Often we take electricity for granted, and if you don’t believe me, ask those who were left sitting in the dark trying to eat all their ice cream before it melted after last week’s epic windstorm.
The storm and the huge effort to restore power drove home the benefit of having an electrical grid that is more decentralized — one of the benefits of rooftop solar, you know, those panels you or your neighbors might have on top of your homes.
On Oct. 5, Utah’s Public Service Commission will begin hearings to determine exactly how much electricity generated from rooftop solar is worth (public comments are now being accepted), and you might be surprised at how far apart the opposing sides are on that question.
Under a 2017 agreement, Rocky Mountain Power set the price at an average of 9.2 cents per kilowatt hour — and those who already had solar panels will get that rate until 2032 or 2035, depending on when they put them in place.
(Francisco Kjolseth | The Salt Lake Tribune) Robert Gehrke.
But the utility says that’s too much and is asking the commission to set the rate it pays to homeowners much lower, an average of 1.5 cents per kilowatt hour, the amount it pays for wholesale electricity from large-scale projects.
“The price is the price,” said Spencer Hall, spokesman for Rocky Mountain Power. “All we’re saying is we think we should be able to pay customers that are generating [electricity] the value that the market is dictating.”
But rooftop solar advocates contend Rocky Mountain Power’s figure is far too low and doesn’t reflect the additional benefits of rooftop solar — like reduced pressure on the electrical grid and increased use of clean, renewable energy without the company having to invest in new projects.
The group Vote Solar did its own calculations and believes the actual value is 22.6 cents per kilowatt hour — nearly 15 times what Rocky Mountain Power is proposing.
The impact of such a low rate could be devastating on the rooftop solar industry in Utah, which according to testimony before the commission has already seen business suffer. New installations went from 4,140 in 2016 to 12,408 in 2017 before falling to 3,540 last year, according to the Utah Solar Energy Association.
The drop has cost more than 600 jobs. Tesla opted not to open a regional office in the state, and others have pulled out or essentially stopped selling residential solar.
Slashing the rate further could be a nail in the coffin.
“The economics will be so bad and the paybacks will take so long that you won’t see rooftop solar develop anymore in the state,” Sarah Wright, executive director of Utah Clean Energy, told me.
There’s a flip side to the equation. Rocky Mountain Power warns in its testimony to the commission of a scenario where an exorbitantly high rate creates a stampede for solar panels, leaving those who can’t afford it or who rent their homes to pay more for electricity, meaning, as Hall put it, “people who don’t have solar on their roof subsidizing those who do.”
For what it’s worth, the 22.6-cent figure is not all that extraordinary. It just depends on what one considers as the benefits of rooftop solar.
A study for regulators in Maine put the value at 33 cents per kilowatt hour when one takes into account reduced carbon emissions, not having to build new power plants, and supplanting more expensive energy sources with solar power.
A 2016 review of 16 studies found that those that accounted for reduced greenhouse gas emissions ended up putting the value at an average of 22.9 cents.
All of this, it seems to me, overcomplicates the process. Instead of haggling over the price, why not simply go with a simpler concept? A kilowatt is a kilowatt. If the solar panels on my home generate a kilowatt that I don’t use and it goes into the grid, give me a credit that offsets a kilowatt I take later.
That is basically how it worked until 2017 and it’s what the advocates want back.
It doesn’t matter then if one side says the unit is worth 1.5 cents or 22 cents or if the price rises or falls.
And if a homeowner has leftover credits at the end of the year, Wright explains that those excess credits get donated to a program to help low-income Utahns pay their electric bills.
Everybody wins.
Of course, I’ve made it simpler than it is.
Rocky Mountain Power argues it shouldn’t give credits at the retail rate when it buys wholesale power cheaper.
Also, the sun shines during the day when demand is low, and those watts have to go somewhere. Battery technology is improving, but isn’t to the point where it solves the problem. Until it does, it makes sense to give a rooftop customer a reduced credit for providing power during the day and charge a premium for taking energy at peak times.
There will be plenty of room for the sides to argue about how much that adjustment will be, but it’s still a lot simpler than trying to affix a price tag to each kilowatt going to or coming off of the grid.
Whether the commission reinstates the old net metering program or tries in a Solomon-like fashion to split the baby and pin a value on the electricity, it will have profound impacts on the future viability of rooftop solar.
Utahns should make themselves heard and the members of the commission ought to carefully consider what’s in the big-picture interest of the state, not just Rocky Mountain Power.
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