Home solar panel growth threatened by utilities, critics say | News - The Capital Times

Home solar panel growth threatened by utilities, critics say | News | captimes.com

Early on a crisp autumn Saturday, a group of brightly dressed activists danced on the Capitol Square to Sheryl Crow’s “Soak Up The Sun” and Stevie Wonder’s “You Are the Sunshine of My Life.” The sun-themed songs were intentional. They paired with the mini cardboard solar panel props the dancers enthusiastically waved around.

The aim of the punny display was to get the attention of Madisonians passing through the Dane County Farmers’ Market and make them aware of a policy activists say would bring growth of rooftop solar in Wisconsin to a screeching halt.

“The solar panel adoption rates in Wisconsin are very low. … This is not the time to be pumping the brakes,” said Emily Park, a volunteer with 350 Wisconsin, a Madison climate action organization.

In line with a national trend, two Wisconsin utilities have asked state regulators with the Public Service Commission for permission to significantly alter net metering — the way people with rooftop solar panels sell their excess energy back to the grid. Activists and those in the solar industry fear this change will kneecap the ability for homeowners interested in solar to finance the investment at a time when climate change makes renewable energy expansion all the more urgent.

Without net metering, Park said, “these renewable energy options are going to be out of reach for a lot of people.”

She recently bought a house and is experiencing that chilling effect herself.

“I was going to be doing solar panels but, as a climate activist, now I myself am thinking twice,” said Park.

“Can I afford this?”

How homeowners sell solar energy

People who invest in household solar almost always generate more electricity than what they use themselves. This is where the utility comes in. Alliant Energy or Madison Gas and Electric(MG&E) will then buy that excess energy back from homeowners and distribute it over the grid.

However, with renewable sources like solar or wind, the amount of energy being made at any given time will vary. On a bright, sunny day, homeowners with solar installations will make more energy than they need during peak hours. That’s when they’ll essentially run the meter backward and sell that energy to their utility. On a rainy, foggy day, they will buy what their panels aren’t able to produce. This is recorded and determined by a meter, hence the name net metering.

The proposals differ, but both MG&E and Alliant Energy are asking the Public Service Commission to allow the utilities to change the rate at which they pay for this excess energy and to change the way it is calculated, from a monthly to an hourly determination.

“The current monthly net metering really doesn't take into account the value of the energy that a customer is exporting at any given time,” said Tony Palese, Alliant Energy spokesperson.

“The reimbursement rate would increase from 7.1 cents per kWh (kilowatt-hour) for all energy exported to the grid in 2023 to 7.9-13.5 cents per kWh in 2024, depending on the pricing period,” Palese said in an email.

Alliant says rooftop solar generators could earn more than they do now, or less, depending on the time of day and how much energy is being produced. The utility also offers to curb the cost of system improvements.

“Alliant Energy would pay for any distribution system upgrades needed to connect customers’ solar to the grid, which can lower upfront costs for customers and reduce payback times compared to requiring customers to foot those bills,” he said.

MG&E’s proposal before the commission asks for a standard rate, lower than what it currently pays rooftop solar customers. In a statement to the Cap Times, MG&E spokesperson Steve Schultz said the utility’s proposal “creates consistency in the net metering tariff, regardless of the size of the system, and helps to manage costs for all MGE electric customers.”

The ability to earn money from excess energy is what makes the investment in solar accessible to most people.

Solar panels create all the electricity for McFarland resident Sherri Schindler.

“If you need to sell back to the grid and you're getting paid less for the electricity you provide, then that's going to lead to less solar, for sure,” said Gregory Nemet, professor of public affairs at the University of Wisconsin-Madison.

Both the city of Madison and Dane County testified against MG&E’s proposal in September. In its brief before the Public Service Commission, Dane County called MG&E’s proposal “radical” and said it would pose “a significant threat to conservation and distributed energy projects within its service area.”

The link to `climate progress'

The city and county each reminded the PSC of the state’s climate goals, noting policy should reflect them.

“Reducing greenhouse gas emissions and decarbonizing the energy grid is one key to addressing the climate change crisis, and public policy has recognized this societal imperative,” the city of Madison’s testimony read.

“At issue in this case is whether MG&E will be allowed to monopolize this important new energy sector through the implementation of discriminatory rates, putting private profits above public climate progress.”

Kathy Kuntz is the director of the Dane County Office of Energy & Climate Change and has the Herculean task of implementing a plan to reduce greenhouse gas emissions 50% countywide by 2030. Rooftop solar not only creates resilience in the energy system, she said, but is a crucial part of ensuring enough electricity in the county comes from renewable sources.

