Bringing Solar Energy Out of the Dark
Originally published January 1, 2014
PHOTO BY DENNIS BRACK
The movement to promote adoption of pollution-free renewable solar energy has devolved into an unfortunate culture war.
In a report issued last October, the Center for American Progress noted that more than 1,460 megawatts of residential solar rooftop generating capacity has been installed across the United States since 2000. Most of that capacity—more than 80 percent—was installed since 2010. The public policy group applauded the move to clean renewable energy, but took issue with the investor-owned utilities in the United States who have asserted that lower income customers are subsidizing wealthy customers who can afford to install solar panels on their homes. Most solar energy is installed in middle class neighborhoods where median incomes range from $40,000 to $90,000, the center said in its report.
The public policy research group misses the point. The rapid growth of distributed solar generation has indeed put non-solar customers in the position of subsidizing those with solar rooftops. Rate tariffs designed to encourage installation of solar collectors have succeeded beyond projections and consumers with the desire and means to do so have taken advantage of tax credits and other incentives to install solar panels on their homes.
These solar installations are usually interconnected with the utility’s local distribution grid so customers can purchase other generation when solar generation is insufficient to meet all of their needs. Sometimes, customers feed power into the local grid and sell electricity to the utility. These interconnections have introduced two major challenges: operational issues related to reliability and safety, and the need for grid users to pay their fair share of costs.
APPA’s CEO Task Force on Climate Change and Generation Policy met in Washington in November and spent time discussing these challenges. One member reported that he lost a lineworker who was electrocuted because a solar installation did not comply with the utility’s interconnection specifications.
The proliferation of solar facilities also has forced utilities to install new feeders to address grid congestion and concerns about reliability.
Solar rooftop generators are an important part of any utility’s renewable energy portfolio. One joint action agency CEO reported that distributed solar installations in his member communities helped the agency save on transmission costs during peak demand periods.
But the rates paid by and to solar customers need to be designed thoughtfully to ensure that small generators who are using the distribution grid to earn revenue—as many solar rooftop owners do—are also paying their fair share of the costs of keeping the grid operating safely and reliably.
These challenges have been especially acute for investor-owned utilities and fierce battles over rate equity are raging in California, Arizona and other states. Solar energy companies and customers are painting the utilities as “anti-renewable” and charging that the utility’s sole concern is a loss of revenue. But those charges are misplaced. The challenges have affected utilities abroad too. Germany had to scale back solar subsidies after capacity increases exceeded expectations. Feed-in tariffs were reduced by 25 percent for large solar installations and by 20 percent or more for smaller ones. Spain also experienced growth of solar capacity that exceeded projections. There, the government imposed capacity ceilings on new installations, which prompted developers to leave the market, leading to lost jobs.
These issues require careful study and thoughtful thorough planning. Solar feed-in tariffs and net metering policies must be designed to reflect costs and to assure that those who benefit from using the grid are sharing in the cost of building and maintaining it. It is vital to address the long-term effects before rolling out a new rate. Customers become understandably angry when rates and capacity ceilings change after they have invested in solar collectors.
APPA is giving this issue a lot of attention. APPA Manager of Policy Analysis and Research Paul Zummo researched and wrote a white paper on this topic last November and presented his findings to the CEO task force on generation policy. The paper examines the issues from several perspectives—costs, benefits, safety concerns, and steps utilities can take to mitigate problems. The paper, Distributed Generation, An Overview of Recent Policy and Market Developments, is posted on publicpower.org. We will have panel discussions on this topic at the Joint Action Workshop in January, as well as the CEO Roundtable in March and the National Conference in June.
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