States Support Clean Energy for Low-Income Residents

Author: Todd Olinsky-Paul, Clean Energy Group | Project: Clean Energy States Alliance

kidsClean energy innovations tend to follow a familiar arc. The newest best thing, whether that is rooftop solar, a Tesla PowerWall, or a Prius in the garage, is bought at a premium by first adopters. As the technology proves itself, costs come down, and a range of financing becomes available, these new technologies become accessible to a broader slice of upper and upper-middle income consumers. Yet, those who need the energy cost savings the most are typically the last to be able to afford them. Low to moderate-income drivers can’t afford to buy a new Prius, and don’t qualify for the necessary financing, so they keep dumping money into the old gas-guzzler. They will pay more in the long run, but don’t have the means to make the leap to a cleaner, more efficient and less polluting technology.

In recent years, a number of states have sought ways to bend the arc of clean energy technologies to benefit the lower-income segments of society. Now both California and Massachusetts have announced well-funded programs that should help those who lack disposable income and may not own property.

California’s Multifamily Affordable Housing Solar Roofs Program (AB693) dedicates $1 billion over 10 years to help provide solar PV – and, we believe, energy storage – to low-income families, who typically rent and thus would not otherwise benefit from solar even if their landlord were to install it. The California program specifies that tenants must see energy cost savings from what amounts to a community or virtual net metering system. The program’s goal is to install a minimum of 300 MW of solar PV on multifamily affordable housing facilities; funding from the program comes from the state’s greenhouse gas cap-and-trade revenues. The actual program design under the law has to be sorted out by the California Public Utility Commission over the next year or so.

Massachusetts, meanwhile, has announced the $15 million Affordable Access to Clean and Efficient Energy Initiative, which will be funded by a $10 million commitment from the Department of Energy Resources (DOER) and $5 million from the Massachusetts Clean Energy Center (MassCEC). The program will address challenges related to high-cost, high-emissions heating fuels, complex financing, and expensive up-front costs of clean energy projects. This initiative, like AB693, also includes a focus on providing solar PV for the benefit of residents of affordable housing developments.

It is worth noting that at least 12 states, including the District of Columbia, have adopted community net metering programs to help lower-income residents access the benefits of solar PV. These programs can help overcome the split incentive problem faced by renters and landlords, to deliver the benefits of solar PV to all – not just to homeowners.

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This article was also published in Renewable Energy World

Clarifying the Role of Distributed Storage in PJM

Author: Todd Olinsky-Paul, Clean Energy Group | Project: Resilient Power Project

Image property of Monitoring Analytics, LLC.

For a while there, PJM was looking like the promised land for behind-the-meter solar+storage vendors. The ISO had established a premium pay rate for fast-responding frequency regulation resources, which was tailor-made for battery storage, and lowered barriers to market entry; and it had gone ahead with a significant demand response program, despite a circuit court order vacating FERC order 745, which had laid the groundwork by requiring that demand response providers must be compensated at the same rate as generators (the U.S. Supreme Court later reversed the lower court’s ruling). Essentially, PJM had thrown the doors wide open and invited small, nimble distributed resources to join a set of lucrative energy services markets previously reserved for big generators.

So when the New Jersey BPU announced its first $3 million round of grant funding for resilient storage systems interconnected with behind-the-meter renewables in October 2014, there was a rush to apply. The BPU received 22 applications, of which 13 were funded. The funded projects were to provide resilient power to schools, fire and police stations, and other critical facilities, and all 13 planned to sell frequency regulation into PJM.

A year later, the landscape had shifted. By summer of 2015, PJM had proposed a temporary cap on fast responding frequency regulation resources, while it reevaluated the market. Then reports started coming in that the NJ grant-recipient projects were dropping out. By the time the dust cleared, only 4 of the original 13 funded projects remained. Some of the failed projects had been stranded by a corporate merger; others withdrew for economic reasons, having apparently misunderstood how PJM limits the amount of frequency regulation that can be provided by behind-the-meter batteries interconnected as demand response resources.

Undaunted, the New Jersey BPU has doubled down with a second round of funding, offering $3 million for energy storage in an open-enrollment prescriptive rebate program, and a second $3 million which is to capitalize a competitive solicitation (the details of the solicitation have not been finalized). But questions remain about the role of distributed storage in PJM. It is still possible, ISO officials say, to provide frequency regulation from behind the meter – but there are complex rules and requirements that can make or break a project’s bottom line, and at least some of these rules are under review. A detailed knowledge of these rules will be essential for any developer intending to sell frequency regulation into PJM.

On Tuesday, February 23, Clean Energy Group will present a free webinar presentation on PJM wholesale market rules and requirements for energy storage. The webinar will feature Scott Baker, senior business solutions analyst with PJM. To register, click here.

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This blog post was also published on Renewable Energy World.

The Case for Solar+Storage Tax Credits: Clean Energy Group’s Comments to the IRS

Author: Seth Mullendore, Clean Energy Group | Project: Resilient Power Project

Photo Credit: BackyardProductions/ Bigstock.com

The outlook for U.S. solar development ended on a high note last year with the unexpected extension of the 30 percent federal investment tax credit (ITC) beyond 2016. With tax season on the horizon again, it’s a good time to take another look at how federal tax credits apply to a resilient solar plus energy storage project.

