Arizona regulators voted on Wednesday to consider lowering the rates
that electric utilities must pay homeowners with rooftop solar for
their excess power. Clean energy advocates say the move will
undermine the state’s booming solar industry and unfairly pad
utilities’ profits.

The decision follows a deep cut to solar benefits in neighboring
California, an indication of how states with high rates of rooftop
solar — regardless of their political leanings — are struggling to
integrate solar power with the legacy electric grid.

“It was a straight-up dumpster fire,” Jason Gallagher, chief
operating officer for Chandler-based solar installer Fusion Power,
told Semafor of the Arizona meeting.

Tim’s view
The decision in Arizona illustrates how solar power, in spite of its
plummeting global price and unprecedented federal backing, is still
subject to local political whims and the rehashing of decade-old
arguments.

In Arizona, as in most states, when a home’s rooftop solar panels
generate more electricity than the house needs, the excess can be
sold into the grid, a practice called net metering. The rate
utilities offer for that power differs between jurisdictions;
usually it’s the same rate the house would pay to buy power from the
grid, or a bit less. In 2016, after an expensive lobbying campaign
by the state’s biggest utility, regulators adopted a plan that would
gradually step down the rate over time (pre-2016 customers were able
to keep a grandfathered higher rate). The justification was that the
retail rate, being higher than the wholesale rate utilities would
typically pay to acquire electricity, raised utilities’ costs in a
way that was eventually passed on to non-solar customers.

Over the last few years, Arizona’s net metering rate has now fallen
the wholesale rate, such that excess rooftop solar power is actually
a bargain buy for utilities. Yet the perception that net metering
constitutes an unfair cost-shift or subsidy has persisted in some
corners. At Wednesday’s hearing of the Arizona Corporation
Commission, which regulates the state’s utilities, chairman Jim
O’Connor, a Republican, argued that anyone wanting a solar roof
“shouldn’t do that at the expense of their neighbors and
communities.” O’Connor, along with two other Republicans on the
five-member commission, voted to reopen the 2016 policy and
potentially allow for much steeper annual cuts in the net metering
rate.

The decision makes solar a hard sell for homeowners in one of the
country’s sunniest states, Gallagher said, because it makes it
impossible to calculate a realistic payback period, and most likely
extends any such period. That view was echoed in a filing by Tesla,
which sells solar and battery systems in the state and said the
decision will “harm investor and customer confidence in Arizona.”
Even the utility companies that originally pushed to lower the rate
were against reopening the existing policy.

“They’re setting a precedent that whatever they decide in one
meeting doesn’t really matter,” Gallagher said, because it’s liable
to be re-litigated every two years when the commissioners are up for
reelection. “There is no major renewable energy company in the
nation that, if they looked at what happened [on Wednesday], would
feel comfortable investing in Arizona.”

Room for Disagreement
In defending his vote, O’Connor pointed to the example of
California, which in April deeply slashed its net metering rates in
spite of its liberal, climate-focused politics. That state is by far
the country’s top solar market, and net metering had become a
legitimate problem for the grid. Midday peak solar production in
California is now so high that it sometimes more than covers the
entire state’s electricity needs — but then forces power companies
to massively ramp up other forms of generation as the sun goes down,
raising costs and the risk of blackouts.

The View From New York

Notable
The global price of solar would be even lower, an Oxford University
lecturer wrote this week, if not for a century-old kidnapping.
George Cove was a Canadian engineer in New York who invented the
first solar panels in 1909, to much publicity, and was shortly
thereafter kidnapped, with a term of his release being that he give
up his solar patent. After his release, he never returned to the
idea. In a paper, economist Sugandha Srivastav argues that if he had
continued, solar would have become cheaper than coal power by 2002,
14 years earlier than it did in reality.

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140707163.html