Maine Delays: Why Is Community Solar Moving So Slowly?

Maine has been experiencing longer than usual delays in bringing community solar online. While some of the issues like equipment shortages or old electrical grids are experienced in other states there are a few issues that are unique to Maine. From utility companies gumming up the works to shifting state policies and regulations, Maine has had a rockier start than other states.

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As many Mainers know, community solar has faced more hurdles and delays than other states to bring projects online. While some delays are expected in any infrastructure project, a perfect storm has formed over Maine’s community solar market. Some of the problems are not unique to Maine—the ongoing impact of the pandemic for example has certainly impacted the solar industry’s supply chain.

However, the major forces impacting Maine projects today can be categorized into a few buckets: Maine’s policy and regulatory uncertainty, transmission-level uncertainty, and utility interconnection uncertainty.

Any industry relies on a degree of stability in a market. Risk is always present, but responsible businesses know how to mitigate risk to operate effectively. When Maine passed community solar legislation in 2019, the legislature thought the distribution grid maintained by Maine’s major utilities, notably Central Maine Power (CMP), was in a position to add solar resources to it at a reasonable interconnection cost to solar developers. Unfortunately, this wasn’t the case.

It also underestimated the massive interest the program would generate. Now years later, policies have changed, utilities have gone back on their original agreements, and many projects are delayed pending additional studies to determine impacts to the electrical grid.

Mainers are now encumbered with an imperfect program, utilities that are ill-equipped and (in action if not verbally) opposed to renewable energy development, and an old grid that needs considerable updates to bring renewable energy online in their state. These are the challenges developers are dealing with to build community solar projects, bring down electricity costs, and help the state meet its ambitious renewable energy goals.

Maine’s policy and regulatory uncertainty

There have been significant and retroactive changes to the community solar program called Net Energy Billing (NEB). The program was initially created in 2019 without a cap on how much capacity could be added to Maine’s energy grid. A cap is used in most community solar programs to slowly scale up the renewable energy sources providing power to the grid, so the additional intermittent power doesn’t overload the system.

Maine unfortunately underestimated the interest their program would generate and there was an influx of projects looking to be connected. A few things happened at the state level that created uncertainty and caused considerable delays to project approval:

  1. Retroactive changes to the community solar program. The original process for accepting projects was ruled uncompetitive and a new structure had to be implemented.
  2. An amendment capped the program at 750 megawatts (MW). The legislature imposed a cap on the existing program, but over 1400 MWs worth of projects had sufficient qualifications to be included. This effectively killed nearly half of otherwise healthy projects overnight.
  3. An amendment that reformulates the way projects are valued. The legislature altered the formula which changed the way a solar project is valued.

Vagueness in public policy introduces uncertainty to the development of projects. Uncertainty has caused delays in financing projects, subscribing customers, and delays in construction.

Nearly every community solar project in Maine is experiencing this.

Interconnection issues with the distribution utility

Before a project comes online, Maine utilities like CMP conduct system impact studies which determine what upgrades and equipment are needed to integrate it smoothly. These costs vary depending on location and project size but usually range between $100,000 and $600,000. After the developer and the utility come to an agreement on the costs to install connection equipment and upgrade a substation, for example, an interconnection agreement (IA) is signed and the project moves on to the next step.

In any state, community solar developers meet delays when dealing with the utility. Maine utilities however, and particularly CMP, caused a logjam. It wasn’t entirely their fault—several distribution utilities in Maine were not familiar with processing interconnection applications and were understandably inundated with over a gigawatt of applications overnight. What they did have control over was the seemingly arbitrary 100 to 200 percent increases in cost for interconnection.

This began a lengthy back-and-forth between the developer and CMP. Because developers—including those that Perch partners with—are experienced in other markets, they had a good sense of how much it should cost to connect to the grid. When considering costs, developers hire engineers to determine the most efficient way to connect a project and get a sense of what a fair price should look like, though the utility has the final say on what the cost would be.

When presented with prices that would bankrupt the project, developers have had to negotiate to get to a price that wouldn’t kill the project, underwrite the project again, and make a case to the project’s financier about the changed economic reality.

Arduous as it is, this process continued after the state amended the program or changed regulatory policy, and the negotiation would start all over again. This delayed projects even longer.

Because CMP had increased interconnection costs for every project overnight, there was a significant uproar in the solar industry against CMP with calls for an official investigation. Under all this pressure, CMP backtracked and suggested it could perform upgrades at a cost in line with a reasonable expectation.

Unfortunately, CMP is not incentivized to be efficient.

Transmission issues and cluster studies

On the transmission side of the grid, the Independent System Operator (ISO) of New England needs to conduct a technical review called a cluster study to ensure the addition of intermittent energy projects can connect to the grid while maintaining the reliability of the regional electrical system. These studies look at a group of projects that are aiming to connect to a substation and the transmission corridor. Currently, there are 21 cluster studies, 18 of which are in CMPs territory and three others in Versant’s territory.

All cluster studies have varying timelines and costs. They take much longer and constantly are pushed back months at a time, which is all the worse when CMP drags its feet to provide ISO New England with information. Cluster studies are the primary reason for the lack of visibility a developer has in knowing when the project will be completed. Sometimes the costs for a transmission upgrade will eliminate entire groups or portfolios of projects.

As it stands, nearly 200 projects across Maine are awaiting results from cluster studies.

Equipment and permitting delays

Project owners are having trouble procuring the equipment needed to construct solar projects like solar panels, racking, and inverters. This issue is often related to the pandemic’s ongoing impact to supply chains. While frustrating, this problem is expected to lessen as the world recovers from the shock to the system that was COVID-19.

Additionally, various permits for solar arrays have been applied for and approved. But because it has taken a long time to both build and bring projects online, some of those permits may expire and need to be renewed. While a comparatively easier problem than navigating an ever-changing policy and regulatory environment, it still takes time to renew those permits.

A community solar farm

The future of community solar in Maine

It is clear that there are considerable issues at play for community solar in Maine. As the solar industry grapples with utilities, the state’s policy framework, the grid, and the economy in general, one may find themselves squinting to see a silver—or silicon—lining. Though the timeline for community solar has been pushed back, many of the problems are often hurdles rather than roadblocks.

Projects that were sited well in their planning phase can still be built, generate clean renewable energy, and provide substantial energy savings for their subscribers.

Additionally, Maine is working on a framework for a successor program. On one hand, this poses yet another shift in policy and regulation, but on the other, it could be a chance to fix some of the equation to make community solar more organized for the Pine Tree State.

Right now, Perch is working hand-in-hand with some of the most experienced project developers in Maine to keep customers informed. It is also worth mentioning that Perch and community solar developers informing advocacy groups of issues to ensure Mainers have greater access to renewable energy.

In the meantime, Perch will keep its subscribers updated while developers work to keep projects afloat. Perch and its developer partners remain committed to clean energy for Maine as not only a goal, but as an imperative.


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