The Utility Empire Strikes Back: Are Utilities trying to crush the Solar Power Revolution
Do large utilities view solar customers as a real threat to their business? Solar, after all, cuts down on utility customer’s consumption of their core product (or dirty energy) which might impact profits. That said, utilities also benefit from rooftop solar, as many home solar producers sell back excess solar power to the utility companies, which is redistributed to other customers.
The benefits to the environment are obvious, however, Solar and the clean energy industry employ hundreds of thousands of people across the US and adding jobs at a rate 12 times faster than the rest of the economy. Despite these benefits, there is increasing and troubling signs in which anti-solar bills backed by utility commissions and private utilities are being pushed thru state legislation to eliminate net metering or other cost rewards of rooftop solar. Utility companies seem unwilling to relinquish their Darth Vader like grip on the energy grid and are making it ever more difficult (cost prohibitive) for homeowners to access affordable clean solar energy. Utilities are seeing the downside of solar for their bottom line, and fighting against solar power in several states.
So far, the utilities have had some success in Nevada and less successful in Florida. Discussions are ongoing in other states.
Nevada: The Financial Advantages of Solar Eliminated
In December 2015, the Nevada Public Utilities Commission (PUC) enacted several regulations that effectively removed all potential financial advantages from installation of solar power. The regulations went into effect in early 2016. They granted NV Energy, the state’s sole utility, authority to charge solar power users monthly fees starting at $12 and increasing to $40 over the next five years.
A Nevada solar energy group estimates that solar power users typically save $11 to $15 monthly on their energy bill. The fees, then, effectively eliminate any financial advantage for the use of solar power.
While many people who are concerned about climate change choose solar energy for their homes, the move is often financially incentivized by potential savings on energy costs, especially over the long term and as the cost of solar installation is amortized. In addition, of course, the chance to save financially attracts people who are not overly concerned about climate change as well.
Both groups of people have effectively been denied the financial incentives of solar power in Nevada.
But the Nevada PUC ruling further penalizes solar power users financially. Before the regulations went into effect, solar power users could sell any excess energy to NV Energy and obtain full retail value for it. Under the regulations, they will only receive one-third of the retail value.
The move is particularly dramatic considering that Nevada is a state ideally positioned to benefit from solar power. Energy bills are generally high due to the hot desert climate. It is also home to many retired people on fixed incomes who stood to benefit from the energy cost reductions associated with solar power.
The moves eliminating the financial benefits of solar power and severely scaling back any monies received for solar-generated excess energy production not only affect potential customers negatively, they effectively undermine the business model for solar energy installers, which is to focus on energy savings and costs.
Although Brian Sandoval, Nevada’s governor, originally encouraged solar power in the state, he justified the regulations by stating that non-solar NV Energy customers were bearing too large a burden for maintaining the energy grid.
Three years ago, though, an independent commission in Nevada indicated that solar users created a $36 million net financial benefit for traditional (non-solar) customers of the utility. NV Energy has challenged the pricing used in the figure.
Nevada is currently the only state to enact regulations that actually eliminate cost-saving benefits. However in a recent victory, Nevada rolled back the regulations for customers that already had solar power, after a considerable uproar from solar users who felt they were unfairly penalized.
Florida Voters Choose Solar
In other states, utilities making arguments similar to that of NV Energy have been unsuccessful. Florida's recent Amendment 1, for example, would have eliminated the ability to sell back surplus energy generated by solar to the utilities in the state. It was defeated by voters.
But that doesn't mean the utilities are backing down permanently. Recently, research published by the Environmental Florida Research and Policy Center indicated that the biggest utilities in the state, Duke Energy, Florida Power & Light, Gulf Power and Tampa Electric, are part of a nationwide movement of utilities actively working against solar power. The research identifies 17 groups in this camp.
The arguments are very similar to those advanced in Nevada: that more people on solar means less on the conventional grid, leaving a smaller number of non-solar customers to bear the costs of the conventional grid. The utilities argue that this penalizes customers of non-solar electricity.
These arguments do not mention the advantages of widespread solar or any cost savings from excess solar power being sold back to the utilities.
Illinois: A Victory for Renewable Energy
Most strikingly, in Illinois recently the legislature passed a bill that offered benefits to both traditional utilities and renewable energy providers. Vox called it "the most significant state energy legislation passed in the US in decades."
The Future Energy Jobs Bill (SB 2814) is the work of groups across the environmental spectrum. Seventy percent of the monies generated by the bill is allocated to clean energy methods and energy efficiency. Thirty percent is allocated for two existing nuclear plants.
Of equal importance for solar customers, net metering remains, despite earlier political attempts to eliminate it. There will be no demand charge. So the bill ensures that there will be no change in rates or methods that negatively affect solar customers.
Solar power users and advocates are advised to monitor state utility rulings for bills and regulations that have an impact on the use and penetration of solar energy. To find out what tax incentives or other benefits exist in your area for going solar, click here to compare solar companies and speak with an expert.
