Tony Boniface, here. I was recently sent a Wall Street Journal op-ed piece with a unique perspective on the rooftop solar industry. Author Brian H. Potts argues that residential solar systems cause an unfair shift of wealth towards solar owners. He particularly highlights the effects on utility companies and how their increased costs get put back onto the utility customers. Potts believes that we should not have federal subsidies that make solar affordable for homeowners and non-utility solar plants (such as commercial businesses). He proposes that the money instead should be used to subsidize only utility-scale solar plants, implying that this would have a greater increase in the amount of solar power installed in the country.
Again, it is important to remember that this WSJ article is strictly opinion. It does not necessarily reflect the views of the newspaper. Here’s my response to Potts’ claims:
If you notice, the author is a lawyer for a utility so his comments are biased. He stems his argument that solar panels installed on houses and which push back power to the grid via net metering is expensive and puts added cost burden to the utility who will then pass it on as higher rates to its customers (who are not solar powered). He does seem to think utility-scale PV power plants are ok as they are less expensive and don’t take subsidies.
What he fails to mention is that it was the subsidies that made the solar industry here and abroad work and become successful enough that the volume increased to the point that solar panel prices have dropped from about $4 per Watt in 2008 to less than $1 per Watt in 2013 or about five years. This volume was the result of residential and business owners taking advantage of the subsidies – So, the subsidy has worked. The utilities only got in the game installing big PV plants recently within the past few years so they are benefiting from this economy of scale too which, again, was derived from subsidies. The subsidies are almost all but gone in the states he talks about as they should after doing what they were supposed to do – create economies of scale to bring the price down. The Federal Investment Tax Credit (ITC) is set to expire at the end of 2016 and, it too contributed substantially to bringing the price down. The ITC is available for any entity that pays taxes- which includes the utilities.
As for net metering, it was employed originally because it is simple and worked to, again, get the industry off the ground. It is arguable that the real value of solar energy being produced at the location where power is being used is actually more valuable than the retail rate of power. The homeowner, who paid to install a solar system on their roof, added power capacity to the grid which helps keep the utility from having to invest in extra power plants needed during peak power times, usually late afternoon when solar systems are still producing power. In California, there are incentives to have arrays facing West for better late-day performance.
Power from central power plants loses around 20% of the power in transmission so that adds 20% value to the energy produced at the location using the power. If this power flows out the meter during excess, it flows to the neighbor’s house and through their meter earning the utility 20% more than if they had to produce that power at the plant. Calling net metering a “hidden rate subsidy” is a one-sided and self-serving argument.
Aside from adding power capacity as previously noted, the homeowner effectively paid to not only install but also maintain his/her own “power plant” -not an insignificant capital investment even post “incentives”. Utilities simply cannot claim that it costs the same to maintain a “solar” customer as it does a “retail” customer.
So, if the argument is that utilities should only pay solar customers their avoided cost for electricity of 5 cents/kWh during times when solar power is available (when the meter spins backward) then the same could be said of the utility charging not the retail rate but, at most, 5 cents/kWh at times when solar power is not available and the meter spins forward ( net metering).
PERSONAL CHOICE AND SECURITY: “ELECTRICAL INSURANCE”
Also, rooftop solar systems allow the home to be powered when the grid fails during storms, etc. via the clever new inverters that have a power supply option or by adding a battery bank as we are doing more often. These systems will become ever more popular because they can feed power into the grid any time not just during the day. They will support the grid in a distributed manner, via building rooftops all over the place, so they will have a very beneficial impact on the grid stability and power quality. These home inverters have the ability to add or remove reactive power from the grid and do so where it counts – where power is being used.
In fact, California is now mandating systems that include battery storage for this reason. This will be the best thing that ever happened to the grid, mark my words. And it will only happen via distributed generation, aka, solar systems on rooftops everywhere not just centralized utility-scale PV power plants. Another thing he is missing is grid transmission lines are already overburdened so adding solar power plants will require grid upgrades. This issue is what is preventing states like Wyoming or Montana with lots of wind from building more wind farms. So again, distributed generation doesn’t have this issue as the power is produced where it is used either by the PV homeowner or his neighbor(s).
The fact is, solar needs to be installed everywhere if it is to make a big impact, on roofs, and as utility-scale. For him to suggest it should only be utility-scale plants negates many positives and sounds very biased as one would expect from someone representing utilities. So, the subsidies have done their job and are going away. Net metering is being reconsidered all over the US and surely a new metering system will replace it. The real question remains: what is the true value of solar generation at the location it is being used? To assume that it should be valued less than the retail rate of utility power is not necessarily true as the bulk of utility power comes from fossil fuels and no one knows what the true cost to society is from the pollution from those plants.
That cost, whatever it is, is NOT factored into the retail rate of electricity. I would call that a subsidy and a potentially huge and growing liability. Rooftop solar has no such potential liability and will prove in time to be a key component for a robust grid and in the meanwhile to provide customers with a clean energy source that keeps the lights on when the grid goes down.
Finally, insinuating that Solar is a “losing technology” is much like saying innovation is for losers. It’s a fear-based comment that aims to protect special interests. The solar train has already left the world’s station and no amount of fear-mongering can stop it.
Wall Street Journal subscribers can read the full original article here.