January 22, 2018
Energy and Utilities

$1B commercial renewables program nears expiration

Photo | Contributed
Photo | Contributed
ZREC incentives funded this solar array atop St. Francis Hospital.
Matt Pilon

A state program that provides financial incentives to commercial and industrial solar, fuel cell and other types of clean energy projects is approaching its expiration date, and it's uncertain exactly what will come next.

Low-Emission Renewable Energy Credit (LREC) and Zero-Emission Renewable Energy Credit (ZREC) incentives, which will total just over $1 billion, have helped the state meet its growing renewable energy goals since launching in 2012.

The incentives go to solar, fuel cell and other projects — more than 2,100 to date — with generating capacity as large as 2 megawatts, according to data from the Public Utilities Regulatory Authority.

Combined, ZREC and LREC-backed projects have more than 330 megawatts of generating capacity, producing more than 685,000 megawatt hours per year — enough to power more than 81,000 average households. For comparison, Connecticut's nuclear plant, Millstone Power Station — the biggest power generator in the state — produces about 16 million megawatt hours per year.

The incentives work like this: Solar and other projects produce a renewable energy credit for every megawatt-hour of energy they generate. Utilities are required to buy a certain number of those credits each year. They aren't actually buying the energy, which is used on-site, but rather the value of the clean power. The costs to the utilities are built into the rates Connecticut residents and businesses pay on their monthly bills.

The legislature in 2016 and 2017 added an additional year to the ZREC and LREC programs, but it's not yet known if they will be extended again. Modifications could be in the cards.

The Department of Energy and Environmental Protection is expected to address the topic in its latest Comprehensive Energy Plan, a final version of which is expected to be out by next month.

A draft version of the plan noted that the value of ZREC and LREC credits have declined, making them less valuable to developers (but less costly to ratepayers). DEEP has recommended placing a greater focus on massive grid-scale renewable projects, which have seen steeper price declines.

Asked about the future of ZREC and LREC last week, DEEP spokesman Chris Collibee said the agency expects the programs to be a key part of the final Comprehensive Energy Plan when it's released.

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