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Washington D.C.’s new renewable energy goals set the bar high

July 28th, 2016

Washington D.C. has long been a great place to go solar, with excellent solar rebates and the nation’s best SREC market that reduce the payback time for a rooftop system to under 6 years and result in almost $30,000 of profit over the life of the panels.

But unless you have some money to put down or a lot of equity in your home, it’s been difficult to pay the upfront costs for solar. That’s why the District just passed a new Renewable Portfolio Standard (RPS) that includes a huge increase in funding for solar systems that is aimed directly at senior citizens and other low-income homeowners.

The bill is currently under congressional review until the end of August, but when it’s enacted, here’s what it will accomplish (click on each to read more):

  • Increase the renewable energy goal from 20% by 2023 to 50% by 2032
  • Increase the solar carve-out from 2.5% by 2023 to 5% by 2032
  • Extend the SREC program at current rates through 2023, declining until 2032
  • Establish the “Solar for All Program” to help at least 100,000 of the District’s low-income households go solar before the end of 2032.

The Renewable goal

A Renewable Portfolio Standard calls for a state (or District) to get a certain amount of it’s electricity from renewable sources by a certain date. In the District, “renewable sources” include: solar, wind, geothermal, biomass, tidal, landfill gas, swamp gas, dog-passed gas and fuel cells. Okay, maybe we made a couple of those up.

The new law calls for 50% of all electricity generated in D.C. to come from renewable sources by 2032, which makes it the 5th most ambitious RPS in the country, behind Hawaii (100% by 2045), Vermont (75% by 2032), California and New York (tied at 50% by 2030).

Here’s how the whole country looks, with D.C. and the four better RPS states called out:

The solar carve-out

On top of that new 50% goal, the law calls for 5% of all electricity to come from the best energy source there is… SOLAR POWER!

A solar carve-out is the best way to ensure your state ends up with good incentives, and usually contains rules not only for total solar capacity, but also what happens if the utility company doesn’t hit the goals. That is done with what’s called a “solar alternative compliance payment” — or SACP for short — which is a financial penalty that the utility has to pay if they don’t get enough of the energy they sell from solar.

The SACP in Washington D.C. is $.50 per kilowatt-hour (kWh) this year, but it was scheduled to go down starting in 2017, and go away entirely as of 2023. With the passage of this new law, the SACP will remain $.50 until 2023, and go down over the next 9 years until it ends in 2032.

So why does the SACP matter?

Well, utility companies don’t want to pay the fine, so they look for solar energy that’s being produced by their customers, and pay them for “proof of generation,” which they buy to show the government that they procured X amount of solar energy to meet the goal. That proof comes in the form of a Solar Renewable Energy Certificate, or SREC (Sorry about the acronyms! The government made us do it!).

The SREC Program

That all brings us to Washington D.C.’s SREC market. Each SREC represents one megawatt-hour (MWh) of solar energy generation, equal to 1,000 of those kWhs we mentioned above. SRECs get their value because buying them from people who own solar panels is cheaper than paying the SACP fines or siting, getting approval for, building, and maintaining their a large solar facility.

These days, SRECs can be sold for $480 in Washington D.C., and with the new law, that’s likely to continue. Here’s how the math works: 1,000 kWhs x the $.50/kWh SACP = $500. So at $480, the SRECs end up being just a little cheaper for the utility than paying the fines. The market works!

A typical home solar system will generate about 6 MWh per year, meaning the owner can sell the SRECs for about $2,900. The new solar carve-out will keep those SACPs high, and SREC sales will likely mean tens of thousands of dollars for each solar owner over the next 16 years, helping solar pay itself back faster and better than anywhere in the country.

The “Solar For All” Program

All the financial goodness that solar can bring to a person comes at a big upfront cost. That’s why low-income folks haven’t been able to take advantage of solar. It’s more expensive than the average person can afford, and the biggest solar incentive—the 30% federal solar tax credit—is only available to people with the income to take advantage of it.

Washington D.C., where one Ward has hundreds of homes with panels on their roofs, and another might not have any at all, recognizes the problem, and has set out to do something about it. Just what they’re going to do is yet to be determined, but there’s good news: The program has the goal of (and the funding for) “reduc(ing) by at least 50% the electric bills of at least 100,000 of the District’s low-income households with high energy burdens by December 31, 2032.”

That’s a tall order, so to get the ball rolling, the city has charged the D.C. Department of Energy & Environment to create a program by February of 2017 that will specifically target ” seniors, small local businesses, nonprofits, and low-income households in the District.”

We’re really hopeful that this program will not only be great for the people of Washington D.C., but that it sets a benchmark for cities and states around the country, with best practices and success stories that can inspire other governments to act now to get more solar to the people least able to afford the upfront costs.

We’ll certainly keep you posted when it happens. Until then, we hope for many sunny days in your future.

Last modified: April 3, 2017

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