Merchant solar facilities could see new rules amid boom
Utility-scale solar is booming in Kentucky, but the regulations that govern these merchant operators were designed for a different era. Now, a state senator is trying to update those rules to balance the interests of communities and an emerging industry.
Merchant generating facilities are governed under rules separate from regulated utilities that typically provide power to Kentuckians. These merchant facilities have at least 10 megawatts of generation capacity, sell their power on wholesale power markets and submit to regulation under the Kentucky Public Service Commission’s siting board.
But the rules for merchant generators weren’t originally designed for solar — they were designed for smaller coal plants that were selling power to wholesale markets, and later updated to include wind, said Tom FitzGerald, Kentucky Resource Council senior environment attorney. He actually helped to draft the original law.
“It needed to be updated to address some of the specific issues that are arising because of the development of utility-scale solar,” he said.
Now, though, more and more solar facilities are expressing interest in building in the Commonwealth. In the last three years, at least 17 facilities have already received approval from the state’s siting board and another dozen have applied or filed notice they intend to apply, according to the PSC. Legislators like Sen. Paul Hornback, of Shelbyville, say it’s time to update the rules.
The PSC siting board currently takes into consideration economic impacts, local planning and zoning requirements (if there are any), setback requirements and a history of environmental compliance. The board has often also required these facilities to have money set aside to manage the costs of decommissioning a plant at the end of its useful life.
Senate Bill 69 would codify that language so that all merchant facilities have these bonds.
Hornback, a Republican and the bill’s sponsor, has been meeting with solar companies, residents and other stakeholders since last summer to draft new rules that balance the interests of those involved.
At a committee meeting Wednesday, Hornback said this is important to make sure local taxpayers aren’t left holding the bag, the way coal communities often have been when companies go bankrupt or abandon mines without properly cleaning them up, leaving behind extensive environmental pollution.
“I personally don’t want to be on the hook for decommissioning 10 years, or 20 years from now,” he said. “I don’t want the state, who is ultimately going to be the one to pay for these clean-ups on oil and gas wells, everything else… I think it needs to be on the companies.”
Hornback said the other driving purpose of the bill is to put more power in the hands of the local government to make decisions about solar fields in their community.
“A lot of the things we have in this bill, the locals can take precedent over that,” he said.
Evan Vaughan, deputy director of the Mid-Atlantic Renewable Energy Coalition Action, expressed concerns that the legislation in its current form could lead to merchant facilities having to hold two separate bonds for clean-up, one at the local and one at the state level.
He also said the industry has concerns about the ability of an enforcement agency to shut down an already operating facility if it’s not in compliance with the law — a problem that could affect the power grid.
“We recognize the needs for enforcement,” he said. “[But] having a government impose suspension of an energy generating project can have very significant knock-on implications financially or otherwise.”
A Senate committee passed the bill Wednesday, but Hornback said it’s still in the process of revision.
FitzGerald said he thinks a bill will emerge that provides important clarifications, codifies a lot of what the siting board is already doing and clarifies the relationship between local planning and zoning and the state siting board.