Debate Over Rooftop Solar Set To Shape The Industry’s Future
The Utah Public Service Commission has been hearing a case for the last week that could dramatically alter the future of rooftop solar in the state. At issue: the price solar owners get for power they generate and send back to the grid.
As it stands now, solar customers receive 9.2 cents per unit of energy they send back to the grid, measured in kilowatt-hours (kWh). But the hearing will set a new price for that credit, likely decreasing it to somewhere around the variable rate Rocky Mountain Power is proposing — between 1.52 and 2.2 cents per kWh, adjusted with energy demand.
It’s a subject that’s been under debate in Utah since 2014, and one playing out across the country, as utilities grapple with an evolving energy market. And while many studies have attempted to put a dollar value on rooftop solar, none seem to have settled the matter conclusively.
A More Expansive View of Solar
In Utah, solar advocates argue the reduction Rocky Mountain Power is proposing will be among the most regressive in the country. It would make installing solar panels less attractive financially in a sun-rich state, and likely reduce the number of homes and businesses that adopt it.
More than 40,000 homes and businesses in Utah have installed rooftop solar, according to Kate Bowman, renewable energy program manager with the advocacy group Utah Clean Energy. It’s been on the rise as costs have come down, but she said rooftop solar still amounts to a tiny fraction of the state’s total energy mix — about 2%.
“The fact is, we've really only just begun to capitalize on the benefits,” Bowman said. “If Rocky Mountain Power's proposal is approved, it would take up to 25 years to pay back the upfront investment in solar panels. And that means that many solar customers will never realize any savings over the life of their panels.”
Beyond that, solar advocates say the utility’s proposal is based on a limited view of solar’s value, one that only considers the fuel costs that customers avoid paying when solar customers export their energy to the grid.
Bowman and others argue that the utility should also account for the wide spectrum of benefits that solar provides, such as its impacts on the environment.
“It's the air pollution. It's the carbon pollution. It's the leakage from gas pipelines. These all have a value,” said Sachu Constantine, regulatory director for the national solar advocate Vote Solar.
Given those additional benefits, Utah Clean Energy proposed a counter of 12 cents per kWh, which Bowman said was on par with average energy rates in the state — around 11.09 cents per kWh, according to the U.S. Energy Information Administration.
Confronting the Market
The price customers pay, however, doesn’t just cover the cost of energy, said David Eskelsen, a spokesman for Rocky Mountain Power. It also includes building and maintenance costs and customer services. Plus, he said solar customers still require power from the company when their panels aren’t generating electricity.
The utility’s main position on the issue comes down to fairness for all customers, he said.
“If we can buy power on the market from a renewable energy source somewhere between 1.5 and 2.2 cents per kilowatt-hour, buying it from our [solar] customers at 9 cents a kilowatt-hour, doesn't make much sense,” Eskelsen said.
He also said that while the reduced price may influence some people’s decision in adopting solar, the utility isn’t in the business of advocacy.
A New Paradigm
On that front, both the Public Service Commission and the Utah Office of Consumer Services — which represents residential and small commercial utility customers — are in agreement.
Michele Beck, director of the Office of Consumer Services, said including some of the additional benefits solar advocates are arguing for would be a dramatic departure from how utilities are regulated and prices are structured.
“It is a new paradigm,” she said. “It would be including types of benefits that have never been included in rates before.”
If that is something that the state wants to start doing, she said it would need to be taken up by the Legislature and should be applied across the board — to all the various sources of energy in the utility’s portfolio.
And while she said she agrees that increasing the export credit would help make installing solar panels more affordable, it also makes it more expensive for others who don’t have them.
“If you want to provide incentives to more quickly evolve the utility system into renewable resources, the way to do it is not to increase the costs of solar,” she said. “The way to do it is to restrict or add costs to resources with negative attributes.”
She said her office is supporting a reduced export credit, though not quite as low as Rocky Mountain Power’s proposal — 3.7 cents per kWh.
The hearing is scheduled to run through Tuesday. The Public Service Commission is expected to make a final decision by the end of the year, which will apply to customers who adopt solar beginning in 2021.