“We're in the midst of a climate crisis. We should be thinking about how we can do as much as possible as fast as possible, particularly now that we have the Inflation Reduction Act and all of these amazing federal incentives that can buy down the costs of these projects,” Kuntz said.

The change to net metering will make it much harder for individuals to see how an investment in rooftop solar would pencil out for them, ultimately leading to hesitation, she said.

“I’ve spent a lot of my career looking at how we get people to adopt clean energy technologies faster and uncertainty is the enemy of action,” Kuntz said. “If it's not clear if something is going to work, people will put off making a decision about it.”

In 2019, Nemet published the book, “ How Solar Became Cheap: A Model for Low-Carbon Innovation.” Last year, solar energy grew about 40% globally, he said. Large utility-scale solar projects that cover hundreds of acres are now outpacing rooftop solar installations. Less than 5% of rooftops in the country have solar panels, Nemet said, and it has particularly lagged in Wisconsin.

“We want to have as many roofs of solar as possible and we want to cover as much of that roof space as possible, because the alternative is building on fertile farmland and other spaces that we might value for forests or for agriculture,” Nemet said.

Public policy has the ability to incentivize and encourage renewable energy growth. Similarly, policy can suppress solar adoption.

“If we're changing rates to make that less attractive to people, to me that's going in the wrong direction,” Nemet said.

Environmental activists perform a flash mob dance during the Dane County Farmers' Market on the Capitol Square in Madison to raise awareness of the potential changes to net metering, a move they say could stifle the growth of rooftop solar.

What rooftop solar can do for owners

Building a small rooftop solar energy system is complicated, and site specific. Maria Drews and her husband own and operate Drews Solar, a Dane County rooftop solar installation business.

Companies like Drews Solar are full service, handling just about everything for their customers, from local government permits, to a design specific to their home and their electricity use, to connecting the system to the utility and turning it on. All interested customers have to do is fill out an application.

“From there, I can send them a quote that shows them how much solar would cost and what it would do for them,” Drews said.

A big part of her job is educating customers about the options before they make a huge investment, Drews said.

“A lot of customers have questions about how (this works) with their specific utility. What are they going to see on their bills after going solar? They kind of want to know the system. And most customers don't know that before they start looking into going solar,” Drews said. “How does this actually work?”

After the system is designed, installed and online, Drews Solar even assists customers in applying for their state and federal rebates.

The amount a potential customer will save on their energy bill is essential information when deciding to invest in household solar, Drews said. People need to know how long it will take for the system to pay itself off. Changes to net metering will make it much more difficult for installers like Drews to give homeowners the data they need to understand what going solar will mean for them and their pocketbook.

MG&E is proposing to charge rooftop solar customers the retail rate for inflow energy, what the homeowners buy from the grid, and pay them less for their outflow, the excess energy those customers contribute to the grid — a change that would cut payments to homeowners from about 17 cents per kilowatt-hour to about 4 cents, based on 2024 rates.

Additionally, MG&E wants to transition from a monthly metering calculation to an hourly one. That’s data the utility and installers don’t currently have, Drews said.

“The vast majority of MG&E meters cannot collect the hourly data,” she said.

The MG&E proposal would throw businesses like theirs for a loop in other ways, Drews said. The reduced outflow rates would incentivize homeowners with the means to invest in batteries to store their excess energy.

“We don't sell and install battery systems right now because the current net metering structure means you don't need batteries. The utility basically works like your battery,” Drews said.

Drews Solar would need time to change its software to handle hourly data, source and sell batteries, train staff, and educate customers.

The typical rooftop solar system for Drews Solar customers costs $20,000 to $25,000. Drews said many of her clients are middle income and up, a good amount are retired, and many take out loans to go solar.

“Say I'm retired, I'm 70, I've always wanted to go solar, I'm going to go for it, and you'd say I have a 10-year payback period. I might say ‘Great!’” Drews said.

“But you say I have a 15- (to) 16-year payback period and I may say … ‘I don't know if I'm going to be in my home for that long, much less live that long. This doesn't make any sense for me.’”

MG&E and Alliant customers are 90% of Drews Solar’s business. Drews said the utilities’ proposals to change net metering is “a huge threat to solar in our area and also just a huge threat to our business surviving.”

Drews Solar co-owner Maria Drews says proposed changes to the way utilities pay homeowners for rooftop solar power would discourage the growth of alternative energy.

Net metering `foundational’ to rooftop solar growth

The proposed changes to net metering would slow Wisconsin’s clean energy transition, said Michael Vickerman, executive director of Renew Wisconsin, a nonprofit that promotes renewable energy.

