Why US power companies don’t want you putting a solar panel on your roof

In his article for the Quartz Daily Brief Tim Fernholz debunks electrical utility claims that increased solar panel reliance to off-set electrical costs will lead to increased rates for all customers. While the “death spiral” of increased solar energy use leading to increased electrical rates is revealed to be little more than a panicked response from power companies, Fernholz identifies that a regulatory solution must be crafted to facilitate our transition to a solar powered future.

By Tim Fernholz

In the US, electrical utilities are in a charged battle—complete with negative political ads—against solar panel distributors over rules that both sides say could put them out of business. Consumers are caught in the middle. 

A relatively new swathe of companies like Verengo, Sunrun, Sungevity and SolarCity have spent millions leasing solar equipment to homeowners and businesses. The cost of the lease is offset by savings on their electrical bill. Those savings come not just because of free power from the sun, but also through tax credits—and, most importantly today, because states allow those who have solar panels to sell any excess power back to the grid. 

The more than 200,000 “distributed solar generators” in the US produce less than 1% of the country’s electricity. But that’s growing thanks to the falling cost of photovoltaics and financing from investors like Google. And this worries the big power companies, particularly two of the country’s largest, Pacific Gas & Electric and Southern California Edison.


Incentives for Solar and Wind Energy Suspended Again

PSC Delivers Another Blow to Beleaguered Renewable Energy Contractors

Immediate release — For the second time in three years, state of Wisconsin incentives for customer-sited solar and small wind systems will be suspended, a result of recent Public Service Commission (PSC) decisions affecting Focus on Energy’s renewable energy budget . The suspension will take effect August 13, according to Focus on Energy, and will run through the remainder of the year. Incentives for biogas and biomass installations are not affected by the PSC’s decisions.

The impending cut-off of solar and wind incentives follows an across-the-board suspension of  
renewable energy incentives that lasted one year before being lifted in July 2012. Focus on Energy is authorized to spend up to $10 million per year on renewable energy incentives. 

Through May 2013, Focus on Energy had spent or obligated a total of $3,048,580 for projects  
expected to be placed in service this year. The suspension ensures that overall renewable energy awards in 2013 will fall well short of the $10 million maximum. 

In 2012, the PSC established a two-tiered funding formula that allocates renewable energy 
incentives based on resource type. So-called Group 1 resources—biogas, biomass and geothermal (ground source heat pumps)–are eligible for 75% of program expenditures up to a maximum of $7,500,000 a year. Funding for so-called Group 2 resources—solar and small wind—cannot exceed 25% of renewable energy expenditures. 

Under this structure, outlays for Group 1 resources determine the overall funding level for  
renewables, even though up to $10 million is available in a given program year.As a result of the funding suspension, no renewable energy incentives will be available to residential customers until 2014. Residential customers account for approximately 60% of Focus on Energy’s program dollars.

The following represents RENEW Wisconsin’s reaction to the suspension of incentives for solar and wind energy systems. RENEW Wisconsin’s advocacy was instrumental in creating a renewable energy component to Focus on Energy.

“First, let’s not stop these incentives simply because the accounting is difficult,” said Executive  Director Tyler Huebner. “That may seem like the easiest fix for decision-makers in Madison, but this is going to cost jobs throughout Wisconsin, especially amongst the small businesses that do this work. Second, if the accounting is difficult, and we agree that it is, then let’s change it. The decisions to make the accounting difficult were made by the same three Commissioners just last year, and this recent decision only adds to the complexity.” 

“The disruption to solar and wind incentives will inflict measurable financial hardship on 
contractors operating here, and will result in a net contraction of sales and jobs. This decision will likely force these contractors to shift the focus of their business to other states that are doing a better job of supporting solar and wind.” 

“On several occasions before this decision, we communicated to the PSC the tenuous nature of the solar market today, and our best forecast of the likely impact from a disruption in the flow of incentives. By all appearances, the views of Wisconsin’s solar contractors were disregarded.”

“Yesterday, we sent a letter to the PSC asking it to reconsider this decision. This Friday, we will file comments with the PSC regarding future Focus on Energy planning, and our primary goal is to simplify the provision of incentives going forward. In our view, the current structure has proved to be an administrative nightmare, and this latest decision will worsen this already bad situation.”
“Finally, we don’t believe that providing policy support for the advancement of solar energy should be a partisan issue. It certainly isn’t in Georgia, where that state’s all-Republican utility commission ordered Georgia Power to acquire nearly 800 megawatts of solar by the end of 2016, effectively tripling what the state’s largest electric utility had already committed to provide.”
“It’s time for Wisconsin regulators to see the light on solar and let it drive our state’s economy forward,” Huebner said.

PSC Sensible Agency for Wind Rule-Making

SB 185/AB 256 direct the Public Service Commission (PSC) to initiate an administrative rule-making process to establish statewide siting standards for wind energy projects. The bill draft requires the PSC to establish an advisory committee of diverse interests to advise the Commission on the rules. The legislature will have the opportunity to review the proposed rules prior to their publication.

+ The PSC is an independent regulatory agency dedicated to serving the public interest. The agency is responsible for the regulation of more than 1,100 Wisconsin public utilities, including those that are municipally-owned.
+ The PSC works to ensure that, in the absence of competition, adequate and reasonably priced service is provided to utility customers. The PSC has oversight on every form of electric generation in the state.
+ Alternatives to bypass the PSC are designed to introduce more delay and confusion into the siting process. Additional layers of bureaucracy only serve to reinforce the siting stalemate.
+ Under the bill the PSC would establish a unique, comprehensive review of siting issues. Any attempt to predict the rule-making is speculative at best.
+ The PSC is the agency with the expertise to provide the appropriate scientific, fact based review of issues related to siting wind energy projects. The bill does not specify any siting requirements but establishes a process to review the relevant health and safety issues.

“I pledge to you a rule-making process which will be open and inclusive…The Commission will continue to be a fair partner with local government to ensure that the siting process is equitable to all, and that decisions are made in a timely and transparent way…The PSC’s rulemaking process is as open and inclusive a process as any.”(Joint public hearing May 12, 2009)
-Eric Callisto, PSC Chairman