Guest Blog: Capacity Charges Drive Up the Cost of Electricity for Customers Across New England

Controlling Peak Usage Through Variety of Measures Can Help Mitigate the Impact

By Liam Sullivan, Vice President of Marketing & Communications at PowerOptions

Customers across New England are seeing an increase in their electricity costs, even as the electric commodity price has remained relatively stable. This is due in large part to an increase in capacity costs. Capacity charges were about 10-15% of the electricity supply portion of the bill for the 2016-17 power year (June 1 – May 31) but have increased to as much as 25-30% of electric supply costs for the 2017-18 power year and similar for 2018-19.

Generation capacity charges are costs imposed on all customers by the electric grid system operator, ISO-NE (the Independent System Operator of New England), to ensure that the region has enough power to serve the maximum customer demand, typically on hot summer afternoons.

Customer capacity charges are used to compensate electricity generators for the need to remain ready and available with adequate generation. This is especially important today, as a number of power plants in New England have recently retired or are on the verge of doing so. This compensation allows marginal power plants—ones that may not necessarily be economical in the competitive market—to remain open until new generation or other resources are available to meet power requirements at the maximum demand.

ISO-NE divides New England into three power load zones: Northeastern Massachusetts (NEMA); Southeastern Massachusetts (SEMA); and Rest of Pool (ROP), which includes Western Massachusetts, Rhode Island, Connecticut and Northern New England. Capacity costs are determined through an auction, where generators bid to serve the load in each zone for a specific 12-month time period.

The graph below shows the impact of capacity prices for each zone over time.

Capacity charges are imposed on all customers, but the amount charged varies based on each individual customer’s usage, measured by ISO-NE on the hour of peak demand. That measurement is called an ICAP Tag or capacity tag, and it indicates the amount of generation ISO-NE needs to allocate for that specific customer. As we enter the hot summer months, customers who can manage their usage on potential peak hours can mitigate capacity charges by lowering their capacity tag.

So how do customers go about lowering a capacity tag?

On-site solar generation is a great way to manage usage during peak hours. Since solar panels will be generating at high levels during hot summer afternoons, it should be a seamless operation. Some customers utilize other forms of on-site generation or have advanced demand management systems to allow them to effectively control power usage. But even without sophisticated demand management equipment, there are some simple steps that you can take to help lower usage at those peak times.

By taking some action, your initial benefit will be a lower electric bill, and the future benefit will be a reduced ICAP Tag, which will decrease your electricity costs into the future. Those actions can include:

  • Turning off lights in unused spaces;
  • Raising the thermostat a couple of degrees, or cycling the compressors and just leaving the fan on;
  • Shutting off computers and other office equipment that is not currently in use; and
  • Closing the blinds and any exterior or interior doors that would affect the loss of cooling.

For more information about various energy efficiency options for businesses and institutions in Massachusetts, check out the Massachusetts Department of Energy Resources.

About PowerOptions

PowerOptions is a nonprofit energy buying consortium that delivers cost savings and predictability to nonprofits and the public sector in New England. Our 500 members benefit from energy supply offerings for electricity, natural gas and solar. An added value, PowerOptions provides members with alerts on potential times of peak demand to help them to manage their capacity tag. Members participating in PowerOptions ICAP Tag Reduction Program can earn rebates for reducing their capacity tag by 10% or more—in 2017, certain members earned rebates of nearly $50,000. Established in 1998, any nonprofit or public institution in Massachusetts, Rhode Island and Connecticut is eligible to participate in this collective purchasing effort. For more information, visit www.poweroptions.org or follow us on Twitter at @PowerOptions.

Gaston Electrical Partners with Solect Energy to Bring Solar Energy to Norwood Headquarters

Companies partner to encourage sustainable practices, save on costly energy charges

gaston-electrical-solar-array-solect

Norwood, MA – August 15, 2016 – Gaston Electrical, an electrical contracting company serving the commercial, institutional, and retail markets in New England, has partnered with Solect Energy, the state’s leading installer of solar energy for businesses, to install a 175.8 kilowatt (kW) solar system, consisting of 676 panels, on the company headquarters’ roof in Norwood, Massachusetts. The installation will advance Gaston’s ongoing initiative to increase its sustainable practices and make a positive environmental impact in the area.

