The future of solar net metering in Arizona is under attack, with the state's largest utility Arizona Public Service (APS) proposing changes that undermine cost benefits for residential solar installations.
Under a plan submitted in July with the state's public utility commission, APS proposes two options for future residential solar customers – both of which will reduce potential financial returns homeowners would receive on their investment.
One alternative would model net-metering contracts much the same as today but require residential customers to pay what APS calls a "convenience fee" - a monthly charge for sending power to the grid. The other option would give homeowners a small ongoing bill reduction, based on market rates APS pays to other power generators.
Customers who already have a rooftop solar system as well as those who have already applied to connect by mid-October, would be given a "20-year grace period" before being subject to the new policy.
“As more customers install solar on their homes, it becomes even more important that everyone who uses the grid shares in the cost of keeping it operating reliably for the future,” says Don Brandt, APS chairman and CEO.
Solar advocates consider the APS proposal a "tax" on solar - the most direct attack yet on net metering, a key policy behind solar's expansion supported in 43 states. When more energy is created than a home or building needs, the meter turns backward, sending power back to the grid, which the utility pays for.
But after working well for many years, net metering is under attack by utilities, who increasingly see their business model threatened by distributed energy, and by conservative groups like ALEC, which will do anything to keep fossil fuels as the dominant fuel.
Things have gotten so bad that top solar installers such as Solar City, Sungevity and Sunrun recently formed the Alliance for Solar Choice to protect net metering and other state policies supportive of solar.
In a conference call before the Arizona plan was submitted, APS executives estimated that the average net-metering return is $0.15-$0.16 per kilowatt-hour (kWh), saving the average residential customer about 70% off their bill, reports GreentechMedia. The first option proposed by APS would reduce the customer's return to $0.06-$0.10 per kWh. The second would reduce a system owner's savings by about 50%.
The fate of the proposal is anyone's guess, but four members of the Arizona commission are closely allied with ALEC.
The Solar Energy Industries Association (SEIA) has voiced its concern over the APS recommendations, but is still hoping for a solution that "preserves full retail credit net metering while achieving ratepayer fairness," says Carrie Cullen Hitt, senior vice president of state affairs for SEIA.
“Solar energy offers tremendous benefits to all Arizona electricity customers, including those who aren’t yet solar users," says Hitt. "Clean solar power reduces air pollution, cuts distribution and transmission costs incurred by utilities, and creates jobs and economic growth opportunities. In 2012 alone, $590 million was invested in Arizona to install solar on homes and businesses.
“Arizona has just begun to scratch the surface of its solar potential. It’s essential that we keep smart policies like net metering in place so that Arizona can continue to benefit from its abundant solar resources, potentially spurring thousands of distributed generation and large-scale solar energy projects in the years ahead."
Arizona boasts the highest solar capacity per capita of any state, 167 watts per person, or about 1,097 megawatts of cumulative capacity. It is one of just 12 states that account for a whopping 85% of all US solar capacity.
The US just passed the threshold to 10 GW of solar, powering about 2.4 million homes. Much of the recent growth is related to residential installations and the success of solar leasing and net metering programs.