Richard Lord, President
Associated Industries Massachusetts
One Beacon St. 16th Floor
Boston, MA 02108
Dear Mr. Lord:
Last week, AIM published a full page ad in The Boston Globe denouncing solar energy as too costly. The ad claimed ratepayers would pay $8 BILLION in subsidies for solar energy, over 10 years. This is simply not true.
As you know, the largest utilities are also spending millions of dollars on lobbying and advertising making the same claim. In particular, they argue the high cost of solar energy forces them to unfairly raise rates for elderly and lower income customers. Stop scaring people. There is simply no credible documentation for your arguments, and your bottom line is demonstrably distorted.
We offer a challenge:
1. Independent poll of your members to see if they agree with you. We’ll pay for the pollster.
2. If you believe your facts are correct, let’s have a public debate.
Here are the documented facts, with sources footnoted:
1. Cost Projections: AIM’s $8 billion number over 10 years is off by roughly two-fold. It is deliberately misleading, predicated on outdated figures. It uses numbers from the first Solar Renewable Energy Certificate (“SREC I”), which is now closed and fails to use the lower numbers of the current SREC II. Independent analysis by members of the Legislature’s Net Metering & Solar Task Force and business associations such as NECEC estimate that our solar programs cost residential customers about $23/annum, small commercial customers $200/annum and large commercial customers $1620/annum *(1). Initial solar costs may be somewhat higher than natural gas, but a fraction of the $8 billion cost figure AIM outlines. Former DPU Commissioner Paul Hibbard noted in a recent paper that the figures used by utilities are “…incomplete in scope and detail, misleading, contain calculation and methodological flaws, and have not been investigated or confirmed.” *(2) ELM supports a reasonable structural compromise on net metering, finding middle ground between resale of solar energy back to the utilities somewhere between retail and wholesale, which could further reduce incentive costs. Do you? If not, why not?
2. Return on Investment: Do you know a single credible business or business group that would cite cost without any reference to the return on investment (ROI)? Without including ROI, you misleadingly provide only half the equation. The Legislature’s Solar Task Force found that by continuing our solar programs, the Commonwealth would achieve a net return on investment of $7 billion to $8 billion *(3). Economic benefits result from increased local manufacturing and jobs installing solar units in-state, avoiding the cost of out of state fossil fuel generation that requires us to export our dollars rather than investing them at home, and the value of the on-site generation. Of the $22 billion the Commonwealth spends on all of our energy needs, we send $18 billion out of state. Why? All of this still does not include environmental or public health benefits from reduced emissions/pollution.
3. Other state models: AIM and the utilities argue that other states, such as Connecticut, have much less expensive solar subsidies. They are correct. It is also why Connecticut has so little solar development compared to the Commonwealth. And even in sunshine states such as Nevada, where the utilities have won, the solar industry has left the state entirely *(4). Is that your objective?
4. Solar v. Natural gas: While AIM and the utilities oppose solar development (because of a mythic $8 billion price tag), you ironically and strenuously support building an $8 billion gas pipeline to be paid by a first-ever tariff on electric ratepayers. Isn’t this a tax, which you otherwise strenuously oppose? *(5). And unlike solar investments, which can be easily altered, natural gas pipelines require a 30-year amortization, which ratepayers will pay regardless of whether new technology makes them obsolete. Ratepayers could pay a fortune for long-term stranded costs for this unnecessary infrastructure. Why don’t you include this extraordinary risk factor in your cost calculation?
5. Diversified portfolio: Natural gas currently comprises roughly 60 percent of our energy portfolio. AIM and the utilities support more natural gas pipelines increasing our dependence on gas to 70 percent. The financial analogy would suggest a high risk portfolio. If your retirement funds had 60 percent invested in one stock, your financial advisor would urge diversification. However, if you follow the money, it is clear utilities make their money from gas pipelines and make no money from solar and wind. AIM’s motives are equally clear. You want the lowest cost energy for your current commercial members, period. That’s understandable. Unfortunately it comes at the expense of potential new members, new industries, new jobs focused on solar and off-shore wind development, the fastest growing segment of our innovation economy. And it comes at the expense of cleaner and more local energy sources that will help us meet our statutory climate obligations for 2020 and 2050.
6. Solar’s future: AIM and the utilities are correct in one regard. Solar (and off-shore wind) are initially marginally more expensive than natural gas, if you completely disregard the ROI. That is the case with all start-ups and new products such as the first computers, smart phones, and digital TVs - all cost more initially. Then the price dropped. The first Model T cost more than a horse and buggy, but we understood the benefit, and we’re not going back. The facts are clear. The cost of solar is dropping. The cost to ratepayers is dropping. The cost projections by AIM are simply wrong. And the benefits of clean energy and new industries and jobs are growing.
Everyone is entitled to their own opinion. No one is entitled to their own facts. We’re happy to share our documentation, if you’ll share yours, including the return on investment.
*1- New England Clean Energy Council (NECEC), "Setting the Record Straight on Solar Costs," Nov. 9, 2015, http://www.necec.org/blog-details/setting-the-record-straight-on-solar-costs.html
*2- Paul Hibbard, "Net Metering in the Commonwealth of Massachusetts: A Framework for Evaluation," May 2015, p.12 http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/hibbard_net_metering_5-2015.pdf
*3- Consultant analysis for the Net Metering and Solar Task Force, April 30, 2015, p.128, http://www.mass.gov/eea/docs/doer/renewables/final-net-metering-and-solar-task-force-report.pdf
*4- GreenTech Media, "Nevada PUC to Reconsider Grandfathering Rooftop Solar Customers into New Net Metering Policy," Jan. 21, 2016, http://www.greentechmedia.com/articles/read/nevada-puc-to-reconsider-grandfathering-rooftop-solar-customers-into-new-ne
*5- Jack Newsham, Boston Globe, "Where else will New England get its energy?," October 13, 2015