“As a prominent electrical contractor working on some of the largest development projects in the Boston area, we understand the importance of clean energy for the environment and for tenants and property owners seeking to occupy or operate more efficient buildings,” said Bill Weber, Jr., Principal at Gaston Electrical. “Our headquarters in Norwood, MA features a large flat roof, which presented an untapped resource and perfect opportunity for a solar system.”

Since completion of the installation in March of 2016, Gaston has already produced more than 92,000 kilowatt-hours (kWh) of solar energy on its 22,000 square foot roof, helping to eliminate 55 tons of carbon dioxide emissions from the atmosphere. The company expects to see significant savings on electricity costs in its first year of production.

“It was a pleasure working with Gaston Electrical to position the company as a leader in solar adoption in the region,” said Brian Herr, Vice President of Sales at Solect. “Not only is the system a cost-effective choice for Gaston, it represents a big step forward toward their goal of being one of the greenest companies in the area.”

Many of Gaston’s projects are within energy-efficient and LEED-certified buildings. This exposure was a significant factor in the company’s decision to develop its own green program. Prior to installing solar, Gaston implemented other environmental initiatives including motion-activated lighting throughout its headquarters, and similar efficiency systems designed to conserve resources.

Recently, Solect Energy was named number 92 out of 500 solar companies in the nation and the number one commercial-scale contractor in Massachusetts by Solar Power World.

About Gaston Electrical

Since 1934, Gaston Electrical Co., Inc. has been successfully providing union electrical contracting services to the commercial, institutional, and retail markets throughout the Greater Boston area. We collaborate with our clients and partners to deliver innovative solutions for complex projects. Our company leadership, electricians, and technicians build trust through best-in-class services, quality workmanship, safety practices, and reliability. For more information, visit http://gastonelectrical.com/ or follow us on Twitter at @GastonElec and Facebook at Facebook.com/GastonElectrical.

Why MA is Among the Most Solar Friendly States in the U.S.

Top Solar States - MA Rank 2015 SEIA

After several years of state incentives and private sector investment, Massachusetts has emerged as one of the nation’s top solar states. According to the Solar Energy Industries Association (SEIA), Massachusetts ranks in the top ten solar states in the United States with 1,020 megawatts (MW) of solar installations, enough to power 163,000 homes. And we trail only California for highest number of solar jobs at 15,095 (Massachusetts and California combined make up more than 60% of solar jobs in the top ten solar states, and more than 40% of solar jobs nationwide). Let’s examine the factors that make Massachusetts so solar friendly.

Strong Solar Policies & Incentives

Massachusetts’ solar market is influenced heavily by progressive solar policies including net metering and incentives such as Solar Renewable Energy Certificates (SRECs). One SREC can be earned for every 1,000 kilowatts generated by a business’ or homeowner’s solar PV system. For instance, under the current SREC-II program, SRECs are worth up to $285, depending on the current market. Also, in Massachusetts, net metering accounts for much of solar’s cost-effective benefits to commercial businesses. And while the net metering cap has been raised to address the growing demand for solar, the state is currently grappling with creating a long-term solution to constantly bumping up against these caps.

In addition, organizations like Solarize Mass works with The Massachusetts Clean Energy Center (MassCEC) and the Department of Energy Resources (DOER) in cities including Medfield, Natick, and Somerville to build awareness of solar energy and its benefits. The group works to increase the amount of small-scale solar systems through an educational campaign that is led by volunteers. The organization’s efforts have led to 2,700 residents and business owners in 51 cities and towns signing contracts for small-scale solar energy systems.

The State’s Own Solar Grid Capacity

Just last year, Massachusetts installed 340 MW of solar electric capacity, which ranks fourth in the nation for solar capacity. Furthermore, the state has the potential to host an additional 8.7 gigawatts of solar photovoltaic generating capacity, lending enormous growth potential.

If solar in Massachusetts continues on its current rate, the state is on track to reach its goal of obtaining 10 percent of Massachusetts’ energy from solar by 2030.

The High Cost of Electricity and a Great Low Cost Solution

In Massachusetts, commercial electricity bills average $525/month [1] depending on the time of year, making electricity rates among some of the highest in the US. With costs like these, people have an incentive to switch to solar, which would ultimately save them money in the long run.

