Maine’s fast-growing commercial-scale solar industry could spend $540 million and create 8,500 jobs by 2027 based on projects underway or in the planning stages, according to a new study.

The study, prepared for the Maine Renewable Energy Association trade group, says the actual economic impacts will depend on how much the industry is affected by labor shortages, supply chain bottlenecks, interconnection delays or public policy changes. And it estimates that spending on workers and businesses in the state could reach $970 million through 2027 based on potential capacity that developers say they aspire to install beyond what already is in the pipeline.

It also estimates that communities could receive $174 million in new tax revenue from those projects over a 20-year period ending in 2046.

The amount of installed solar capacity in Maine has jumped exponentially since 2019, when the Legislature passed bills creating unprecedented incentives to encourage commercial-scale solar projects. The purpose of the study was to quantify the economic benefits from capital and operational spending on projects installed or expected to come online between 2019 and 2027.

“This answers the question of, ‘What’s in it for Maine?’ ” said Jeremy Payne, the group’s executive director. “This is real Maine data about real Maine projects, today and tomorrow.”

Payne’s group represents wind, solar, hydro and tidal interests doing business in Maine. He said the study can serve as background for ongoing legislative review and public debate on the value of renewable energy and financial incentives. For instance: A stakeholder group representing government, industry and other interests has been meeting for over a year to make recommendations around the costs and benefits of distributed generation, the power produced at hundreds of grid-connected sources, such as solar and wind farms. The group issued a draft report to the Legislature last December. A final report is due this January.

“Some people say that renewable leads only to temporary jobs,” Payne said. “That’s why we wanted to talk about what’s in the pipeline through 2027. Thousands of jobs over the next decade, just from solar.”

IMPACT ON RATES NOT ADDRESSED

Not included in the study, however, are estimates of the financial impact of these projects on electric customers through the state’s net energy billing programs. The programs offer bill credits for power provided to the electric grid, subsidized through electric rates.

The subsidy issue was explored in 2020 by the Public Utilities Commission, which issued a report stating that net energy billing could lead to a substantial increase in electric rates, depending on how many projects ultimately were built. That was followed by a 2021 report from Daymark Energy Advisors, commissioned by the industry, that countered the PUC’s conclusion. The pros and cons of net energy billing continue to be the subject of ongoing debate.

But simply ignoring ratepayer impact in the new study is a glaring omission, according to critics of the current shape of net energy billing.

“Unfortunately,” said Bill Harwood, the state’s public advocate,  “the study focuses exclusively on the industry’s positive contributions to the Maine economy and makes no mention of the amount of subsidy provided to the industry by Maine ratepayers.”

Harwood cited estimates that net energy billing credits could raise delivery rates for Central Maine Power and Versant Power customers by as much as 30 percent if 1,000 megawatts of generating capacity come online. A better way to encourage utility-scale solar development, he said, is through a competitive bidding process conducted by the PUC.

That point was echoed by Tony Buxton, who represents manufacturers and large power users in the Industrial Energy Consumer Group. Both his organization and the Office of Public Advocate are participating in the distributed generation stakeholder process.

The solar study, he said, combines investments in both net energy billing projects and those with contracts obtained through the PUC’s competitive procurement process. The net energy costs to ratepayers range from 19 to 21 cents per kWh, Buxton said. The PUC contracted projects are in the 2.5 to 5 cents per kWh range.

“It’s almost as though one is being used to conceal the other,” Buxton said. “This is not the telling of a whole truth. The whole truth is that competitively bid solar is good for Maine; legislatively created (net energy billing) is harmful to Maine.”

In response, Payne said lawmakers would have simply shut down net energy billing if they thought it had an overall negative impact. Instead, they set up a stakeholder group, which is looking at ways to further refine the program to maximize its benefits. He expects to see fine-tuning, such as creating incentives to pair solar farms with battery storage and targeting locations, to add to their value on the grid.

Meanwhile, Payne said, the study shows clear benefits for the state’s taxpayers, in terms of employment and capital spending.

STUDY BASED ON SURVEY

The study’s projections were based largely on responses from an online survey of the trade association’s members, so it doesn’t capture additional projects planned by non-members. Surveys were sent to 82 developers and 23 support businesses, leading to 47 responses.

The study, which also did not consider the value of greenhouse gas emission reductions, was done by Ryan Wallace, a regional economist and director of the Maine Center for Business and Economic Research at the University of Southern Maine, and Michael LeVert, the principal at Stepwise Data Research. LeVert is a former Maine state economist who also teaches economics at the Muskie School for Public Service.

Some of the other key findings include:

Roughly 370 megawatts of nonresidential solar capacity will be operational by the end of the year.

To put that in context, it’s enough capacity to power more than 48,000 average homes, based on estimates of system performance and household electric use over the year by the Solar Energy Industries Association. The study’s survey tallied another 860 megawatts of capacity in the pipeline by 2027, for a total of 1,230 MW. The potential exists to boost that capacity to 2,200 MW in 2027, the study found, although this upper limit was based on developer expectations, and not specific projects.

Spending by developers between 2019 and 2027 would reach $540 million. Projects completed by the end of this year would result in $160 million in investment, with an additional $380 million forecast for projects completed between 2023 and 2027. If the projected 960 megawatts of additional capacity comes on line, it would bump up spending by an additional $430 million.

This capital investment is for workers and businesses located in Maine, not solar modules, racking or equipment from elsewhere.

SPENDING HIGHEST IN RURAL COUNTIES

Of note, spending is highest in Kennebec, Aroostook and Somerset counties, possibly related to the availability of land and grid connections. Property tax revenue also is highest in those counties, with estimates of $46 million in Kennebec, $41 million in Aroostook and $25 million in Somerset.

One key takeaway from the study is that development estimates are especially sensitive to uncertainty over public policy. In other words, changes in financial incentives, permitting and other rules could affect the feasibility of projects and could curb development.

Sixty percent of survey respondents cited uncertainty over public policies as their biggest challenge. One respondent emphasized that any changes by the Legislature in the net energy billing program should only apply to projects not yet in development.

“If these challenges can be addressed,” the study concluded, “the solar industry will continue to be a significant source of career opportunities, good wages in construction, installation, engineering and other trades; and local and state revenues to invest in local communities across the state.”