By Slowing Small Solar, Utilities May Miss Technological Wave

October 18, 2018


The overwhelming momentum of solar technology is lower prices, better performance, and, combined with plummeting costs for batteries – it seems inevitable that some utility customers, if not given the option of installing solar on homes or businesses, may eventually decide to drop off the grid, if they are able to self generate sufficient power.

Opportunities would vary by state, but examples might be farmers, business owners with available open space, flat roofs, or parking lots – medium sized customers who, in leaving, increase costs for those consumers who remain on the utility grid.

Sets up utilities for a classic death spiral. Just sayin’.

I’m cheering Utilities as they attempt to change course from a centralized to distributed generation model, and appreciate the “changing course of the aircraft carrier” nature of this problem. DTE is doing some absolutely vital yeoman’s work in deploying wind energy.
But I feel the need to point out….

Inside Climate News:

A national fight that could slow the spread of rooftop solar has landed in Michigan, where utility regulators are weighing a proposal that would cost consumers more to produce their own power.

The outcome could have widespread significance for net-metering, a popular policy in many states that has spurred dramatic growth in rooftop solar installations. Clean energy advocates say it is the most worrying attempt to undermine rooftop solar that they’ve seen since a 2015 Nevada policy that nearly killed the market there and later was undone after massive blowback.

“It is very clear that DTE is trying to put a dagger in the heart of rooftop solar in Michigan,” said Becky Stanfield, a senior regional director for Vote Solar.

The underlying arguments being spread by utility groups and their supporters are “already contagious” for other states, she said, and will become more so if this is adopted in Michigan, a state that is controlled by Republicans but perceived as more politically moderate.

In the background, Major utilities across the Midwest are changing course to shut down coal plants, and move more and more to no-carbon solutions.

Right now, DTE Energy customers who generate their own electricity from solar panels are paid the full retail price for any excess power that they produce and sell to the grid. The utility wants state regulators to cut that by about 75 percent for future rooftop solar systems. It also wants to create a new monthly charge based on the size of a household’s rooftop solar system.

DTE, Michigan’s largest utility, says the plan would end what amounts to a subsidy for rooftop solar.

That’s a familiar argument. The Edison Electric Institute, a trade group for electricity utilities, is supporting DTE’s proposal using a policy framework that echoes one put forward by the American Legislative Exchange Council (ALEC), a national group that advances corporate interests through state government actions.

Putting the Brakes on Solar Growth?

The change to net-metering was teed up by a 2016 law, supported by utilities and signed by Republican Gov. Rick Snyder, that increased the state’s renewable energy requirements for utilities but allowed lower payments for net-metering customers.

The Public Service Commission followed with an order this year that requires utilities to set new rates for paying rooftop solar customers that are lower than the full retail price, but it allowed flexibility in how much lower. Stanfield says DTE went to the extreme.

The company’s proposal would change how rooftop solar owners are compensated for electricity they sell to the grid. Instead of paying them the same retail rate that the utility charges customers, it would pay them a much lower wholesale rate. Last year, that averaged about 75 percent less than DTE’s full retail rate.

The utility is also proposing a new $2.31 per-kilowatt monthly charge for rooftop solar customers, something the Public Service Commission’s staff had recommended against.

The commission—whose three members were all appointed by Snyder—will decide the case in a process that begins in earnest in a few weeks when parties file their initial testimony, with a ruling likely next spring.

DTE declined to say what the impact of its proposal would be for solar panel owners, but Vote Solar estimates that the proposed changes would mean a homeowner with a 5 kilowatt system loses about $498 per year.

The new rates would apply to new installations, while customers who already have rooftop solar would be able to keep their current rates for 10 years.

In a rapidly growing market, those new customers would quickly outnumber the existing ones, but DTE’s plan would put the brakes on that growth, said Joseph Nagle, co-owner of Strawberry Solar, a solar installer in Detroit.

“They’re definitely going to make it harder to sell,” he said.

Nevada saw the results of that kind of change after it slashed its net-metering rates in 2015. Solar growth came to a near-standstill, and major solar installers, including Sunrun and SolarCity, announced they were stopping local operations, closing offices and cutting hundreds of jobs. The backlash forced the state to reverse course in 2017, and Republican Gov. Brian Sandoval signed a bill restoring net-metering payments.

ALEC’s Shadow in the DTE Proposal

DTE spokesman Peter Ternes says the Detroit-based company “is overwhelmingly in favor of renewable energy.” In fact, it has plans to expand its solar and wind power. It and most other utilities support renewable energy development in the form of large solar farms and wind farms that generate electricity they can sell—as opposed to consumers generating their own power.