Under net metering regulations, if you generate more energy than you are using, that excess energy is “sold” to the grid, enabling you to collect a credit from your utility company for the energy that you contribute. Traditional utility costs can be unpredictable and especially high in Massachusetts, so many have made the switch to solar in order to stabilize and reduce energy costs.

Massachusetts is expected to install 2,430 MW of solar capacity over the next five years, which is more than three times the amount of solar installed over the past five years.  With production like this, it’s likely Massachusetts will maintain its status as a solar powerhouse, helping to cut costs for consumers, make businesses more competitive and cutting down on fossil fuel use, which is critical to the planet’s future. That’s a win-win-win for the Bay State and its consumers.
[1] http://www.electricitylocal.com/states/massachusetts/boston/

Go Solar in MA - Contact Solect Energy

Solect Energy Launches Expanded Solar Service Program

Hopkinton Company to service existing solar projects statewide

Solect-solar-maintenance-services

JUNE 15, 2016 – Hopkinton, MA – Solect Energy, the leading full-service commercial solar company in Massachusetts, is announcing the launch of its Solar Service program which offers a comprehensive suite of operations & maintenance (O&M) services. Solect has always been responsible for the maintenance and management of the solar arrays it designs and builds, and has expanded both its capabilities and reach with this new program, offering a multitude of solar maintenance services to any commercial-scale installation in the New England area.

“It’s a logical next step for the company to venture into the solar service space,” said Steve Bianchi, General Manager of Solect Services. “Solar has become so popular in recent years and we’ve seen a significant increase in new solar installations across the region. Those new arrays need to be maintained on a routine basis in order to operate as they are supposed to and generate projected return on investment for each system owner. We have extensive solar service experience, and with investments we have made this past year we are positioned to fulfill O&M needs to more solar system owners.”

The comprehensive Solect Services program offers a full operations & maintenance package, with increased capabilities and standardized offerings for solar arrays. Solect’s suite of solar services includes preventative maintenance, corrective maintenance, solar performance monitoring, SREC management, and net metering management, along with less technical services such as landscaping and cleaning to ensure optimal energy production.

The expansion of the Solect Services division has already bolstered the company’s operations & maintenance project portfolio; Solect is currently managing 22 solar installations under the fledgling program, and has seen rapid program growth since its implementation. Recent customers outside of its own installation base include Equity Industrial Partners’ 2 MW rooftop solar array in Danton, MA and Carlstrom Pressed Metals’ 625 kW solar field in Westborough, MA

“Much energy is expended on the development of solar projects and on-going Operations & Maintenance is often overlooked,” said Matt Henretta, Property Manager at Equity Industrial Partners. “Solect has made protecting our investment a point of emphasis. The Solect team has demonstrated a thorough understanding of what it takes to keep an array running optimally.”

In light of the expansion, Solect has broadened its services team, hiring several new employees and purchasing diagnostic tools to better analyze the performance of our customer’s solar systems. Solect now boasts a core team of experienced solar professionals dedicated to monitoring, maintenance, and coordination for the services department.

Solect offers solar services to customers of all sizes, from 50 kW rooftop systems to multi-megawatt ground-mount projects.

Solect Energy Announces New Additions to Growing Team

Strategic hires reflect the company’s growth and enhance Solect’s business development, advocacy and energy solutions expertise and offerings

Hopkinton, MA —August 25, 2015 —Solect Energy, the leading full-service commercial-scale solar company in Massachusetts, announced today that the company has brought on three new senior and strategic hires to accelerate the company’s growth and expand its offerings to its commercial and institutional customers. Solect hired Matthew Shortsleeve, Senior Business Director of Development Services, to expand and lead the company’s third-party financed project business; Brian Herr, Vice President of Business Development, Public Sector & Education will advance the company’s development efforts for non-profits; and, John Mosher, Vice President of Energy Solutions, will help offer customers comprehensive energy management solutions.

“We are thrilled to welcome Matthew, Brian and John to our growing team at Solect,” said Ken Driscoll, Founder and CEO of Solect. “In addition to having extensive knowledge of the energy space, these three individuals have demonstrated experience in overall business development and will be fantastic assets as we continue to expand our offerings to business and institutional customers throughout Massachusetts.”

