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D.C.'s Solar Industry Seeks Help From Council

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D.C.'s solar industry wants the D.C. Council to step in and improve incentives for its potential customers.
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D.C.'s solar industry wants the D.C. Council to step in and improve incentives for its potential customers.

Robert Robinson wants solar panels on his house off 16th Street NW.

"12 solar panels -- the balance would be thin film," he says, explaining the logistics of the project. He originally thought of the idea because "we simply could not continue to afford to pay the cost of both the gas and the electric utility bills which, in addition to being very high, were rising," he says.

But he can’t just pay for those 12 solar panels all at once because they're kind of expensive.

"We really can't," he says. "The cost of the job is around $30,000 dollars."

He can get about a third of that covered by the federal government, and a little more paid for by D.C. if he's lucky. A third thing Robinson could do to offset the cost of solar power -- well, at least he used to have this option -- is sell the 'greenness' of his panels.

Putting a price on 'greenness'

Yuri Horwitz, CEO of Sol Systems, explains the greenness like this: "It doesn't exist in a tangible way. It represents the green attributes associated with a unit of electricity from a renewable energy system."

So, basically, picture a little sticker on the electricity that says 'Hi! I’m renewable and I'm great!'

This greenness, these little stickers, are called SRECs, Solar Renewable Energy Credits. And who buys these imaginary things?

"Any company that sells electricity to customers in the District of Columbia has to buy SRECs," says Harry Warren, president of Washington Gas Energy Services, an affiliate of Washington Gas.

Washington Gas Energy Services buys SRECs. PEPCO buys them too. Why would they buy greenness? Because they have to.

"All suppliers of electricity have to comply with the District's renewable portfolio standards law. And that law requires us to source a certain amount of our electricity supply from renewable energy facilities," says Warren.

There are 32 states with laws like this. As a result, there’s an entire legislatively created marketplace for greenness - SRECs are bought and sold all the time.

There's similar markets for wind and other renewables. And the money generated by the sales sustains a whole industry -- in this case installers, solar utility companies, solar leasing companies, solar financial companies. It's basically a way to create demand for solar panels by helping people like Robinson afford the installation.

Prices for solar credits plummet

Now here's the problem. In D.C., the price of greenness -- that is, individual SRECs -- has crashed.

"They've fallen. In some cases by 50 to 70 percent," says Horwitz, whose company aggregates and sells SRECs. "They've fallen dramatically."

He says the prices have fallen because the laws in D.C. don't require companies like WGES to purchase SRECs that come from here.

Unlike most of the other states with portfolio standards, D.C. has no local requirement for SRECs.

"Right now, you can provide SRECs anywhere on the east coast," says Horwitz. "There's a huge system in Chicago, Illinois that sells its SRECs into the city." The glut has caused prices to crash.

Projects stall as market falters

"Things are not getting built and will not get built," says Horwitz. "We're talking about thousands of jobs in the next ten years."

Anya Schoolman, president of the Mount Pleasant Solar Cooperative, says before, the SRECs could be like collateral and get new solar users an upfront payment or loan. Now, that kind of financing for solar has become all but impossible, she says.

"There's no longer the ability to get financing, because we have essentially an unstable market," she adds.

Looking for legislative fix

Now, D.C.'s solar constituency wants the D.C. council to plug that hole in the SREC market by walling in the market -- and increasing the amount of solar energy electricity suppliers are required to purchase. They argue this would effectively raise the price of 'greenness'. At least four states have done this already.

"Now we're at this sort of cliff side, waiting for the D.C. legislature to come up and pass this legislation," says Horwitz.

But there are a few dark clouds over the idea of walling off D.C.'s greenness market, says Mary Cheh, a member of the D.C. Council from Ward 3.

Cheh introduced D.C.'s renewable portfolio standards law in the first place several years ago, but she is aware of the down side.

Will a change increase electricity costs?

"We're probably going to be increasing the bill to the residential electric customer," says Cheh. "Because what these companies do is, when they have added costs, they’re going to pass it on to the consumer."

The estimates for the effect on electric bills range widely, from just a few cents per month to, according to PEPCO, potentially $3 per month. Other estimates predict it could increase bills by as much as $5 dollars per month.

Most estimates don't go that far, but the mere idea is enough to make any elected politician think twice. Cheh says it may be possible to adjust the legislation to mitigate effects on electric bills.

Weighing the interstate commerce clause

There's also concern that the legislation might run afoul of the interstate commerce clause of the U.S. Constitution.

"A state or the District isn't supposed to insulate itself from market forces," Cheh says. "We're not supposed to throw up barriers to trade."

But four states have succeeded in threading that constitutional needle, and the measure hasn't yet faced serious opposition from power companies or constituents.

Industry wants to maintain momentum

Schoolman and Horwitz point to the growth of D.C.'s solar industry thus far and say that without SREC reform, that growth, and the jobs that come with it, will grind to a halt. Robert Robinson’s solar project is doing just that.

"It’s just not a possibility," he says. "We’ll simply not be able to do it."

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