable tax breaks, like the
investment tax credit, however, expire every few years, causing political
strife and uncertainty in the industry. Oil subsides are permanent.
Oil companies can write-off 70 percent of their drilling expenses
and depreciate the remaining 30 percent. The controversial natural-gas
extraction technique called hydraulic fracturing, also known as fracking, received
massive upfront subsidies in the 1970s.
In Rhode Island, ratepayers also subsidize a program that offers
funds for new natural-gas connections to homes and businesses.
Electricity customers subsidize Rhode Island’s Renewable Energy Fund,
which supports small and medium-sized solar and wind projects. The state also
promotes federal programs that offer additional breaks for schools and farmers.
In fact, each year the state turns down money due to the lack of applications
from farmers. Funds from the American Resource and Reinvestment
Act also support local renewable projects, as do proceeds from
the Regional
Greenhouse Gas Initiative, a seven-state,
cap-and-trade program that gets money from fossil-fuel power plants.
Getting cheaper.
The cost of renewable electricity subsidies, however, is dropping.
Rhode Island’s DG program has seen solar price agreements cut in half, to about
15 cents per kilowatt-hour in four years — a price so low that it competes with
standard electricity rates.
Solar panels are becoming more efficient and less expensive. In
fact, even without subsidies, and ignoring the environmental and health
benefits, solar and land-based wind power are as cost effective as fossil
fuels, according to a 2014 report by the International Renewable Energy
Agency, an organization that supports
solar energy and land-based wind power. Incentives and the worldwide adoption
of solar energy has helped cut the price of solar panels by 50 percent since
2010, according to the report.
At the same time, employment in the solar sector rose 22 percent
in 2014, to 174,000 jobs nationwide. That’s six years of 20 percent-plus
growth. Installers earn between $20 and $24 dollars an hour, which is on par
with the national average hourly wage.
Wind.
While public resistance to new
land-based wind turbines has slowed development in southern New England, Wind Energy Development LLC (WED) of
North Kingstown, R.I., has plans to erect dozens of land-based turbines in the
region.
WED owner Mark DePasquale intends to build eight to 10 wind
turbines per year for eight years. In Rhode Island, projects are already moving
forward in Tiverton and North Smithfield, with an additional 10 turbines
approved in Coventry.
According to DePasquale, a German turbine maker is opening
an office in Rhode Island to meet WED’s building needs and serve as a
supplier for the region. As a result, DePasquale expects to create dozens
of new jobs.
“In the next few years, it’s going to get a lot easier for us to
permit, and people are starting to accept (wind energy) more than they did in
the past,” he said.
Seth Handy, an energy lawyer who is counsel to WED, believes wind
energy will make a comeback in the region. The public, he said, is getting
more savvy about the economic benefits of renewable energy, and wind energy in
particular, which is considered one of the most cost-effective of all energy
sources.
Rhode Island also has plenty of wind to harness, not just the in
coastal regions, Handy said. “We haven’t found a site where we can't do wind
economically.”
Offshore wind is still in its infancy, as the United States has
yet to build its first offshore wind farm. Providence, though, is home to Deepwater Wind, a company with huge ambitions for this sector. Its
five-turbine demonstration project off Block Island is on track to be the first
wind farm in the nation.
The company predicts that at least 200 local jobs will
be needed this summer when construction begins. Preliminary work is expected to
start soon at the company’s 60-acre facility in the Quonset Business Park in
North Kingstown, R.I.
Deepwater Wind also has a massive wind farm in the works for federally
owned waters between Massachusetts and Rhode Island. This 150- to 200-turbine
project will need 1,000 workers during construction and dozens of permanent
jobs over the life of the turbines, according to company officials.
Currently, the company has 10 full-time employees in Rhode Island
and relies on dozens of local engineers, surveyors, oceanographers, marine
scientists, fisherman, biologists and legal professionals.