 

Matt Shortsleeve Solect EnergyPrior to joining Solect, Matthew Shortsleeve was the regional director of the northeast U.S. region for RGS Energy and held the same position with Mercury Solar, which was acquired by RGS in 2014. Shortsleeve will be responsible for leading Solect’s project development business, working with the Solect sales team, directly with key account clients, and with strategic partners. Shortsleeve brings a deep understanding of the solar industry, specifically in terms of financing solutions from owner financed to Power Purchase Agreements (PPAs) and Net Metering Credit agreements.

 

Brian Herr Solect EnergyBrian Herr comes to Solect after having worked in the electrical manufacturing and distribution industries for 30 years. He began his career with Westinghouse Electric Corporation as a Sales Engineer calling on electrical contractors and general contractors throughout New England and held various sales, sales management, marketing and general management roles in Massachusetts. Beyond his professional career in the electrical industry, Herr has been involved in local, state and federal government activities including several political campaigns for elected office. In his role at Solect, Herr will lend his expertise to engage the public sector and oversee the company’s efforts towards energy development and “best practice” energy management for the company’s small and medium-sized business and institutional customers.

John Mosher Solect EnergyJohn Mosher has over 20 years of product design, development and commercialization experience and he has helped manage several high profile clients over the years. In his new role, Mosher will leverage these skills to help develop comprehensive energy management solutions for Solect’s customers and to help manage and deploy energy strategies more effectively. Mosher will be responsible for identifying alternative and key technologies to assist in energy storage, and efficient and economic energy reduction/use, which is an increasingly important area for the solar industry.

 

 

Solect Achieves 20 MW of Installed Commercial-Scale Solar PV Systems

The full-service solar PV project developer and installer has now completed 150 projects for small to medium-sized businesses and organizations that help save money, control energy costs and benefit the environment

Hopkinton, MA —July 21, 2015 —Solect Energy, a leading full-service solar PV project developer and installer serving business and institutional customers, today celebrated achieving 20 megawatts (MW) of solar power through more than 150 completed commercial-scale projects. The company’s significant market growth and expansion underscores its commitment to helping small to medium-sized businesses, manufacturers, schools and municipalities throughout Massachusetts save money, generate revenue, and support the environment by delivering smart solar solutions.

“This is an exciting milestone for Solect Energy, which has grown by successfully working with a historically underserved market, small to medium-sized businesses, not-for-profit organizations and municipalities,” said Ken Driscoll, Founder and CEO of Solect. “Massachusetts manufacturing companies, commercial enterprises and institutions operate with tight budgets and require customized solutions to gain the maximum return on their capital investments. We are proud that all of our customers view us as a long-term, trusted advisor that will guide them through all phases of the process including feasibility, financing, installation and ongoing system support – with many of these customers coming back to do a second system with us or referring us to their professional network.”

Among the 150 completed projects contributing to Solect’s growth is Joseph P. Sullivan & Co., Inc. (JP Sullivan), a family-owned packer and shipper of local apples grown in New England and Eastern New York. Solect recently completed a 260 kilowatt (kW) solar energy system on the roofs of JP Sullivan’s Ayer apple packing and storage facilities. This project, combined with an earlier 99.5 kW solar project with Solect atop its office building, will cover more than 75 percent of the company’s electricity use.

“When we first looked at solar with another developer five years ago, the economics did not make sense. However, with today’s financial and tax incentives in Massachusetts, a strong business case emerged,” said Ned O’Neill, Vice President at JP Sullivan. “As a medium-sized, family-owned business, Solect has made it easy for us by providing a turnkey solution that laid out all of our options. We view Solect as a strong long-term partner that will help ensure that our business reaps the significant economic and environmental benefits of solar energy.”

At the individual business level, energy is one of the biggest budgeting challenges faced by a company or institution. Solect delivers solar and financial solutions that not only reduce the overall energy costs for our customers, but also provide long-term budget stability. This has helped Solect’s customers improve cash flow and make capital budgeting more predictable, which in turn can help them drive better credit terms and increased capital investment, business growth and more jobs.

In addition to the economic benefits, there are significant environmental benefits to Massachusetts associated with Solect’s installation 20 MW of commercial-scale solar systems including greenhouse gas reductions that are equivalent to taking over 3,200 cars off the road or reducing over 5,500 tons of waste sent to a landfill.

To learn more about the other benefits associated with our 20 MW installation milestone, you can view our fact sheet at https://solect.com/20mw/.