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The More Things Change…

· October 2, 2017

Remember January 2008?

The U.S. presidential primaries were just getting under way. “Breaking Bad” premiered on AMC. Most importantly, a brand-new B2B magazine all about solar – a sector poised for extraordinary growth and momentous changes – launched. Although I took Solar Industry’s official editorial reins in January 2010, I was deeply involved with the magazine from its earliest days as a Web editor, writer and occasional representative globe-trotter (Valencia, Spain – home of EU PVSEC 2008 – remains an all-time highlight).

Jessica F. Lillian

Nearly a decade later, it’s clear a lot has changed since 2008:

1. Solyndra. Let’s get that one out of the way. From industry darling to synecdochal punching bag throughout incessant congressional hearings, this is one solar company that I hope has finally receded from public awareness. But here’s an interesting flashback: I recently unearthed notes from a 2008 solar conference, where several respected keynote speakers spoke effusively about this remarkable cylindrical technology. Their comments might seem laughable in retrospect, but the whole tale – minus the disproportionate political baggage – is really just part of any maturing industry.

2. San Francisco. Mid-July means two things: the Major League Baseball All-Star Break and Intersolar North America. Even now, mid-summer feels incomplete without a week in wind-whipped San Francisco, watching the Home Run Derby together in a hotel bar and celebrating Bastille Day at a French restaurant. In 2008, change was already well under way in San Francisco’s neighborhoods, especially in the streets surrounding the Moscone Center. Each year upon our return, we’d note a new hip restaurant, a freshly remodeled hotel, or a different mood in the streets. SoMa felt like an apt location to reflect on the solar sector’s growth and evolution each year.

3. Cost per watt. When the first issue of Solar Industry rolled off the printer, the SunShot Initiative was still years away. A buyer perception of “still too expensive” pervaded. Everyone from slurry and wafer manufacturers to installation companies’ marketing departments to town permit boards had a role to play in cost reduction. Now, SunShot has met its 2020 utility-scale solar goal, installed costs have come way down, and residents of towns and cities across the U.S. notice a whole lot more solar on their neighbors’ rooftops. While this is no time for complacency, it’s worth comparing the numbers and toasting to the immense collective progress.

4. Twitter. In early 2009, I noticed that solar professionals – ever on the cutting edge – were increasingly sharing their thoughts on a little three-year-old social media platform called Twitter. I snagged the coveted username @SolarIndustry, jumped into weekly solar chats, procured interview sources, made new friends at Tweetups, and steadily grew our following in a community that still felt like a new frontier. Just last month, Twitter doubled the tweet character limit to 280 – the latest of many changes we’ve seen at the now not-so-small publicly traded company over the years.

Through the years, some things stay the same – namely, the importance of smart, timely news coverage. As Solar Industry transitions to the digital-exclusive life, it will surely continue to serve as the best source of daily news and analysis for B2B solar professionals.

We could publish 10,000 words on the transformation of media consumption preferences since 2008, but fortunately, quality journalism never goes out of style, especially in an industry as complex and vibrant as solar.

Jessica F. Lillian is a writer and editor who served as editor of Solar Industry from January 2010 to April 2013. Follow her on Twitter @jessica_lillian.

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Solar Industry Stands United Against Trade Case

Posted by Abigail Ross Hopper

· September 6, 2017

Last month, hundreds of solar workers descended upon Washington, D.C., for a hearing at the U.S. International Trade Commission (ITC) as a show of force against Suniva and SolarWorld’s Section 201 petition. Since the petition was submitted in April, we at the Solar Energy Industries Association (SEIA) have heard nearly universal opposition from solar companies large and small and across all sectors of the U.S. supply chain.

Abigail Ross Hopper

If the remedies sought by Suniva are implemented, it would double panel prices, halt many gigawatts of U.S. solar installations and cost 88,000 Americans their jobs. The workers who showed up from Massachusetts and Minnesota and North Carolina and California and Pennsylvania and New Jersey, among others, did so because they recognize that well-paying American jobs are at stake – theirs.

