State’s electric utilities oppose move to allow third-party solar financing
Wisconsin is missing out on a wave of solar power development that’s going on around the country.
One example: Kohl’s Department Stores around the country generate three times as much power as all the solar electricity being generated in Wisconsin today.
What’s driving the boom in other states is third-party financing, which allows a company such as SunEdison, a builder of solar power plants, to own the panels on the roof of a Kohl’s store. That’s not allowed in Wisconsin, but would be under a bill being drafted in Madison.
The proposal, backed by a group of clean energy companies and the Wisconsin Farmers Union, faces opposition from the lobbying group for the state’s electric utilities.
The utilities worry that such a change would open the door to more renewable energy and drive up costs for other ratepayers.
The legislation is being crafted by Rep. Chris Taylor (D-Madison) and Rep. Gary Tauchen (R-Bonduel). It’s expected to be among a host of energy issues that may come before the Legislature now that the debate over mining legislation is finished.
The change would exempt owners of renewable generation at a home or business from being regulated as a public utility. Supporters say it’s a low-cost step that would stimulate economic development in the form of increased investment by solar installers that have moved work to states that are encouraging renewable energy.
“This will open up the renewable energy market to companies that don’t have a lot of money lying around to finance clean energy projects,” said Michael Vickerman, policy director for Renew Wisconsin, a clean energy advocacy group.
For Renew Wisconsin, the effort could make up ground lost in recent years after the failure to expand the state’s renewable energy standard, and following moves by state regulators and utilities to shift their focus away from support for customer-owned renewable systems.
The markets where solar has taken off are dominated by those that permit third-party ownership, said Carl Siegrist, a solar energy consultant who was a renewable energy strategist at We Energies.
“Nearly three-fourths of the solar market last year came from third-party ownership,” said Siegrist, who discussed the proposal at the recent Sustainability Summit in Milwaukee.
At stores around the country, Kohl’s buys power from SunEdison, which built the panels on the roofs of the Kohl’s stores.
“If there was third-party ownership allowed, they would have it on every one of their stores in the state,” said Steve Johnson of solar energy developer Convergence Energy, which developed a solar project in Delavan.
Fears of cost shifting
Utilities are concerned that the proposal could lead to higher rates.
According to Bill Skewes, who heads the Wisconsin Utilities Association, the lobbying arm for the utility industry, the biggest concern is that utilities will see cost shifting because they will sell less power to customers who install solar systems.
The fixed costs of paying for the poles, wires and day-to-day business operations of the utility would then have to be spread across the remaining customers, he said in a memorandum to lawmakers on the issue.
“The customers who become partial customers because of a distributed generation agreement would be subsidized by the other customers on the utility system,” Skewes said.
Supporters of the renewable energy shift see potential for helping farmers address their phosphorus and manure challenges by enabling them to put up more anaerobic digesters.
But, Skewes said, “advocates that want to help farmers may, in the next breath, decry the utility rate increases that further discourage economic development at a time when Wisconsin is trying to foster job growth.”
Supporters concede that the shifts could help businesses that install solar generation avoid some of the rate pressure in Wisconsin, and it could result in reduced power sales by utilities.
At the same time, they note that utilities see lower sales every time a business takes steps to cut energy waste or replaces an incandescent light bulb with an LED bulb.
Making solar affordable
Nationwide and worldwide, solar development is booming, with solar generation now reaching more than 6,000 megawatts, or enough to supply 1 million homes, according to GTM Research.
While the price of solar systems is coming down quickly – it has fallen by 50% over five years – companies are conserving cash rather than looking for places to spend it.
So when an efficiency consultant such as Johnson Controls Inc. contracts with a building owner to help cut energy waste, the upfront cost is paid for by Johnson Controls, not the utility customer. The customer then pays Johnson back over time through the savings on energy bills.
The renewable proposal works the same way, said Amy Heart, solar program manager for the City of Milwaukee. The solar company would pay the upfront costs, with the customer paying a fixed price over time for the power generated by the panels.
“We see the opportunity to not only support our solar industry, but we also have the opportunity to reduce our energy costs and lock in those rates for a 10- to 20-year term, which is that consistency we’re looking for,” Heart said. “In the long run, if we can lower our energy bills for taxpayers, that’s the idea.”
It’s a way to lock in prices over time from solar, even if utility rates go up, Siegrist said.
The proposal also overcomes one of the biggest hurdles facing renewable energy – that its upfront cost makes it affordable to a select few.
(See the original posting of this article here.)