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APS, solar industry at odds on value of power from rooftop units By Ryan Randazzo The Republic | azcentral.com Wed May 15, 2013 9:48 PM Arizona Public Service Co. and the solar industry have published conflicting studies estimating the value of rooftop solar panels, foreshadowing a debate that will determine the future of the budding solar industry in Arizona. The APS report says that people with rooftop solar are being overpaid for the excess electricity they generate, which is directed to the power grid when they are not using it. The solar-industry report said those customers are being underpaid and that their solar panels provide value to the utility by helping APS avoid expenses like new power plants. The two sides are making their arguments as APS prepares to ask regulators in July for a reduction in its credits. The five Arizona Corporation Commissioners will decide whether to keep or alter the payments. The utility, like many others, gives customers a one-to-one credit for each kilowatt-hour of electricity their solar panels generate that gets sent back to the power grid. The policy is called net metering because customers are billed for their net usage. If their solar panels generate excess electricity in the daytime, their meters run backward. Then at sunset, when their panels stop making electricity and they are using electricity from APS, the meters run forward again, effectively spending the credits they accumulated during the day. No money actually exchanges hands unless a customer has excess credits at the end of the year. Most customers with solar panels accumulate credit for the electricity they generate during the day, then they start to redeem those credits in the evening when they get home, turning on lights, air-conditioners and other appliances. The average price for electricity in those evening hours is higher than usual, 15.5 cents per kilowatt hour, according to APS. Those prices include everything from the cost to build power plants to maintaining power lines. The electricity the customers redeem with their credits is much more valuable than the electricity their panels provide, officials said. APS estimates the electricity those customers generate from solar panels is really worth only 3.6 cents per kilowatt-hour today, the cost APS avoids in power-plant fuel, according to a report APS commissioned. “They get a credit today based on their rate structure that allows them to take more credit for their solar production than what the value really is,” said Jim Wilde, APS director of resource planning. But the panels do not help much, if at all, when it comes to staving off costs associated with the construction of power lines, power plants and other infrastructure, and thus is not worth the full retail value of electricity on the APS grid, Wilde said. Wilde said the value of electricity from rooftop solar could be about 8 cents per kilowatt-hour by 2025. The Solar Energy Industries Association trade group in Washington, D.C., released its own study last week that puts the value of electricity from APS customers’ rooftop solar much higher, at 22 to 24 cents per kilowatt-hour, more than what APS is giving solar customers credit for. That study says that for every $1 that APS spends on rooftop solar, it gets about $1.54 back in electricity, avoided infrastructure costs, reduced pollution and other benefits. “Net metering isn’t broken and we don’t think it needs to be fixed or adjusted at this time,” said Sara Birmingham, Western states director for the SEIA. She said that APS does not give a fair value in its study to the costs that are avoided by using rooftop solar, and the study commissioned by her organization and conducted by Crossborder Energy provides a more comprehensive analysis. “If you put in solar, the (electrical) load required for APS to serve is lessened,” she said. “It obviously is going to make an impact. They are not going to need to build a power plant as they were if there were not that solar out there. They are refusing to recognize that.” APS commissioned a similar study in 2009 that pegged the value as high as 14 cents per kilowatt-hour. The new report for APS was produced by SAIC Energy, Environment and Infrastructure LLC, which acquired the agency that conducted the 2009 APS study. The two new studies are at odds because of the assumptions they make. In 2009, APS was expecting growth in Arizona. But today, after a long recession and with excess electricity production, rooftop solar isn’t worth as much because there is plenty of electricity to go around. And the benefits that rooftop solar brings in avoiding new power lines aren’t the same because with slow economic growth, APS doesn’t need to build many lines, Wilde said. “In the 2009 study, we were just coming off of growth projections made in the heyday of Arizona,” Wilde said, adding that APS bought additional energy then to meet demand today. “That is why we have surplus reserves on our system today. Now we don’t have any significant transmission additions in the time frame (the study) looks at.” The solar industry is gearing up for a major fight over net metering once APS makes its application to change the policy. Without credit for the excess electricity, the costs of rooftop solar would be too high for most customers to justify because they would not realize any utility-bill savings. APS also pays customers a rebate to offset the installation cost of solar, and that is declining and likely to be gone soon, thanks largely to the fact that solar prices have declined dramatically in the past few years and the subsidy no longer is needed. The federal tax credit worth 30 percent for solar panels expires in 2016 unless renewed, which means that net metering will be the last financial incentive for rooftop solar. APS and other regulated utilities in Arizona must get 15 percent of their electricity from renewable sources like solar by 2025, but without rooftop solar, most of that power will continue to come from out-of-state wind farms and other projects, said Sean Seitz, president of American Solar in Scottsdale. He said that neither of the conflicting studies takes into account the value of having an in-state industry. “The studies do not include the external values (of solar) outside the utility system, things like workforce, jobs, employment, tax revenue collected from installations, all of that,” he said. The rooftop sector is the strongest for the solar industry in Arizona. A survey last year by the Solar Foundation trade group found Arizona had the most workers per capita employed by the solar industry, with about 9,800 people working in solar, or one in every 306 workers. Most of those jobs were in the installation business, not manufacturing or project development. Birmingham said the Arizona debate could set a precedent for other states looking at net metering. |