“The number one determinant in assessing whether a solar system would be cost effective or not for that customer is the utility rate,” Vickerman said.

Utilities need to keep net metering as is or revise it to ensure the value proposition for customers is strong, he said.

Net metering is the “foundational piece of any serious policy to support additional customer adoption of solar,” Vickerman said.

Renew Wisconsin opposes MG&E’s proposal and Vickerman said the nonprofit put together “a very, very strong argument” against it. There were hundreds of public comments made in the case, and Vickerman said he didn’t come across a single one in favor.

After Alliant made revisions to its calculation that better account for the value of energy produced, and ensured customers would have access to information necessary to determine the payback period of a household solar installation, Renew Wisconsin endorsed the company’s proposal.

Alliant Energy representatives don’t believe the net metering changes will slow the growth of household solar in Wisconsin, but instead more accurately reflect the value of energy produced.

“The monthly net metering is really based on some outdated technology before we had smart meters,” said Palese, Alliant’s spokesperson.

Palese said the company adopted a similar system in Iowa a few years ago and it did not hinder the growth of rooftop solar in the state.

“In fact, the total number of solar systems our Iowa customers placed into service in 2022 was more than double the number in 2020,” Palese said via email.

Alliant says the change is to take into account time of day and year when calculating the cost of electricity moving back and forth. Any net metering billing system is inherently complicated, Palese said, but the proposal better reflects and accounts for customer energy use and rooftop solar customers could earn more from the energy they export during peak production times.

“At the end of the day, customers will benefit from this change. Customers both with rooftop solar systems and those who don't have rooftop solar,” Palese said.

The MG&E spokesperson, Schultz, said in a statement the utility works hard to contain costs and “manage energy affordability for our customers while advancing cleaner energy for the benefit of all our customers.”

Current rooftop solar MG&E customers will not be affected by the potential net metering changes, Schultz said, and future customers will still save money.

“Customers who participate in net metering will continue to see savings from offsetting their own energy use with the electricity generated by their own solar when it's sized for their own usage,” Schultz said.

Dave Bender is the attorney representing the Sierra Club and Vote Solar, two organizations that have opposed the utility proposals before the PSC. Stability of policy and understanding by the public correlate with customer adoption, especially when it comes to net metering and rooftop solar, Bender said.

The inverse has played out in other states.

Bender worked on cases in Arizona and Nevada when a move away from net metering was proposed. Nevada’s 2016 proposal was similar to what MG&E is hoping to adopt, and the change had an immediate effect, he said.

“The drop-off was almost a straight line down. It’s a pretty healthy solar market in Nevada. That (policy) came out, it dropped to like near zero,” Bender said.

Vote Solar fought the changes and the policy was reversed 12 months later.

“Then the numbers shot back up.”

The Public Service Commission is expected to make a decision in each case in November.

Stephen Cavill owns Madison Home Performance, a company that tests homes for safety, durability and maximum energy efficiency. He said he’s not a huge environmental activist, but “just a Madisonian” motivated to save energy because it's cost effective.

Cavill’s been frustrated by what he sees as so little public awareness of the potential changes to net metering. And he’s been putting in the rounds, biking around town, knocking on doors of houses with solar panels to warn the owners what might be coming, a modern renewable energy Paul Revere. He said many looked at him like “a deer in the headlights” after receiving the news.

Cavill lives in an all-electric home. It’s been weatherized, air sealed and insulated and uses a heat pump. However, he’s also reconsidering an investment in rooftop solar panels since MG&E made its case with the PSC.

“They're kind of changing the rules after everything's kind of been set in motion here, which is really unfortunate,” Cavill said.

A Madison solar resident who didn’t need Cavill’s warning was Jay DeNovo. He didn’t mince words about his view when he testified before the Public Service Commission.

“The current MG&E rate proposal is an example of what happens when an investor-owned utility monopoly gets tunnel vision about short-term profits and loses its way with respect to responsibilities toward shareholders, customers, and the planet,” DeNovo said.

He got solar panels installed by Drews Solar in spring 2020, amid the pandemic. The 325-watt solar panels on DeNovo’s house — 19 of them — power it and his electric vehicle. He said these were economic decisions for him and his wife, as well as environmental.

“There had to be a payback in real dollars that was foreseeable,” DeNovo said.

DeNovo and his wife are retired and live in a housing development where many of his neighbors also invested in household solar. He attributes the proliferation of solar in his neighborhood to the fact that it’s currently a good deal.

“It wasn't all, ‘Oh, we want to make the world a greener place.’ We do,” DeNovo said.

“If feeling good was going to be the objective, there were definitely cheaper ways to feel good than to put a solar array on my house.”