rss icon

Sunday, 30 August 2015 22:00

What should customers pay — and receive — for generating their own solar power?

Written by 
Rate this item
(1 Vote)
Michigan legislators are considering a bill that would eliminate the state’ net-metering program that reimburses customers for generating power and putting it back on the grid. Michigan legislators are considering a bill that would eliminate the state’ net-metering program that reimburses customers for generating power and putting it back on the grid. COURTESY PHOTO

As lawmakers in Lansing discuss new energy legislation, Michigan finds itself at the center of a nationwide debate.

At issue is how utility customers who generate their own solar power should pay for the grid services they receive, as well as how the state’s utilities should reimburse those customers for the power they put back into the grid.

A plan before Senate Republicans would eliminate Michigan’s net-metering program, which was established under the state’s 2008 renewable energy law. The program set up a system for customers to be reimbursed for the excess energy they provide to the grid after meeting their own needs.

Under the proposal, customers who generate their own solar power would be forced to purchase their electricity from their utility at retail prices and be compensated for the energy they put back on the grid at wholesale prices. Wholesale rates are less than half the cost of retail.

“It’s a slap in the face to the people who have been early adopters in the last 10 years,” said Mike Linsea, owner of Shelbyville-based installer Solar Winds Power Systems LLC. The seven-year-old company works with more than 90 customers, a majority of whom participate in net metering, Linsea said.

The state’s major utilities and Republican leaders of the Senate Energy and Technology Committee say the new plan brings fairness to the issue and means other ratepayers won’t be subsidizing those who generate their own power.

But a range of clean-energy advocates, solar manufacturers and those with solar installations on their property say S.B. 438 would effectively kill any new projects that aren’t owned by utilities.

They say the bill — which was first discussed in committee on Aug. 19 and sponsored by Republican Sen. John Proos of St. Joseph — removes the economic incentive for self-generating electricity by extending the time it would take to see a return on the upfront investment for the systems.

Advocates also staunchly dispute the notion that non-solar ratepayers in the end are subsidizing those with installations, claiming that such projects offer a net benefit to the grid and other ratepayers because of the type and timing of the electricity they generate.

“It doesn’t take a lot of math skills to see that if you sell at one rate and buy it back at a higher rate that you’re not going to see growth in the industry,” said Liesl Eichler Clark, vice president of policy and business engagement with the Michigan Energy Innovation Business Council. “There’s just no reason to when you run the numbers.”

The MEIBC disputes the subsidization claims because Eichler Clark said the true value of what self-generation provides to the grid is not fully realized.

“Solar gets sold back at a time when energy costs are usually over 15 cents a kilowatt hour, but solar is at 8 cents per kilowatt hour,” Eichler Clark said. “So who is subsidizing whom?”

Distributed generation, such as individual solar projects, also helps prevent line loss on the grid by offering more locations where there are points of generation, she added.

“The concept of valuing electricity at the same price — that has been fine and has worked for us, but it will probably not be what the utility of the future is going to do,” she said.

DEBATING A SOLAR SUBSIDY

As it’s written, S.B. 438 would also be retroactive and apply to existing net metering contracts.

However, that is one aspect of the bill that DTE Energy could support eliminating.

“We’d really be interested in talking about how to grandfather those people in,” said David Harwood, director of renewable energy for DTE.

Ultimately, DTE and Consumers Energy say the bill — which they support — is about fairness.

“We all agree that if someone has a solar panel on their roof that very rarely is it ever generating exactly what that homeowner needs at that point in time,” Harwood said. “It’s either under-generating at night or on cloudy days or it’s over-generating. At the heart of the issue is the recognition that customers that have solar and are net metering are in need of the grid to support their energy needs. It’s not just grid costs, but the cost of the entire infrastructure put in place to serve them, which is almost 100 percent of the time.”

That includes the cost of distribution wires, transformers, substations and other related equipment, Harwood said.

“We agree that customers who generate solar offset costs for us on the fuel side,” he said. “But the fact that the power plant has to be there, fully staffed and with all the costs associated with operating it means that they should have to pay their fair share to have that on standby.

“As much as solar advocates like to cast some doubt as to whether there’s a subsidy, there’s no doubt that there’s a subsidy. It’s real dollars. If we don’t fix the accounting of this subsidy now, that subsidy is going to be huge.”

Yet neither side of the debate can attach a dollar figure to how much that subsidy costs.

A spokeswoman for the Michigan Public Service Commission said the agency has not conducted a study as to whether there is a subsidy.

Michigan’s net-metering program continues to grow as the cost to install solar panels decreases.

According to an August report from the MPSC, the state’s net-metering program grew by 25 percent in 2014 compared to the previous year. Still, at just over 14 megawatts of generating capacity, the program represents just .015 percent of Michigan’s total retail sales.

Last year, an MPSC-led “solar working group” tried but failed to establish consensus among members over what the true “value of solar” is.

‘A REALLY BIG DEAL’

Michigan is at the center of what is a national dispute over net metering and how utilities adapt to the rapidly growing sector and interest in self-generation. According to a recent report by the North Carolina Clean Energy Technology Center, at least 16 states are considering changes to their net-metering policies.

As of June 2014, 44 states had some sort of net-metering policy in place, according to the National Conference of State Legislatures. In states like Wisconsin, utilities are pushing for higher fixed rates among all customers to help pay for associated grid costs.

Linsea of Solar Winds called the proposed changes “a really big deal.”

“It’s echoing a national attack on net metering. This would have a devastating effect,” he said. “Some of these proposals are pretty archaic. They want to go back and have us send power directly to the power company, bypassing the home. This is really bad.

“What (the proposal) wants to do is pivotal because people have set up all of their buying decisions based on this figure that they can offset power in the building. What they’re doing is fundamental to the solar business and how it works.”

Linsea also disputes that sending valuable solar power back to the grid in the middle of the day is a net benefit to the system.

“Power companies in this whole scheme give no value to that whatsoever,” he said.

Daniel Zimmer, a West Olive resident with a 10-kilowatt net-metered system at his house, spoke in opposition of S.B. 438 during an Aug. 19 committee hearing.

“This bill is anti-capitalism, anti-American and anti-solar,” Zimmer said. “S.B. 438 is payola legislation to reverse P.A. 295 (of 2008) and return domination to fossil fuel and a monopoly the utility so enjoys.”

Indeed, advocates have mobilized in states across the country as the amount of rooftop generation continues to grow, forcing utilities to rethink their traditional business models.

“They’re very concerned about distributed solar and its impact on their profit model,” Linesea said of the power companies.

Read 6231 times Last modified on Sunday, 30 August 2015 22:30

Breaking News

September 2018
S M T W T F S
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Follow MiBiz