Connecticut has set a goal of obtaining net-zero emissions for electricity by the year 2040, but according to some environmental organizations and solar companies, the state has effectively hamstrung itself by capping the amount of solar power that can generated through commercial projects.

“We really don’t need the caps,” said Mark Scully, president of the People’s Action for Clean Energy (PACE), who also acknowledges there are reasons the caps were included in the authorizing legislation for legitimate reasons. “We could deploy a lot more solar without over-burdening the Connecticut ratepayer. The caps just aren’t necessary.”

Connecticut previously did away with a cap on residential solar development, and PACE is hoping that Connecticut’s legislature will consider at least placing a moratorium on the commercial caps, particularly as federal infrastructure money is set to come to Connecticut from Washington D.C. “We could make those investments with little to no cost right now,” Scully said.

The cap on commercial solar development is meant to ensure that commercial solar projects approved by the Public Utilities Regulatory Authority (PURA) through the state’s Non-Residential Renewable Energy Solutions Program (NRES) are low cost, essentially a reverse auction so that electric ratepayers are not burdened with higher electric bills. There are two caps: one for the size of the project in terms of kilowatts, the other is a cap on the price.

The state’s utility companies – Eversource and United Illuminating, who administer the NRES program – enter contracts to buy electricity and renewable energy credits from the solar projects at whatever the bid price was, the cost of which is included in the “public benefits” portion of an electric bill. So, the lower the cost of the project, the lower the potential impact on ratepayers. 

Joe Cooper, deputy director of communications for PURA, however, says that if the caps were eliminated, something else would have to take their place to ensure program viability.

“The idea behind caps on annual deployment, which are prescribed in the authorizing statute, is that they function as a way to ensure the competitiveness of the annual solicitations, which theoretically result in bids closer to actual project costs and, thus, lower overall costs for ratepayers,” Cooper said in an email. “Said another way, absent a cap on available megawatts for each auction, the current program cannot function as designed and would need to be supplanted with an alternative program design.”

Scully and PACE are arguing the cap on kilowatts should be lifted or eliminated, while the price cap can be maintained by PURA. Scully says that fears of eliminating the caps will increase electricity rates are “unfounded,” based on his talks with industry experts.

“What we advocated for is, let’s get rid of the caps and give PURA the charge to administer the program without caps, without successively increasing the rate payer burden,” Scully said. “We have an incredibly capable chair of PURA, and I think everybody has confidence they could manage a program without the caps if asked them too.”

“We haven’t really heard much about the cost-shift argument in recent years,” said Mike Trahan, executive director of the Connecticut Solar and Storage Association. “PURA has kind of dispensed with that, I don’t think they buy that anymore.”

Scully, Trahan and various stakeholders in the field of Connecticut’s solar industry and utility industry, as well as the general public, may get a chance to make their arguments soon.

Reached for comment via email, Rep. Jonathan Steinberg, D-Westport, chair of the General Assembly’s Energy and Technology Committee, says that a moratorium on the caps is something the committee is considering this legislative session. He reportedly announced that during a presentation before the Connecticut League of Conservation Voters to rounds of applause. “We’ll give the idea a public hearing to debate the pros and cons,” Steinberg said in an email.

Scully says that over the years the state has increased the cap on the size of the projects that can be approved annually for commercial development, increasing from 60 megawatts to 120 megawatts, but that the program is still “oversubscribed,” meaning that when the application window for getting a project approves opens, it fills up quickly. The projects have to be shovel-ready, meaning some developers often put in a lot of time and effort leading up to the application before essentially being told they can’t move forward or have to reapply the following year.

“A lot of projects just die on the vine,” Scully said. “What we hear is there are a lot of projects that don’t make it in. It’s certainly not the only thing holding back solar.”

But part of the problem, and part of the reason the caps exist, is Connecticut’s electric grid hosting capacity and the ability for the large commercial solar projects to connect to the grid, particularly in rural areas that were not designed to handle the increased load. Eversource, for instance, currently has 300 megawatts of commercial solar contracts waiting to connect to the grid under existing contracts. To upgrade systems in those rural areas could cost tens of millions.

