Proponents of Senate bill 263 say the law will help the poor put solar panels on their homes. The real purpose of the law is to sell more solar panels at premium prices. Electric ratepayers, including the poor, will pay $750 million more for electricity over the next dozen years to pay for this new solar requirement. Each job created in the solar industry will cost about two jobs elsewhere. At the same time, the bill manages to violate the U. S. Constitution and a legislative deal cut just a year ago. Delaware already has a solar mandate 10 times higher than the average state east of the Mississippi and we are only one fifth of the way toward meeting it. We don’t need an expansion of this mandate.
Installing solar modules is the most expensive way to help the poor pay their electric bills. Energy efficiency improvements, such as efficient lighting, better insulation, a new hot water heater or furnace, or new windows provide a better return for each dollar spent. This means more people can be helped for the same investment. Programs already exist to help the poor with these energy efficiency improvements and to provide help paying for electric bills. The cost of these programs doesn’t get passed on as higher electric bills to the very people we are trying to help.
Let’s examine the claims made about this proposed law:
Claim: Ratepayers will not see higher costs because of reductions in Alternative Compliance Payments.
Truth: The ACP is a minimum charge for energy credits if they are not purchased from solar electric generators. No one has ever paid an ACP charge for standard Solar Renewable Energy Credits because enough wealthy people have built systems to cover the requirements so lowering the ACP does not save any money. Meeting the new 2.5% maximum will require generating 265,000 LSREC’s a year. That will require 190 megawatts of new solar capacity to generate those LSREC’s. At the current $4/watt installed price the solar infrastructure investment will cost $750 million. The infrastructure cost will be passed onto electric ratepayers through LSREC purchases by electric distributors or from grants paid by taxpayers.
Claim: Jobs will be created for the home-grown solar industry.
Truth: The diversion of money to higher electric rates will eliminate one to six jobs elsewhere for each job created by the solar industry according to multiple studies from around the world. A CRI article titled “Where are the Green Jobs?” discusses this in detail.
Claim: Only energy credits created by solar generators located in Delaware will count.
Truth: Such laws violate the Commerce Clause of the U. S. Constitution and are being challenged in other states. No out-of-state energy credits are registered in Delaware so this exclusion is not needed. When the Fuel Cell Act was passed last year it was known passage would lead to higher electric bills. A deal was made to protect electric ratepayers. Part of the agreement was these higher costs would be offset by requiring the purchase of fewer solar energy credits. It was also agreed no legislation would be introduced to expand the requirement for solar energy credits.
Claim: An energy credit procurement flaw will be corrected.
Truth: The flaw is solar proponents were more interested in the next sale than in protecting existing system owners. Older system owners were cut out of participating in a new, very generous, energy credit procurement process so more new systems could be sold. Owners of existing systems were relegated to the spot market which saw energy credit prices drop from $300 to $25 each (a typical residential system might generate 10 SREC’s a year). Many of these older systems may have been built by wealthy individuals or owners who have already made back their investment. None of them are likely to be poor. Delmarva Power could solve this problem by offering owners of these stranded systems short term SREC contracts at moderate prices. Delaying withdrawal of banked Dover Sun Park SREC’s to future years would leave room for the contracts with no reduction in the number of SREC’s needed from new installations. The contracts would also produce the least expensive contracts Delmarva Power has signed and would lower ratepayer cost for the Renewable Portfolio Standard.
This proposed law would expand the solar carve out in Delaware to 6% of electric power sold in the state, sixteen times higher than the average state east of the Mississippi. New Jersey requires about 3%, Maryland 2.2%, and Illinois 1.5%. Seven states and the District of Columbia require 1% or less and sixteen states have no solar requirement. We need competitive electric rates to compete with these other states and SB263 takes us in the wrong direction.
David T. Stevenson, Director
Center for Energy Competitiveness