DC Residents Need Access to Affordable Solar Energy

Testimony of Lara Levison
Sierra Club DC Chapter
DC Council Committee on Transportation & the Environment
Public Hearing on the Local Solar Expansion Amendment Act of 2022 (B24-950) and the Building Energy Performance Standards CREF Amendment Act of 2022 (B24-938)
October 3, 2022

Thank you, Councilmember Cheh, for the opportunity to testify today about the role of solar energy and energy efficiency to meet DC’s climate commitment of carbon neutrality by 2045. My name is Lara Levison, I’m the Energy Committee Chair for the DC Sierra Club, and I’m testifying on behalf of the organization.

The Sierra Club has about 3,000 dues-paying members in DC, and for decades we have been a leading advocate for climate action in DC. We are a strong proponent of local solar production in the District. However, we cannot support the Local Solar Expansion Act of 2022 (B24-0950) or the Building Energy Performance Standards CREF Act of 2022 (B24-0938) as currently conceived.

Several years ago, the Sierra Club joined with a broad coalition of environmental justice and national environmental groups to release the Equitable and Just National Climate Platform. The platform commits the Sierra Club nationwide to improve the public health and well-being of all communities while tackling the climate crisis. The shared vision and goals of the platform include access to reliable and affordable electricity. Thanks to the tremendous decline in the cost of utility-scale solar and wind power capacity, renewable power can be procured at very affordable rates. However, the subsidy for locally-produced solar in DC is the highest in the nation.  

DC electricity ratepayers would bear the increased costs of compliance under the Local Solar Expansion Act. This is because the cost of the Solar Renewable Energy Credits (SRECs) and alternative compliance payments is added into customers’ bills by Pepco, or into the cost of electricity provided by alternative electricity suppliers, and paid by everyone who purchases electricity in the District. Electricity costs would rise significantly for all ratepayers but would be most impactful on low-income residents. Low-income households spend a disproportionate amount of their income on energy and are facing historically high levels of energy burden, compounding the general crisis in cost of living faced by the District’s most vulnerable residents.

According to the calculations of an economist who is a Sierra Club member, assuming SRECs maintain a value around $400, the impact increasing the local solar carve out per Solar Expansion Act in 2030 would be to raise the cost to ratepayers of the Renewable Portfolio Standard (RPS) from 2 cents to 3.1 cents per kWh. In that year, the RPS will likely already cost ratepayers nearly $200 million; this bill would raise the cost to ratepayers to roughly $300 million. For a DC household using 10,000 kWh of electricity per year, the impact of the RPS on the annual electricity bill rises from $200 dollars to $300 dollars.

The impact in 2040 would be to raise the cost of the RPS from 3.8 cents to 5.7 cents per kWh of electricity. In that year, the RPS will already cost ratepayers an estimated $372 million; this bill would increase the cost to about $558 million, an increase of about $186 million. Our testimony includes a spreadsheet showing the rate impacts of this bill. For customers like me, with a good income and solar panels on my roof that I own myself, these are manageable costs. For customers who are barely getting by, this would be a significant hardship.

DC has the highest prices for solar renewable energy credits (SRECs) in the country, peaking at over $400 per credit earlier this year. Even factoring in recent price fluctuations that prompted the Local Solar Expansion Act’s introduction, DC SRECs are currently priced more than 20% higher than the second-highest market. They are triple the average price among states with a local solar carve out and SREC market, which range from the mid-$200s per credit down to below $4.^[1]

Increasing the subsidy for local solar would also have significant opportunity costs; the same amount of solar energy could be purchased for a fraction of the cost from neighboring states with larger-scale projects. The District could get a much higher return on investment through energy efficiency measures within the District. Furthermore, increasing the cost of electricity to ratepayers would undermine critical efforts to replace polluting fossil fuel appliances with clean and efficient electric appliances such as heat pumps for heating and cooling in our homes and businesses.

There are many reasons to promote DC’s continued clean energy leadership through a robust local solar industry. But there are more effective ways to support local solar adoption, including:

• reasserting public control over the District’s energy infrastructure by proactively combatting Pepco’s obstruction of solar expansion (through interconnection and permitting costs and delays) and increasing transparency and accountability over administration of key programs like Solar for All;

• developing a systematic approach to modernizing the energy grid that incorporates the various anticipated sources of solar input, ensures upgrades are distributed equitably across different neighborhoods, and sets definitive timelines for upgrading capacity across the District;

• improving the government-controlled elements of the solar development process (such as adopting of automated permitting);^[2] and

• providing resources to make sure the solar incentives available from the Inflation Reduction Act are known to and easily accessible to households and businesses.

Such measures focus resources into producing solar energy and away from navigating bureaucratic obstacles. They leverage funding from sources other than ratepayers. They also reflect the economic reality that the U.S. solar industry has grown dramatically and that solar production has gotten much cheaper; average U.S. residential and utility-scale solar costs decreased 65% and 85%, respectively, from 2010 to 2021.^[3] Experts expect costs to continue to decline. As the underlying dynamics change, so should our policy approach, shifting from direct subsidy to investments in infrastructure and process improvement.

If the Council proceeds with some iteration of the Local Solar Expansion Act, it is imperative that it include a cost protection mechanism. The most straightforward method is to keep the proposed phased increases to the local solar carve out, but instead of eliminating the phasedown of the alternative compliance payment (ACP) as the bill contemplates, the ACP phasedown should be accelerated in proportion with the increases in the solar carve out. For example, in 2024, when the proposed legislation would increase the solar carve out to 3.65% of the Renewable Portfolio Standard (RPS) from 3.15% under current law, the ACP should proportionately decrease from $400 per megawatt hour (MWh) (under current law) to $345/MWh. The same calculation should apply throughout the scheduled increases in the carve out and corresponding reductions in the ACP, such that after 2041 the solar carveout would stabilize at 15% and the ACP at $200/Mwh.

Proportionally adjusting the ACP will keep the cost to ratepayers constant, while still encouraging a larger proportion of the District’s energy to come from local solar and maintaining DC’s SREC market as one of the highest priced in the country. The Sierra Club is open to other methods of protecting residents from escalating costs, as long as they incorporate consideration of and collaboration by all relevant stakeholders.

Amid high inflation and displacement due to the high cost of living in the District, we cannot add to ratepayers’ energy burden. DC already has a strong solar energy presence, and to the extent funds are raised from ratepayers, there are more cost-effective ways to promote our larger clean energy and climate goals than further subsidizing local solar generation. To act otherwise violates fundamental equity principles and jeopardizes the broad coalition needed for a just clean energy transition that is both supportive of and supported by all of the District’s residents, rather than favoring one particular industry.

With respect to the BEPS CREF Act, we echo the sentiments of local advocates, energy efficiency experts and the Department of Energy and Environment in opposing weakening the Building Energy Performance Standards (BEPS), one of the District’s proudest policy accomplishments. The goal of BEPS is to encourage energy efficiency and reduce the total amount of energy consumed by buildings. Increasing rooftop community renewable energy facilities should be in addition to those efforts, not pitted against them. Energy efficiency is by far the most effective way for the District to reach its climate goals, and BEPS is an important part of encouraging and normalizing best energy efficiency practices across the real estate industry. We are in favor of exploring other ways to promote rooftop solar, but not at the expense of the critical initiatives embodied in BEPS.

Thank you, Councilmember Cheh, for the opportunity to testify today. The Sierra Club very much appreciates your 16 years of environmental and climate leadership on the DC Council and we look forward to continuing to work with you in the coming months.