New Incentive Would Allow Solar-Panel Leasing

By TIM FAULKNER/ecoRI News staff

PROVIDENCE­ — Residents and small businesses may soon have new options for going solar.

Come March, a renewable-energy funding program geared for large wind and solar projects will likely expand its classifications to include small-scale solar. The change will give property owners and solar businesses more financing options and even open the door for leasing solar panels.

The program, known as distributed generation (DG) requires National Grid to buy electricity for a fixed rate from the owner of the solar panels for a period of 15 or 20 years. The rate is capped well above the current standard market rate for electricity, allowing the owner of the solar panels to receive income from the electricity it generates and sells to the utility.

Under the existing DG program, this income delivers revenue to investors who helped finance large projects, such as the 411-foot-high wind turbine in North Kingstown and the 14-acre solar field atop a former landfill in East Providence.

By offering fixed pricing to small-scale solar arrays, it would give solar installers the option of leasing panels to property owners. Lease programs in Connecticut and Massachusetts allow property owners to receive solar energy without an up-front payment for the panels. The avergae new solar system for a home costs between $20,000-$30,000 before incentives. Third-party ownership allows a solar company to receive the financial incentives while the home or business owner usually receives a discount on their monthly electric bill.

After the Rhode Island Distributed Generation Board approved the new program Dec. 15, at least one local solar installer said he expects the expanded DG platform to unleash pent-up demand for small-scale solar projects.

“It’s tremendous. It offers a broader range of options to go solar and it makes Rhode Island much more comparable (with other states) than we’ve been in the past,” said Ben Swanson of solar-panel developer RGS Energy.

Michael Daley of the International Brotherhood of Electric Workers Local 99 congratulated the board for approving the program. Rhode Island, he said, has new growth potential for renewable energy and construction jobs. “Our neighboring states are way ahead of us,” he said.

The new program must be approved by the state Public Utilities Commission (PUC). The PUC is expected to vote on the new program by the end of March.

The new small-scale solar program is part of a significant expansion of the DG program. It was launched in 2011 as a pilot system with an allotment of 40 megawatts of power. Renewable-energy advocates regarded the program as a success, prompting the General Assembly to expand the energy allotment to 160 megawatts across five years. The new DG program is available to five solar-energy categories, two for wind power, two for anaerobic digesters and two for small-scale hydropower.

While the enhanced DG offering would open the way for more solar-energy projects, it would offer a smaller share of the annual electricity allocation to wind energy. DG board chairman Kenneth Payne said the initial optimism for wind turbines in 2011 died down after local resistance intensified, especially for proposed projects in pricy coastal areas.

“And the reality was we were getting very little interest and sometimes outright hostility in regards to such locations," he said.

The North Kingstown wind turbine was the only turbine financed through the pilot DG program, compared to more than 20 solar installations. Proposals for wind turbines were turned down or withdrawn in Charlestown, Jamestown, Middletown, Newport, Tiverton and Westerly.

To encourage wind development, the ceiling price, or the top price a developer can bid for a 20-year fixed contract, was increased from previous DG allotments.

The expanded DG program would join several state incentives for small-scale solar projects. The Renewable Energy Fund offers grants that cover about 25 percent of the cost of such a project. The group-purchase discount program Solarize Rhode Island launched a pilot program in North Smithfield in October. A federal tax credit of 30 percent also is available.

Here is the list of recommended ceiling prices for the 2015 DG program:

Small solar owner financed 15-year term: 41.35 cents per kWh/20-year term 37.75 cents

Small solar third-party financed: 32.95 cents per kWh for 20-year term

Medium solar: 24.40 cents per kWh for 20-year term

Commercial solar: 20.95 cents per kWh for 20-year term

Large solar: 16.70 cents per kWh for 20-year term

Wind I: 22.75 cents per kWh for 20-year term

Wind II: 22.35 cents per kWh for 20-year term

Anaerobic digestion: 20.60 cents per kWh for 20-year term

Small-scale hydro I: 21.35 cents per kWh for 20-year term

Small-scale hydro II: 20.10 cents per kWh for 20-year term