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New state law adds ‘insult to injury' for Maine solar, clean energy
It would be hard to argue that Maine’s solar incentive program hasn’t been successful in spurring the development of small-scale solar projects. Since it was established in 2019, the program, formally called Net Energy Billing, has helped bring hundreds of arrays and more than 1 gigawatt of solar power onto the grid — far exceeding the program’s 750 megawatt goal.
Where community support for the program wanes is on the issue of costs, with critics arguing that NEB has become a raw deal for Maine ratepayers who have subsidized solar development to the tune of more than $200 million annually.
Enter L.D. 1777, a bill that the Maine Legislature passed with bipartisan support last month and that Democratic Gov. Janet Mills signed into law on June 27. The administration and other proponents of the measure, including lead sponsor Rep. Sophia Warren (D-Scarborough), say overhauling the NEB program is necessary to better protect ratepayers amid rising energy prices.
“We can’t afford to let soaring electricity bills undermine public support for renewable energy,” Maine Public Advocate Heather Sanborn said in a statement applauding Mills for signing the bill. “This new law is a responsible, forward-looking reform that ensures we can continue growing clean energy while protecting Mainers from rising electricity bills.”
But solar energy advocates and developers warn that the law, which retroactively impacts projects that have already been built or are already under construction, threatens to put Maine’s growing renewable energy sector on ice.
Eliza Donoghue, executive director of the Maine Renewable Energy Association, a local trade association, called the law “penny wise and pound foolish” and “incredibly bad news” for Maine’s solar industry.
“The cost of electricity, the numbers on folks’ utility bills, we need to take those incredibly seriously and look for the many ways that those costs can be lowered,” she told The Maine Monitor.
“But one of the primary ways that can happen is by having more renewable energy on the grid in Maine and I’m very concerned that by creating an atmosphere in Maine where the Maine legislature has conveyed that renewable energy investment is not welcome here, or can not be relied on here, we have set ourselves up to not enjoy the incredible stabilizing effect that renewable energy has on energy costs. That’s incredibly disappointing.”
Among other things, the law tasks the Public Utility Commission with establishing a new credit payment structure for non-residential customers in NEB’s tariff rate program. Instead of the current structure, where rates are tied to standard utility electricity rates, they would be capped and increase at 2.25 percent annually.
When Warren introduced her bill in May, she said having the tariff rate tied to volatile natural gas and fossil fuel markets ultimately led to “unexpectedly high returns” for renewable energy developers.
“In many cases, these rates now exceed what is required for project viability and are placing an unnecessary burden on nonparticipating ratepayers,” she wrote in written testimony to her colleagues in the House.
The law also makes changes to the NEB credit program, imposing new monthly per-kilowatt fees on community solar projects ranging in size from 1 to 5 megawatts beginning next year, with larger arrays paying more to local utilities. A 1 megawatt array would pay $2,800 per month, while a 5 megawatt project would pay $30,000. The new fees do not impact projects smaller than 1 megawatt, such as household rooftop arrays.
The changes are expected to slash overall payments to existing community solar farms by approximately 20 percent and save Maine ratepayers approximately $61 million annually over the next 16 years, according to the state’s Office of the Public Advocate.
Across the board, members of MREA in the solar development space have voiced to Donoghue that L.D. 1777 will significantly impact their current projects in Maine and their future relationship with the state.
“They are likely or have already directly communicated to me that they are no longer going to look to build projects in Maine because they perceive it as too risky from a regulatory perspective,” she said.
Nexamp, a member of MREA that has dozens of community solar projects across Maine, called the law’s retroactive policy changes “a breach of economic trust” that will “permanently damage Maine’s reputation as a climate leader.”
The adoption of L.D. 1777 came as Republicans in Congress were putting the final touches on President Donald Trump’s so-called “Big, Beautiful” budget bill, which includes numerous provisions meant to stymie the nation’s buildout of renewable energy.
The federal act, which Trump signed into law days after L.D. 1777 received Mill’s signature, rapidly phases out Biden administration-era tax credits for wind and solar projects and terminates tax credits for home energy efficiency upgrades, including rooftop solar, electric heat pumps and insulation, at the end of 2025.
Together, the federal act and the new state law leave Maine’s clean energy sector in a precarious place, according to Donoghue and Kate Daniel, Northeast regional director for the Coalition for Community Solar Access, a national trade group.
“I do find that it’s been a little frustrating to hear state policymakers in Maine criticizing these federal actions when they really don’t need the help of DC to kill solar programs in the state of Maine,” Daniel said, stressing that uncertainty in the Maine market will drive clean energy investors to do business elsewhere.
As for Maine’s new, more aggressive target of achieving 100 percent clean electricity by 2040, Donoghue worries that the state now finds itself with limited options to get there.
“We’re going to be exceptionally challenged to meet those goals,” she said, adding that the combination of L.D. 1777 and Trump’s “Big, Beautiful” Act adds “insult to injury.”
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