In its push to lower the rates it has to pay rooftop solar owners who sell power to the grid, the company is using arguments similar to those that are being promoted across the country by ALEC, a group that uses state legislators to advance corporate interests.

ALEC’s talking points on net-metering describe rooftop solar customers as not paying their share to maintain the grid. That was a key argument in a presentation that the Edison Electric Institute gave to the Michigan Public Service Commission last spring.

“It’s not a coincidence that several of these proposals have come out with similar structures,” said Kevin Lucas, director of rate design for the Solar Energy Industries Association. The arguments don’t mention other studies have found that the flow of rooftop solar power can help states both reduce greenhouse gas emissions and avoid costly new infrastructure investments that customers would end up paying for.

In states that already have substantial development of rooftop solar, this would not be politically tenable, Lucas said. But it can happen in Michigan, where rooftop solar is gaining momentum. DTE currently has about 1,700 home and business customers with rooftop solar in Michigan, less than 1 percent of its 2.2 million customers.

“Much of the case here is trying to stop this industry before it gets a foothold,” Lucas said.

One example of this kind of spiral, that played out in Nevada, was the mutiny of MGM Grand from the Nevada Power system when they decided they could buy their own power more cheaply.

Las Vegas Review-Journal:

CARSON CITY — Las Vegas gaming giant MGM Resorts International told state regulators on Thursday that it will exercise its option to exit as a customer of Nevada Power and purchase its own electricity on the wholesale market.

In a letter to the state Public Utilities Commission, the gaming company said it plans to leave as a customer of Nevada Power by Oct. 1.

The company will have to pay an exit fee of $86.9 million for the privilege of leaving.

In a letter to the commission, John McManus, MGM executive vice president, said the company will proceed to exit as a customer.

“It is our objective to reduce MGM’s environmental impact by decreasing the use of energy and aggressively pursuing renewable energy sources,” he said in the letter to the PUC. “Our imperative is heightened by increasing customer demand for environmentally sustainable destinations.

“After careful thought and analysis over many months, we have concluded our objectives are best met by purchasing the energy required to operate our resorts, and serve our customers and guests, from a source other than NV Energy,” the letter said.

The letter says the company will pay the significant exit fee imposed by the PUC to ensure remaining customers of NV Energy will not be harmed by the company’s departure.

The departure of the company would be the first in many years. The hotel-casino relied on a 2001 law approved by the Nevada Legislature allowing companies to leave as utility customers to lessen pressures on electricity rates during an energy crisis.

The circumstances behind its passage no longer exist. Instead, energy prices are increasingly competitive, including natural gas. Large companies that exit are expected to be able to negotiate their own favorable rates for power.

MGM, with its multiple properties, is the largest at 4.86 percent of Nevada Power’s annual energy sales. MGM had indicated early on that it intended to leave the utility, a part of NV Energy, with approval of its exit application.

Not sure what Michigan law allows in this regard, but not a stretch to imagine that pressures to allow self generation will increase as technology matures.

I think we need utilities for their expertise in moving energy around, in a future that is going to increasingly reward agility and quick response.  I want them to succeed, so would hate to see them make the same mistakes other industries have made in not appreciating the scope of the transition we are in.

3 Responses to “By Slowing Small Solar, Utilities May Miss Technological Wave”

  1. Jean Swan Says:

    I think there are many ways the oil/gas corporations are being subsidized by tax payers..Frackers contaminate air/water/soils and are not fined for this..citizens will have to pay///I remember the oil depletion cash tax payers paid the fossil fuel industry to keep the oil/gas in the ground (before the days of fracking wwas invented)anyhow I want my money back

  2. Reblogged this on The Most Revolutionary Act and commented:
    In the long run, locally controlled distributed solar energy will always be cheaper than the fossil fuel-based grid – without centrally controlled oil/gas monopolies demanding their cut in the form of shareholder profits and bloated CEO salaries.

  3. rabiddoomsayer Says:

    This is a balancing act. There are real costs involved in distributing power and this should be recognized. But the way utilities are behaving, it will be economical to have stand alone power systems in most circumstances. Infact a new subdivision might be better served by stand alone systems already.

    The outrageous run in costs for rural properties already make it much more economical to have solar, wind, battery and even a back up generator as well.

    Just done a little homework, cost of underground power across the street $9,000 to $15,000 . Cost 5kw solar with battery $16,000. I think the time is here.

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