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Arizona regulators voted Wednesday to reduce the fees electric utilities must pay owners of rooftop solar panels for their surplus energy. Clean energy advocates say the measure will hurt the state's growing solar industry and increase utility profits.
The move comes after a sharp decline in solar benefits in neighboring California, an indication that states with high rooftop solar prices — regardless of their political leanings — are struggling to integrate solar power into the existing grid.
"It was a simple dumpster fire," Jason Gallagher, operations manager for Chandler-based solar installer Fusion Power, told Semaphore about the Arizona meeting.
Tim's view
Arizona's decision shows that solar power, despite falling global prices and unprecedented government support, still needs to be fueled by local political interest and decades-old debate.
In Arizona, like most states, if rooftop solar panels produce more electricity than the home needs, the surplus can be sold back to the electric grid, a practice called net metering. The tariffs offered by energy suppliers for this electricity vary from country to country. This is usually the same price or slightly less that the house pays to get electricity from the grid. In the year In 2016, after a costly lobbying campaign by the state's largest utility, regulators approved a plan that would reduce the rate over time (customers before 2016 could have a higher rate on their franchises). This is because the retail price is higher than the wholesale price that utilities would normally pay to purchase electricity, and ultimately increases the cost of energy that is passed on to non-solar customers.
In recent years, net metered rates in Arizona have fallen relative to wholesale rates, so excess solar is a good deal for utilities. However, there is a persistent view in some quarters that net metering represents cost-shifting or inappropriate subsidies. At a hearing Wednesday at the Arizona Corporation Commission, which oversees the state's utilities, Republican chairman Jim O'Connor argued that anyone looking for a solar roof "shouldn't be at the expense of their neighbors and their community." O'Connor voted with two other Republicans to reinstate the 2016 policy.
The move makes solar a tough deal for owners in the nation's sunniest states, Gallagher said, because it's impossible to calculate an exact payback period and could extend that period. This opinion was echoed in a filing by Tesla, which sells solar and battery systems in the state, saying the decision "harms the confidence of investors and customers in Arizona." Even the utilities that originally asked for lower rates refused to return the existing rates.
"They're setting the stage that what they decide at trial doesn't matter," Gallagher said, because the case comes up again every two years when commissioners are up for re-election. "When you look at what happened [Wednesday], there isn't a large renewable energy company in the country that is willing to invest in Arizona."
The possibility of an argument
In defense of his vote, O'Connor cited the example of California, which had liberal, climate-friendly policies that significantly lowered net metering rates in April. The state is by far the largest solar market in the country, and net metering has become a legal issue for the grid. Meanwhile, California's afternoon peak solar output is so high that it sometimes exceeds all of the state's electricity needs, but utilities are forced to generate other generation when the sun sets, increasing costs and increasing the risk of outages.
In the new system, the net measurement rate is variable, increasing during low solar energy and dropping to near zero in the afternoon. The effect is essentially a subsidy for home batteries to store excess solar energy, said Kunal Jirotra, CEO of California-based home battery startup Lunar Energy. Girotta predicts that flexible metering will soon be available in the US. Currently, the idea is not being discussed in Arizona.
View of New York
Renewable energy faced a setback this week from regulators in New York state. On Thursday, the Public Service Commission voted to raise the price that foreign wind developers can pay for utilities in their jurisdiction. Orsted, Equinor and other major wind companies have been locked into contracts to supply power at fixed prices in recent years, with inflation currently too low and supply chain bottlenecks driving up developer costs. The message from New York this week: Too bad. From the point of view of the regulators, it is easy to understand the situation, because otherwise they have to explain to the taxpayers up to 12 billion dollars in additional costs. But if offshore wind companies pull the plug, it could jeopardize the state's lofty clean energy goals.
Unusual
Global solar energy prices will be even lower if not harvested for a century, an Oxford University professor wrote this week. George Cove was a Canadian engineer in New York who invented the first solar panels in 1909 with great fanfare and was soon kidnapped. A condition of his release was giving up his Sun license. After his release from prison, he did not return to his thoughts. Economist Suganda Srivastav said in an article that if this had continued, solar power would have overtaken coal 14 years ago in 2002.
