Incentives designed to make rooftop solar feasible for a wider range of consumers are under attack nationwide, threatening new solar development as well as the consumers that already have rooftop panels. The staunchest opponents? Utilities who say, despite a growing body of research to the contrary, that rooftop solar hurts other ratepayers and their bottom lines.
In particular, utilities have railed against net metering policies that require them to provide credits to customers that produce energy from their own solar arrays. Those programs, and other key incentives supporting rooftop solar, are at the center of fierce debates in several states — notably in Arizona, on former U.S. Rep. Barry Goldwater Jr.’s home turf.
Arizona’s fraught energy policy landscape sprouted the advocacy group Tell Utilities Solar won’t be Killed, or TUSK, in 2013. The group is led by Goldwater and now active in more than a dozen states facing similar discord. Goldwater spoke with ILSR’s Director of Energy Democracy, John Farrell, in May 2016 about solar energy as a source of freedom and the threat from incumbent monopoly utilities.
Customer Choice Under Fire in Arizona
In Arizona, a simmering debate pits solar advocates firmly against major utilities insisting that net metering unfairly transfers energy costs to non-solar customers. But several studies recently reviewed by the Brookings Institution show distinct financial benefits for both solar and traditional power customers.
In our interview, Goldwater likened the utilities’ argument to shrugging off other home upgrades that promote energy efficiency, like low-flow toilets and certain appliances. Consumers that integrate those features into their homes would pay less for water and power than consumers who didn’t. But that’s not unreasonable, he said.
Plus, Goldwater said, more expansive solar power makes the energy industry more competitive — clearing the way for price reductions and increased quality. Beyond that, residential solar shores up the existing grid by lightening demand and boosting production.
“We all have the choice and that’s what’s important in this discussion, is giving people choices,” Goldwater said. “So, to use that as an argument — that somehow or another because I buy less energy everybody else is subsidizing my portion of the upkeep of the grid — it just doesn’t hold water.”
Despite energy-friendly policymaking in some states, like New York, utilities elsewhere continue to firm up opposition. Mediated net metering talks between Arizona Public Service Co., one of the state’s largest utilities, and solar industry titan SolarCity broke down after just one meeting, the Arizona Republic reported last month.
Arizona’s contentious fight has hampered new solar development and put new projects on ice, unwinding the state’s status as a solar leader. Another of its major utilities, Salt River Project, last year leveled a roughly $50 monthly surcharge against solar users that cuts the upside of installing panels.
“As a result, there has not been one new rooftop or solar system sold or applied in that SRP territory,” Goldwater said.
Debate Reverberates Nationwide
Tensions over solar in Arizona underscore friction across the U.S. energy industry. A similar dispute tipped toward utilities in Nevada late last year, when the state’s Public Utilities Commission agreed to shrink net metering payments — for new solar customers and, most controversially, existing ones.
The hardline move ran against a 2014 study commissioned by the regulator itself that projected solar systems installed through 2016 would deliver a $166 million benefit to all ratepayers over the systems’ lifetimes. It also pushed out Nevada’s top solar providers, which lambasted the retroactive changes.
Solar City, Sunrun and Vivint Solar each announced plans to exit the Nevada market soon after the action, halting what had been meteoric growth for the state’s solar industry. Coupled with the regulatory ruling, the lack of providers reins in Nevada consumers’ ability to tap into solar.
“It just seems to me that the fight is going to continue on until the people stand up and say we want choice, we want the opportunity to make a decision,” Goldwater said.
Still, the net metering debate doesn’t always sting renewables advocates. New York regulators, for example, debuted policy changes in April that favor a transition to a long-term distributed energy model — leaving plenty of room for rooftop solar and reserving a place for consumers in the state’s long-range energy plan.
In Vermont, investor-owned Green Mountain Energy became the first utility in 2014 to earn B Corp certification, affirming its commitment to a new energy economy that prioritizes renewables and veers away from traditional power sources. The utility has supported recent efforts to increase the amount of solar production under the state’s net metering rule.
Still, cooperation from utilities largely remains the exception even as solar power becomes more accessible and consumers increasingly favor policies that favor renewables.
“We’re seeing all kinds of new applications of technology and you’ve got to be willing to make some changes,” Goldwater said. “Utilities are not willing to do that, it doesn’t appear. They have a business plan that’s a dinosaur and they don’t want to make room for competition.”
Lessons from Abroad?
Other models around the globe showcase new energy frameworks and offer lessons for U.S. rulemakers. In Germany, for example, a feed-in tariff meant to incentivize small-scale renewable projects spotlight a successful twist on traditional energy policy.
“The rooftop solar is big over there,” Goldwater said. “However they do it, we ought to take a look at that and maybe adapt it to our system.”
No Simple Solution, but a Simple Principle
Varied methods for gauging the true value of solar complicate the dialogue about how to best implement net metering — and exactly how those programs affect, or don’t affect, traditional utilities.
Several states have developed frameworks for assessing their solar’s value per kilowatt hour, then compared that figure with retail rates. That way, they can gauge costs and identify upside for their local communities. But variable markets and shifting industry dynamics mean there is no single playbook for tallying expenses and benefits.
In addition, solar power generation carries social and environmental upside that often goes overlooked — or at least unquantified.
On top of that, utilities have a longstanding tradition of shaping the energy markets to benefit themselves.
“They like solar as long as they own it and can then charge the ratepayer for their own solar arrays,” Goldwater said. “But competition and freedom is what’s at stake here, and is the underlying issue that needs to be addressed and to be preserved.”
This is the 37th edition of Local Energy Rules, an ILSR podcast with Director of Democratic Energy John Farrell that shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion. Other than his immediate family, the audience is primarily researchers, grassroots organizers, and grasstops policy wonks who want vivid examples of how local renewable energy can power local economies.