It’s been over a year since Thetford Post Mills Solar LLC filed an application with the Vermont Public Utility Commission (PUC) to install a 2.5 acre solar array on the closed Post Mills landfill. On February 3, the project cleared a major hurdle when it received a Certificate of Public Good (CPG) from the PUC approving the 500 kw array.
Thetford Post Mills Solar LLC is a project of Norwich Solar Technologies, a business that builds commercial and industrial solar arrays and finances them through partnerships with investors. Norwich Solar does not own the landfill itself; ownership of this “orphan” parcel will be transferred to Green Mountain Economic Development Corporation (GMEDC), provided that it obtains protection from brownfields liability under Vermont law. Assuming that final hurdle is cleared, the solar LLC will lease the land from GMEDC, thereby making the project possible.
For large projects like this, capital is typically raised by a consortium of investors who realize a return by selling the electricity, in this case to our local utility, Green Mountain Power (GMP).
There’s another thing that’s sold, as well. Renewable energy has an “attribute” attached to it called a Renewable Energy Credit – or REC for short. RECs are commodities unto themselves and can be traded and sold independently from the electricity. In the case of the Thetford solar, Green Mountain Power becomes the owner of all the RECs. As stated in the CPG approval, “[a]ll environmental attributes associated with the Project’s output, including any renewable energy credits (‘RECs’), shall be transferred to Green Mountain Power Corporation (GMP).” What GMP does with those RECs determines whether solar electricity delivered to its customers can actually count as “renewable” under Vermont law.
The origins of this system can be traced back five years to the adoption of the VT Renewable Energy Standard, which aims to increase the percent of renewable energy in the state. All of the state’s electric utilities are required to obtain a small percentage of the energy they sell from new in-state renewable sources (like the one proposed for Post Mills). Each year they have to increase this percent to a maximum of ten percent by 2032. Each utility must demonstrate yearly compliance with the Renewable Energy Standard (RES) by “retiring” the required number of RECs.
So far, so good. However RECs are “financial products available for sale, purchase, or trade that allow a purchaser to pay for renewable energy production without directly obtaining the energy from renewable energy sources” (quote from US Energy Information Agency). The owner of a REC derived from a solar array obtains, by “retiring” that REC, the legal right to claim the energy they used was “renewable.” This applies even if the energy actually used came from a coal-fired plant.
If a Vermont utility acquires more RECs than it needs to meet its annual RES requirement, it is free to sell those excess RECs to utilities in other states. GMP finds willing buyers in Massachusetts and Connecticut, who must meet the renewable energy requirements in their own states. When those utilities buy Vermont solar RECs, they are effectively getting Vermont-generated solar energy. Those utilities are able to use the Vermont RECs, stripped from the electricity, to “offset” fossil fuel generated electricity that they have purchased separately.
So, assuming that the solar array is built on the old Post Mills landfill, who will receive the “renewable” energy it produces? GMP’s 2021 compliance filing with the Public Utility Commission allows one to make a reasonable estimate. From in-state solar generation in 2020 (442,897 megawatt-hours), GMP acquired 442,897 RECs, of which it retired only 111,684, or about 25%. In other words only 25% of its instate solar was delivered to its customers, amounting to 2.8% 0f GMP’s retail sales.
GMP sold 75% of its 2020 instate solar generation to utilities in Massachusetts and Connecticut. Those utilities used the RECs from GMP to fulfill their state’s “renewable” energy obligations by using those RECs to account for 253,140 megawatt-hours of fossil fuel-generated energy. In February 2021, one “premium” REC generated by Vermont solar arrays was selling for about $40. The exported RECs represent about $10 million revenue for GMP.
The electricity that may eventually flow from the solar panels on the Post Mills landfill will be profitable to investors. The RECs will benefit utilities in other states. Green Mountain Power, which is 100% owned by a Canadian gas company, will continue to make claims that only exist on paper, about how clean its energy mix is.
Yes, there are still environmental benefits, but they are clouded by the fact that the Thetford-generated RECs will offset fossil-generated electricity elsewhere.
There’s another model for development of renewable energy that doesn’t depend on non-resident investors and the sale of RECs to out-of-state utilities. It’s one of true community control and democracy, where the owners of the array are the residents and small businesses that use the energy their solar panels generate. And because they retire the RECs rather than sell them, they truly own the rights to the renewable energy. One example of this model of community solar is the White River Community Solar (WRCS) array in Royalton.
WRCS went online in the fall of 2021 by sending power to the distribution grid. It was an arduous process that was derailed for several years by enactment of the same Renewable Energy Standard that created incentives for Vermont utilities to sell their RECs out of state. In response to the 2017 RES, the PUC implemented rules that penalize array owners who choose not to assign their RECs to the utility, through an added charge for each kilowatt hour generated. The new rules also added expensive pre-approval startup costs that could easily be recouped by wealthy investors but, when combined with the REC penalty, puts development out of reach for most true community projects.
WRCS eventually overcame the obstacles with a partnership developed over the course of more than four years with community institutions. The Energy Clinic at Vermont Law School provided a template for the legal structure and donates legal assistance free of charge to help launch a project. Out-of-pocket upfront expenses for regulatory approval can amount to $15,000. To cover those, a project can draw on a revolving loan fund established with a $15,000 grant from Vermont State Employees Credit Union and administered by Building a Local Economy, a South Royalton nonprofit.
WRCS proves that the model works for Vermonters to own and control truly renewable energy from generation to use. Unfortunately, because the model depends on a single, tiny loan fund, the model doesn’t scale up beyond one-at-a-time development.