“There are limitations on the grid. The grid cannot handle an unlimited amount of solar power uploaded to it. Once you hit that limit, game over,” Trahan said. “At some point reality sets in, and you have to have a discussion about what infrastructure and where has been overwhelmed and the projects are in a queue waiting to upload power through that infrastructure and onto the grid. They’re in a queue because that particular substation may be overwhelmed.”

“There’s a lot of locations in Connecticut where it’s just not viable to put solar because the grid can’t handle it, so we need to make investments in the distribution,” Scully said.

Reached for comment, Andrew Belden, vice-president of solar program for Eversource, says they support efforts to modify state solar incentives to increase the use of solar energy.

“Solar will play a critical role in meeting Connecticut’s energy and climate needs both today and for decades to come and we’re ready to build the grid of the future needed to support ambitious solar expansion,” Belden said in an emailed statement. “Current state programs limit development of commercial rooftop solar, particularly for the small businesses and non-profits that can benefit the most by reducing their energy bills with solar. We support efforts to modify state solar incentive programs to ensure rooftop commercial solar is able to grow in Connecticut.”

Grid and substation capacity is most affected in more rural parts of the state where land is cheaper and can accommodate large arrays of solar panels, but the substations – which are built to accommodate existing needs, not future needs – would require costly upgrades. Meanwhile, substations in urban areas can more readily handle more power flowing from solar generation and more easily connect to the grid, but lack land area to host large solar farms, driving up the cost. 

Rooftop solar on commercial buildings is a possibility, however, those installations generally serve to just power the business where they are located, rather than feeding energy back into the electric grid.

There are several questions and issues that will need to be addressed by PURA and Connecticut’s utility companies when it comes to expanding the state’s electric infrastructure to accommodate more solar generation, the biggest of which is where to make those upgrades and who is going to pay for it, which are all reportedly on PURA’s docket.

Of course, all of it takes time to work out and build. Even estimating conservatively for getting PURA approval and building new substations, Trahan says it could take six years.

“The question is: can the industry sustain itself? Are there enough entry points to the grid over the next six years so the industry can sustain itself and commercial customers can benefit from solar?” Trahan said. “That is a big question weighing on the minds of our industry right now.”

“We’re going to find out in the next couple years from now whether or not we’ve started quickly enough to upgrade the infrastructure here,” Trahan said.

One possibility floated by PACE is the installation of solar roofs over large parking lots in urban areas, known as solar canopies. PACE identified over 8,400 potential solar canopy sites in Connecticut in a 2021 study and found the state could potentially generate 37.8 percent of Connecticut’s annual electricity consumption – enough to power 870,000 homes.

The report recommended a number of potential policy changes that would be needed, including offering incentives for building solar canopies, raising the $10 million cap on virtual net metering, prioritizing canopies when it comes to modernizing Connecticut’s electric grid, and possible zoning law changes.

But with grid upgrades taking years and tens of millions of dollars, expanding solar generation in Connecticut through commercial projects may not be as easy as just removing the caps. Rather, it would be a balancing act between costs, location, substation capacity and the ability to connect to the grid. 

With Connecticut residents already paying some of the highest electricity rates in the country, lawmakers and regulatory officials are cautious when it comes to potential cost burdens on ratepayers, but with no upcoming expansion of natural gas coming into the state and a continuing push by both state and federal administrations for more renewable electricity generation, Scully sees an opportunity as the cost of solar comes down.

“The reason our electricity rates are high is not because we have too much solar,” Scully said. “A lot of our electricity, over 50 percent, is powered by natural gas power plants, and the cost of those are going to continue to increase. We’re locked into ever-increasing electricity rates until we get off gas and onto solar. Solar, over time, is a downward sloping technology cost curve.”

“We can own it ourselves. We can keep the money in the state, and the jobs, and the revenue,” Scully said.

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