We demonstrated at the August 15 injury hearing that the bankrupt companies’ failures were the result of their own poor management decisions. And now the ITC is due to decide Sept. 22 whether solar equipment from other countries is a “substantial cause” of serious injury to these companies. It is not.

The broader industry is unified in opposition, and if the case moves forward to a remedy stage, we all must be ready to make a strong argument that these two companies and their hedge fund investors should not be paid to cover their bad bets. While the ITC will have an additional two months to recommend a remedy if injury is determined, the decision ultimately would lie with the president. As an industry, we have engaged with leaders in the Trump administration, and we will continue to make them aware of the terrible effects of this petition if the case moves forward.

One red herring the other side has come up with is that they represent American manufacturing. But this case would hit domestic manufacturers particularly hard. There are more than 600 solar manufacturing facilities across the U.S., making modules, cells, inverters, and racking and mounting systems, and they are often exporting these products around the world. America’s solar industry supports 38,000 manufacturing jobs, and the proposed trade barriers will undercut demand across the board, including in our manufacturing sector.

While SEIA is putting great emphasis on this trade case and the thousands of jobs at risk, we are not halting the work we do in other critical areas. State policy, grid modernization, codes and standards and removing barriers to solar adoption are all major areas of focus concurrent with the trade fight. But it is true that the trade case is the biggest threat to our industry.

In the past five years, the cost of solar has dropped by 63%, installed capacity has more than doubled and employment has skyrocketed past many traditional fuel sources. Free and fair trade supports this dramatic growth in America. Continuing to foster smart policy will triple U.S. solar capacity by 2022 and bring total employment in solar to more than 300,000 workers.

If we lose the case, on the other hand, solar will be priced out against fossil fuels and other renewables, and the jobs will start to dwindle, as production of new solar plants falls off the table.

Abigail Ross Hopper is president and CEO of the Solar Energy Industries Association.

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The Fight For Residential Solar Incentives In Oregon

Posted by Jeff Bissonnette

· August 1, 2017

Jeff Bissonnette

Chaos theory says that the flutter of a butterfly’s wing can cause a hurricane on the other side of the world. That may or may not be true, but one thing is certain: Most things are won or lost in the margins.

That’s the case we found in the Oregon legislature in 2017. The solar industry’s top priority this session was to extend – or, if needed, replace – an existing tax credit that helps residential customers put solar on their homes (the same tax credit also helps Oregonians make energy efficiency investments in their homes). The tax credit is scheduled to sunset at the end of this year, and the general consensus was that it was still needed to help drive clean energy investments in homes throughout the state, help the solar industry continue to grow and help the state meet its greenhouse-gas emission reduction goals.

OSEIA, Oregon’s solar trade group, started our advocacy effort last fall, talking to legislators during the campaign about the importance of the tax credit to solar installers. We started developing an “Oregon Solar Plan” to provide a long-term vision for solar in the state and demonstrated the need to maintain existing policies (including the tax credit) in order to realize that vision. We had strong legislative champions and an active grassroots base that generated hundreds of calls and e-mails at the drop of an action alert.

During the session, we struck a deal to allow the existing tax credit to expire but to be immediately replaced by a new credit that cost less and provided a glide path to signal that the industry was going to work to not need the incentive anymore over the course of several years. That deal, because of our champions, grassroots network and inside-the-Capitol lobbying, was alive until the last hours of the session.

But in the end, we fell short due mainly to a couple of legislators whose top priority was reforming the state’s revenue system. When that didn’t happen, those legislators maintained the position of “no new revenue, no new tax credits,” no matter how worthy (and needed) those tax credits might be. No amount of arguments about jobs, economic development, confronting climate change, popularity of solar or anything else moved them from their mantra.

We did most everything right from an advocacy perspective but got caught in the margins with a few legislators who had other priorities. The loss was tough, especially because people’s jobs literally hang in the balance. But solar is resilient, and we are taking lessons from our colleagues in Nevada and Washington state who saw their incentive regimes evaporate only to be brought back in some form a couple of years later.