It’s clear from the existing investment tax credit rules that solar and its related components are covered by the ITC, but what about battery storage? Can distributed battery storage be considered an integral part of a solar energy system and be included for the tax credit?

The quick answer is that, yes, energy storage could qualify for the federal ITC when it’s integrated as part of a solar system. Unfortunately, the longer answer gets a bit more complicated, and it can depend on a number of factors that haven’t yet been clarified by the IRS.

The good news is that the IRS recently asked for comments on how the ITC should cover solar and storage systems. Clean Energy Group’s comments, submitted a few days ago, strongly support the eligibility of storage under the ITC. The IRS recently issued a notice, 2015-70, for comments as it

…anticipates issuing regulations under § 48 of the Internal Revenue Code to define certain types of property qualifying for the energy credit under § 48. This notice requests comments on how to define these types of property; specifically, this notice requests comments on the definition of certain equipment using solar energy, certain equipment used to produce, distribute, or use energy derived from a geothermal deposit, qualified fuel cell property, qualified microturbine property, combined heat and power system property, qualified small wind energy property, and equipment using the ground or ground water as a thermal energy source.

In its comments to the Internal Revenue Service regarding the codification of certain current principles in new Section 48 regulations, Clean Energy Group encourages the Internal Revenue Service to clarify:

  • That all forms of energy storage, including batteries, thermal storage, flywheels, and associated hardware, when incorporated with a solar energy system, can be eligible for the Section 48 investment tax credit.
  • That each qualifying part of an integrated energy storage and solar energy system can be eligible for the Section 48 investment tax credit even if multiple businesses have ownership interests in the system.
  • That energy storage devices retrofitted into an already installed solar energy system can be eligible for the Section 48 investment tax credit.
  • That an energy storage system incorporated with a solar energy system can be eligible for the Section 48 investment tax credit even if the storage device uses a separate inverter.
  • That the “75 percent cliff” rule be reevaluated and better rationalized as applied to dual use energy storage equipment.

Clean Energy Group’s detailed comments on these points can be found here.

Our comments provided a basic policy perspective – that storage devices should be considered solar energy property for the purposes of the investment tax credit under Section 48 because of the added system and grid benefits these devices provide when incorporated into solar energy systems.

In particular, storage devices incorporated with solar energy systems offer important benefits that go well beyond the taxpayer. Storage devices can expand solar systems use, with all of the key economic and environmental benefits such systems offer, by providing unique value opportunities that stand-alone solar systems would not otherwise provide, including:

  • Storing off-peak solar energy generation for self-consumption or export to the grid during higher value, on-peak times
  • Providing on-site power to loads during periods of peak demand to reduce utility demand constraints and offset customer electricity demand charges
  • Supplying reliable backup power during power disruptions and outages
  • Delivering value to the larger grid through services such as frequency regulation, voltage support, and transmission and distribution congestion relief and upgrade deferral.

Clean Energy Group believes that the deployment of energy storage is integral to ensuring the continuing success of distributed solar in the United States. The inclusion of energy storage technologies adds value and functionality not only to individual solar energy systems, but to the larger integrated electric power system as well.

Clean Energy Group’s Resilient Power Project recently hosted a webinar with tax professionals from Deloitte Tax to learn more about financing solar+storage projects with federal tax credits. A recording of this webinar is available here.

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This blog post was also published on Renewable Energy World.

February 10th Webinar to Review “How-To” Resources for Resilient Power Systems in Affordable Housing and Community Facilities

Resilient-Power-Project-mapSS-480x330Clean Energy Group is hosting a free webinar on February 10th to provide an update on the Resilient Power Project and review the resources and web-based tools on our redesigned website. Project Directors, Seth Mullendore, Rob Sanders, and Todd Olinsky-Paul, will also discuss the following topics:

  • The need for resilient power and why it’s important.
  • The Project’s activities related to policy, project finance, and program support for resilient power and energy storage to assist states, communities, and project developers.
  • Overview of the Project’s strategies regarding net metering, community solar+storage, residential and commercial demand charges, optimization of solar+storage systems, project finance, and energy storage opportunities across the country.

The redesigned website offers updated policy and finance tools and other information to assist building owners who are considering installing solar and battery storage systems in affordable housing and other community facilities. It includes informational resources to learn about the benefits of, and best practices for, deploying solar+storage system.

Over the past two years, the Resilient Power Project has produced materials to help developers and city officials decide how they can use solar+storage technologies to protect vulnerable populations during power outages while providing an economic return to building owners and savings to residential tenants. The new website features various updated materials, including reports, case studies, webinar announcements and recordings, and an interactive mapping tool that tracks resilient solar+storage installations across the county.

“The Resilient Power Project has shown that clean energy technologies, such as solar+storage, can provide more reliable power solutions to support those in need—the disadvantaged communities who are most vulnerable to the impacts of prolonged power outages,” noted Lewis Milford, Clean Energy Group’s president. “In addition, our analysis has shown that these resilient power systems can provide significant economic benefits, such as lowering electric bills and generating revenues from providing grid services.”

The February 10th webinar is free, but registration is required. For more information and to register, please visit: http://bit.ly/Resilient-Power-Webinar. Clean Energy Group is also hosting a webinar on February 3rd on Financing Solar and Storage with Federal Tax Credits.

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Update: A recording of this webinar is available here.