A little housekeeping is in order.
I am a founding member of Kent Conservation and Preservation Alliance and currently serve on the BOD. However, what I am about to write reflects an expression of my own position and is not a statement from KCPA.
I will also disclose that I was a member of the working group for the 50% Renewable Energy feasibility study conducted by the Maryland Power Plant Research Program in 2017 & 2018 and currently am a member of the working group studying 100% Renewable Energy feasibility in Maryland. In addition, I was appointed to serve on Governor Hogan’s Renewable Energy and Land Use Task Force, final report August 2020. I mention this as a means of conveying that while no expert in the field of energy, neither am I a neophyte.
Refraining from ad hominem attacks, I will present you with data to explain why I disagree with the premise that solar will play a role in lowering utility bills for Kent County ratepayers.
When Solar fluctuates with the passing clouds, often the most expensive wholesale market power is called upon to balance the grid; the “peaker plants”. They command a premium price to be on standby and fire up at a moment’s notice to make sure your AC keeps running on a hot day in August when a stray cloud diminishes the sun’s power and creates a sudden drop in production. While I agree with Mr. Whitney (Spy 9.29.2021), there is good data on the day ahead weather conditions affecting solar and though it is predictable that it will decrease and stop working when the sun sets, it still lacks consistent reliability. Even so, the yearly potential for solar production relative to stated output is generally considered in Maryland to be about 20% to 22%. The challenge is to recover the capital costs of the array plus the return on investment for the lifetime output of the project. This does not “pencil out” without subsidies, both to reduce capital costs and prop up revenues with price support. Although the capital costs of solar have dropped dramatically in past years, supply chain issues and the shortage of raw materials, polysilicon being primary among them, this decreasing cost is being thrown into reverse according to data provided by Bloomberg
Wind or solar (renewables) sell into PJM, the Regional Transmission Operator for all or part of 13 states including Maryland, in the same way all power sources, be it gas, nuclear, or coal, compete to sell power to PJM. It is a complicated bidding process and the prices vary accordingly.
However, to promote the growth of renewable power generation the Maryland General Assembly has legislatively mandated that utilities selling power in Maryland must buy renewable energy credits (REC include wind, solar and other power sources considered renewable produced outside of Maryland). These same utilities must also purchase solar renewable energy credits (SREC) which can only be generated from solar power generated in Maryland. Both REC and SREC are bought according to how much retail power a utility sells. These REC and SREC purchases are paid to the power plants that generate renewable energy and in-state solar. One MWh of output equals either one REC or one SREC depending on the source. Renewable energy companies and in-state solar generators are paid double, first for every MWh they generate and sell in a PJM auction and then a second time for the REC or SREC sold to the utilities.
The current auction price of one SREC in Maryland is $77/MWh. The current average PJM price for baseload is $26/MWh. So even if a solar company sold power at $0 dollars, which is below what Mr. Whitney has stated the power in the UAE is being contracted for, solar would still be getting a higher price per MWh than other power sources by collecting a price support in the form of a SREC payment from the utility. The cost of these REC and SREC purchases by utilities is determined by an auction market based on supply and demand. These costs are passed onto the ratepayer directly impacting how much is paid for electricity.
Maryland utilities 2014 to 2019 when Maryland had a portfolio standard of 20% by 2022 and 2% in-state solar generation, paid a total of $657 Million to meet the requirements. $257 Million of that was for SREC purchases when the SREC prices were considerably lower than today due to an oversupply.
The oversupply led the Maryland General Assembly to intervene and increase the in-state solar generation requirement while also increasing the renewable energy standard overall. In 2019 the increase amounted to a requirement that by 2030 50% of retail power in Maryland must be renewable and 14.5% of that must come from in-state solar. A scheduled step wise increase is set year over year.
Based on the mandates the estimated future costs 2020 to 2030, utilities will spend between $2.2 to $3.4 billion on renewable credits and $1.76 billion for in-state solar renewable credits. This may be an underestimation. In the last session of the Maryland General Assembly an increase in the solar alternative compliance payment that keeps an upper price limit on the costs in the SREC marketplace was passed.
As I mentioned there is currently a study underway to look at the feasibility of 100% Renewables for Maryland. So, future renewable energy and solar mandates will likely be rising rapidly. The other states that are part of PJM are also likely to increase renewable generation requirements. Should the penetration of solar become high enough the type of Duck Curve, (solar output high when not needed falling off rapidly just as demand increases) that is a major threat to the stability of the California’s grid, could become a reality for PJM as well.
Unfortunately, we have legislators and lobbyist not engineers designing the power supply of the future.