OER’s Gold, however, is cautious about the immediate prospects for
offshore wind. The Block Island project was granted a generous price of 24.4
cents per kilowatt-hour to sell its electricity, almost twice the price for
standard electricity and land-based wind energy.
The Deepwater Wind price also
increases 3.5 cents annually for 20 years, a cost that is funded by Rhode
Island ratepayers.
Gold maintains that artificial pricing and subsidies are one of
the biggest impediments to a broader expansion of renewable-energy programs.
“If we don’t reduce the cost (for offshore wind power) it’s not
going to be a cost-effective resource for us,” she said. “We can’t ignore that.
That’s important for a stable environment and a stable economy.”
Opposition.
Anthony Baro, co-founder of solar developer E2SOL in Providence, is optimistic about the solar sector but he
believe's Rhode Island’s manufacturing and industrial companies, which
typically have the real estate and rooftops for larger renewable-energy
projects, simply can’t afford the upfront costs for renewable-energy systems,
even though they save money in the long run.
“Many of our small to medium size businesses are still struggling
in the state to stay competitive and profitable, and are very cautious with
their discretionary spending,” Baro said. “I believe our great potential is
limited at this time by our business and financial well being and the ability
to secure long-term financing terms.”
Is help on the way?
Community-driven bulk purchasing and discount programs, such as
the Solarize and Green Communities initiatives, have had considerable success marketing solar
energy in Massachusetts and Connecticut. They are just getting underway in
Rhode Island.
In Massachusetts, virtual net metering is fostering community or shared solar farms. The program
offers cost savings and other benefits of renewable energy for residential and
commercial ratepayers who don’t have the space or income for a renewable-energy
system.
The program is expected to get serious consideration in Rhode
Island. However, virtual net metering is unpopular with utility companies that
claim the program shifts more costs to the utility and other ratepayers.
The environment.
The health and environmental benefits of local renewable energy,
as well as the cost of inaction on climate change, are often overlooked in the
economic debate. Wind and solar energy reduce greenhouse-gas emissions by
reducing pollution from transportation, refining, extraction and the burning of
fossil fuels.
The OER and Commerce RI report predicts 130,000 tons of annual
emission cuts through the DG and Renewable Energy Fund programs.
“Would you rather invest in solar panels to generate clean
electricity, or pay to build retaining walls for our diminishing coastline?”
Eric Beecher, owner of solar developer Sol Power in
Providence, wrote in a 2014 op-ed.
“The clean energy industry in Rhode Island,” he wrote, “has only
scratched the surface of its full potential. Not only is alternative energy a
critical component to fighting climate change, but the development of an
industry to generate clean energy serves as a source of job creation and
economic growth.”
Beecher is living up to his words. In 2013, the year he founded
Sol Power, he installed two solar arrays. In 2014, he installed five. This
year, as one of the preferred solar developers for Solarize RI he
expects to install more than 50 and now has seven coworkers.
"The more (customers) that sign up, the more prices come
down," he told ecoRI News.
These benefits, however, are often low priorities for top
policymakers and lawmakers who claim programs and incentive for renewable
energy harm the economy. Governors across New England are intent on expanding pipelines
to bring more natural gas to the region and beyond our borders for export.
Recent research, from Wall
Street investment bank Sanford Bernstein, refutes the claim that renewable
energy is too expensive by showing that solar and wind energy provide a hedge
against fossil-fuel price spikes as well as a hedge against peak-hour energy
price increases.
The 2014 report concludes that solar and wind help smooth out
winter and summer electricity cost increases. Long term, according to the
13-page report, the rapid expansion of solar power will significantly lower
fossil-fuel prices and erode profitability.
The renewable sector, on the other hand, continues to create new
jobs and businesses, and greater political influence.
“Clean energy is beginning to become mainstream,” Gabe Elsner,
executive director of the Energy
& Policy Institute, told The
Washington Post. “Renewable energy is popular and has increased political power
now,” but, he added, “that power is still eclipsed by the resources of the
fossil-fuel industry.”
