Solar being undervalued by utilities: report
Energize Weekly, July 1, 2015
Rooftop solar owners may be getting under-compensated for the benefits their systems provide to the electricity grid, according to a new report by environmental advocacy group Environment America.
According to the report, which reviewed 11 net metering studies analyzing the value of solar, the median value of solar power was about 17 cents per kilowatt-hour (kWh). That’s five cents more than the average residential retail electricity rate, which in 2012 was just under 12 cents per kWh.
That means solar owners are likely getting underpaid for their troubles, not subsidized for them as utilities often claim, according to the report authors.
“While some utilities claim they’re subsidizing solar panel owners, our report shows the opposite is probably true,” said Rob Sargent, senior program director at Environment America and the report’s co-author. “If anything, utilities should be paying people who go solar more, not less.”
Utilities have become increasingly irate over net metering policies which require utilities to pay a fixed rate, usually the retail price of electricity, for the energy solar panel owners provide to the grid. Many utilities say that this arrangement shifts costs of operating the grid to non-solar customers, and have advocated the creation of fees so that solar customers still pay for being part of their electric grid system.
Several states, including Arizona, Hawaii, Nevada, Minnesota, and Colorado, have either implemented or proposed making changes to net metering policies to charge customers more for installing rooftop solar systems. In Hawaii, the state’s largest utility, Hawaiian Electric Co. (HECO), has proposed ending its net metering policy and replacing it with an alternative tariff structure. In Minnesota, lawmakers recently passed an energy bill which allowed municipal utilities and co-ops to start charging a “reasonable and appropriate” fee to solar customers.
To calculate the value of solar, the studies cited in the report reviewed a wide variety of factors, including both the immediate cost of solar energy and the larger benefits of distributed solar generation, including avoided environmental compliance costs, grid resiliency, reduced financial risk and avoided capital investments. Overall, eight of the 11 studies found that installing solar is more cost effective for the grid and ratepayers than retail electricity, while the three studies that did not took a more narrow approach of tabulating the “avoided costs” of delivering electricity via increased rooftop solar penetration.
Depending on the factors included, the studies put a value on solar ranging from 3.56 cents by Arizona utility SAIC, to 33.6 cents by the Maine Public Utilities Commission.
Environment America says that the country is “nowhere near” the solar capacity the nation can support, and that if every state captured a tenth of a percent of their solar capacity, the country would be getting 10 percent of its energy from the sun by 2030. It recommended that state regulators evaluating benefits and costs of solar to consider a methodology which includes environmental and societal benefits, and to reject alternatives to net metering that do not provide residential and business customers full and fair compensation for the value they provide to the grid. It also says that state and local governments should ensure that the ability to take advantage of net metering policies is available to every possible resident, whether through individual home installations or via community solar options which allow residences unsuitable for solar to be part of solar installations.