Solar Stories Bring Debate Into Focus

Having returned from Jackson, Mississippi, last week to offer testimony to that state’s utility regulators about a net metering proposal, solar issues have been on my mind of late. PACE has written regularly about solar issues, of course, for the past several years. Our position continues to be that solar energy is a useful technology that will play a larger role in the future, but that it’s critically important for regulators to adopt policies that make sense for all customers. Moving too far, too fast could result in bad outcomes that don’t just hurt most power customers, but endanger the solar industry, too.

Along those lines, three articles recently caught my eye. The first comes from the United Kingdom, where two large British solar firms have collapsed into insolvency. The first company, Climate Energy, had revenues of more $70 million last year, but now finds itself in deep financial trouble. The other, The Mark Group, collapsed just two days later.

The reason? British officials have cut back solar subsidies to keep power bills affordable and control government spending. Official estimates are that ending British solar subsidies would save between £40 million and £100 over the next five years.

The second article comes from Arizona, where the state’s largest utility, APS, continues to deal with state regulations that don’t make solar rooftop owners pay for the full cost of electric service. PACE has been involved in Arizona’s net metering issues and has argued that current rules will end up shifting costs to non-solar customers. APS released data last week that says the company is absorbing an average of $67 per month per solar rooftop customer in unpaid service costs. The company says solar rooftop owners are only paying a little more than a third of the cost of providing electric service.

The third article looks at U.S. federal subsidies for energy efficient and low-carbon technologies and who receives those. According to a recent study by two energy economists at the University of California Berkeley, those benefitting from massive taxpayer expenditure for green initiatives are mostly rich. This is true not just for the obvious subsidies, such as tax deductions for expensive Tesla cars, but for tax credits for solar rooftops, as well. While the bottom three quintiles of U.S. income earners get just a tenth of federal green subsidies, the top quintile gets about 60%. Under these programs, the rich get greener. Everyone else? They mostly just foot the bill.

These articles, in their own way, each underscore basic tenets of the solar debate that continues to rage in public service commissions and state legislatures nationwide. They show that public subsidies remain essential to the viability of solar power, regardless of how much the cost of panels has fallen. They demonstrate the importance of designing net metering policies so that all customers pay their fair share for electric service. And they provide a strong spoiler alert for anyone wondering who will really benefit from high net metering payments. [Hint: It’s not the low-income customers the solar industry continues to parade in front of regulators.]

In Jackson, as in so many venues where solar issues are debated, familiar themes emerged. Solar industry reps told regulators that the notion of cost shifting was invented by the utility industry. The truth? Actual cost shifting has already happened in other states. They also compared solar panels to cell phones, portraying them as a disruptive market force that is only being constrained by the greedy powers-that-be. The truth? Cell phones can do everything landlines can do, but better. Solar rooftops can’t make that claim. Reasonable solar advocates know that solar remains a niche energy source, even if their more zealous allies in the for-profit solar industry refuse to acknowledge that fact.

At some point in the debate over solar, it would be refreshing to separate fact from fiction and to allow real-world experience to guide policy-making rather than theoretical speculation. Other states and nations have grappled with these issues, too, and some of the results are clear. Why not learn from the experience of others, take a smarter path, and avoid pitfalls? Customers would surely appreciate that approach. It would likely make for better policy, too.