Community Solar Gets its Day

A bill that would allow anyone to access solar through a community subscription model heads to the governor’s desk

A half-decade effort to make community solar available to all New Mexicans has for the first time cleared both chambers of the Legislature.

Senate Bill 84, the Community Solar Act, passed in the House on Wednesday; 44 of 45 Democrats voted in favor and just three of 23 Republicans opposed it—the rest were absent and did not vote.

After the Senate approved House amendments late Thursday, the bill now heads to Gov. Michelle Lujan Grisham for a signature or veto.

According to bill sponsors Sen. Liz Stefanics, D-Cerrillos; Sen. Linda Lopez, D-Albuquerque; Rep. Patricia Roybal Caballero, D-Albuquerque; and Rep. Andrea Romero, D-Santa Fe, the measure allows renters and people who can't afford the costs of rooftop solar installation to access the reduced utility costs and positive environmental impacts of solar power via a subscription model.

A study published in January by the University of New Mexico's Bureau of Business and Economic Research found that community solar could bring significant economic benefits to the state, generating between $155 million over three years to more than $517 million over a five-year period. This could lead to as many as 4,000 new jobs and more than $2.9 million in annual tax revenue.

However, opponents of the bill worry that the Energy Transition Act, passed in 2019, makes community solar obsolete and that the costs of the program could get passed on to regular rate payers.

The bill sponsors have introduced some version of community solar legislation for at least five consecutive years. Proponents of community solar gained some ground in the 2020 session when the Legislature set up a working group to study the successes and failures of community solar legislation in other states and its implications for New Mexico.

Recommendations gathered by the group through dozens of meetings helped shape the version of this year's bill.

Stefanics believes this process of compromise is ultimately what allowed the bill to pass.

"We had the utilities, we had the rural electric co-ops, the developers, solar advocacy groups, the cities, the counties, the tribes and individuals participate…. the group didn't always agree on what should be done, but in the end, I think everybody can live with this last piece of legislation, even the utilities," she tells SFR. "I don't think any person, including the advocates or the sponsors, got 100 percent of what they wanted. But I think everybody got something of what they wanted in this bill."

Stefanics says after years of opposition to community solar, the utilities finally got on board in the last few weeks after sponsors amended the bill to meet some of their requests, such as reducing the size of the program and excluding large corporate entities from subscribing to community solar projects.

"At this point we are in favor of the bill, but our position is still that community solar is not necessary because the Energy Transition Act ensures that the whole state will be at 100 percent clean energy by 2040," says Ray Sandoval, a spokesperson for the Utility Company of New Mexico.

The Community Solar Act will allow businesses, nonprofits, municipalities, tribes and utilities to develop and manage small-scale community solar projects of up to five megawatts and a minimum of 10 subscribers each. Unlike rooftop solar, in which the energy generated can be hooked up directly to the electrical system of the house underneath, community solar projects are hooked up to the grid and generate electricity that is distributed by the utility serving that area.

Residents and organizations in the utility's local service area can purchase subscriptions for a certain percentage of the energy generated by the project. When they get their regular utility bill, subscribers will get a credit for their portion of the energy generated by the project. No subscriber can be allocated more than 40% of output, leaving more room for individuals and small organizations to take part.

This should all add up to lower utility bills for subscribers, and since 30% of the energy generated by each community solar project must be allocated to low-income customers, it should help level the playing field so that everyone has more equitable access to solar power, Roybal Caballero told the House on Wednesday.

She said it also protects tribes' rights to energy sovereignty and increases economic opportunities.

"[The bill] ensures tribes and pueblos have sovereign jurisdiction over their lands including the use of their lands for energy projects and infrastructure," Roybal Caballero said. "Tribal nations stand to benefit from community solar legislation through the vast opportunities of economic development, by lowering the disproportionate energy costs that tribal communities have experienced in the past."

The Community Solar Act charges the New Mexico Public Regulation Commission—which is responsible for regulating utilities—with running the statewide program and coming up with specific rules and fees. Projects developed by tribes would be exempt.

The bill also creates a trial period to test out the program by capping the total amount of energy that can be generated by all community solar projects in the state at 200 megawatts for the first three years and charging the PRC with creating a comprehensive report about the program at the end of that time.

Throughout the legislative process, opponents raised consistent concerns, most often having to do with potential hidden costs.

During the debate on the House floor, Rep. James Strickler, R-San Juan, said small-scale community solar projects would be significantly more expensive to develop than huge, utility-scale solar installations due to the cost of land in rural versus urban areas and the economies of scale.

Strickler worried that these costs might either add up to the point where community solar is not profitable for developers, or that the extra costs would be pushed onto the utility distributing the power and handed down to regular rate payers.

The concern is valid.

Minnesota, for example, passed community solar legislation in 2013 and has one of the largest programs in the country, but the economics have been complicated. In 2018, Xcel, the primary utility in the state, paid twice as much per kilowatt hour to purchase electricity generated from community solar gardens than it paid for electricity generated by utility scale-solar projects, reported to the StarTribune.

According to what a representative of the utility told the newspaper, those costs were passed down to regular utility customers, adding up to as much as $39 per year for the average residential customer in 2019.

Rick Gilliam, program director for Vote Solar and one of the experts who testified in favor of HB 84, tells SFR the bill includes several measures to protect New Mexico ratepayers from undue costs. He says some other states, including Minnesota, require utilities to buy back power from community solar projects at above the market rate. This is not the case in New Mexico's legislation.

The Community Solar Act also includes language specifically directing the PRC to come up with regulations and fees to make sure that "non-subscribers shall not subsidize costs attributable to subscribers," unless "the commission determines that it is in the public interest for non-subscribers to subsidize subscribers," in which case costs for non-subscribers can't be increased more than 3%.

Finally, says Gilliam, Xcel fails to acknowledge the hard-to-quantify savings that come from community solar. For example, community solar can provide the electricity that a utility might otherwise have to construct a costly new power plant to generate, so the utility gets the power without spending anything on the infrastructure. New infrastructure tends to be the primary reason ratepayers see an increase in their bills, says Gilliam.

"With community solar, there can be economic benefit for everyone involved, including the utility, subscribers and non-subscribes," Gilliam says.

The Albuquerque Journal reports both out-of -state and local developers are already planning how to jump into the market as soon as the bill is signed into law.

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