Vermont regulators refused to issue a permit for a 500-kW solar net-metered system because it could displace existing, less expensive renewable energy generation along a constrained transmission corridor.

In what could impact other projects and future renewable developments in Vermont, the Vermont Public Utility Commission on Jan. 24 denied Derby GLC Solar's application for a certificate to build and operate a 500-kW alternating-current solar net-metering system because the developer failed to show it was in "the public good of the state."

In doing so, the regulators addressed the "fundamental question" of "whether to allow the displacement of existing, lower-cost renewable energy with new, higher-cost renewable energy, in an area where the transmission system is already overloaded and where demand for electricity is low."

The PUC recalled that the proposed Derby solar project sought to be located in rural northern Vermont's so-called "Sheffield-Highgate Export Interface" area that is experiencing costly constraints.

"In this largely rural area, output from existing renewable energy plants often exceeds electric demand," the order said. "Further, the capacity of the electrical transmission lines leading out of the area is not sufficient to transport the excess power without jeopardizing the reliable operation of the electrical grid."

In addition, the order said the Vermont Department of Public Service, or DPS, Vermont Electric Cooperative Inc., and Énergir LP utility Green Mountain Power Corp. all agreed that the project would require the curtailment — or reduction — of existing, less expensive renewable generation at the expense of customers and contrary to a comprehensive energy plan the DPS adopted in 2016.

"Curtailment arises when the transmission lines in a particular area are at risk of being overloaded," the order said. "When that occurs, the regional grid operator [ISO New England] requires certain generators, typically with a capacity of 5 MW or larger, to curtail (reduce) their electrical output to ensure reliable operation of the transmission system."

The Derby solar project would increase the curtailing of the local area's existing large generators, which cost less to run and are almost all renewables, "during small, but meaningful, periods" while the proposed solar project itself would not be subject to curtailment, the order said.

"Such a trade-off, whereby a new, more expensive generator displaces already existing — and less expensive — renewable energy, would harm Vermont utilities and customers," the PUC said. "The project therefore fails to comply with two of the explicit requirements for approval" of Vermont statutes not to cause "undue adverse" harm on Vermont utilities and customers or violate the state's energy plan.