In Oregon, we hope not to have to wait that long. We have a chance in a February 2018 session to get an incentive re-established. The uncertainty over the next several months won’t be painless, but we hope to make the pain more like a headache rather than having an arm cut off.

Oregon has a chance to realize the mistake it made in allowing an incentive to help individual homeowners invest in clean energy expire at the end of the year (energy efficiency fell by the wayside, too). Solar advocates will be working with our efficiency allies to quickly rectify the mistake. We’ll now try to win in the margins with a bigger grassroots network and examples of lost opportunities. Stay tuned, and we’ll report back at the end of February 2018!

Jeff Bissonnette is the executive director of the Oregon Solar Energy Industries Association.

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More Doing, Less Complaining

Posted by Jigar Shah

· July 7, 2017

The U.S. solar industry has experienced massive growth in the past few years, reaching almost 16 GW of new installations in 2016. This was about 60 kW for each of our 260,000 workers. But this year, the U.S. market is expected to shrink. Although many of us are disappointed about President Trump’s actions on the Paris agreement and worried about his future actions on the Suniva trade case, we have to take more responsibility for the success of our industry – more doing, less complaining.

Jigar Shah

Trump’s actions on Paris don’t really impact the solar industry, which will continue to sell robustly in the U.S. and abroad. In fact, state-level policy has a much bigger impact, and Trump’s announcement has led many states and cities to pledge to accelerate goals to install more renewable energy.

What we need is more “selling.” The solar industry enjoys one of the largest sales forces in the Advanced Energy Economy. Since Trump’s Paris decision, Climate Mayors have adopted the Paris agreement goals for their cities, a coalition of governors has formed the bipartisan U.S. Climate Alliance, and many colleges and universities have also stepped up – but most have barely scratched the surface on rooftop, parking and ground-mounted solar.

Our sales force has to do more to move beyond the traditional residential and utility-scale efforts we have been chasing and add distributed solar for these partners. Further, there are only 25,000 cities and towns in the U.S., and pretty much every one of them can adopt much more solar faster.

Analysts at the National Renewable Energy Laboratory have used improved data analysis methods to estimate a technical potential of 1,118 GW of capacity and 1,432 TWh of annual energy generation on rooftops across the U.S. – equivalent to 39% of the nation’s electricity sales.

Almost all of these buildings could save a minimum of 10% on day one using “no money-down financing” solutions that are prevalent these days. Furthermore, most other buildings without rooftop potential have adjoining parking lots and other space that can host solar power systems. It is time for the solar industry to work to grow our presence and not fight over the same 720+ FICO score residential customers and 5+ MW utility-scale projects.

What’s holding us back is a lack of focus on credit analysis and soft-cost processing innovation, not a lack of opportunity. Solar does not keep progressing to more rooftops and fields without people pushing their local politicians for more deals and their financing partners for more leeway to do smaller and more difficult deals. There is always a roof or field that needs solar and a mandate that needs reaching.

So, contact people within your sphere of influence. Each of us can grow the solar industry one rooftop or field site at a time. With just 60 kW of solar installed per solar employee in the U.S. last year, it feels like we need to be just a little more loud about our industry. Every relative, friend and classmate should be hit up for solar on their rooftop. I am sure that all of the people signing these pledges to do more for renewables will get distracted with other priorities unless our industry holds their feet to the fire. Again, it is time for more doing and less complaining.

Jigar Shah is the co-founder and president of Generate Capital.

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Installers Must Adapt To Today’s Value-Conscious Shoppers

Posted by Vikram Aggarwal

· May 31, 2017

Across the U.S., the cost of solar energy systems continues to fall at an accelerating rate. Our latest data report saw prices drop by over 6% between the first and second half of 2016 – the greatest rate of decline since we started tracking prices in 2014.

Vikram Aggarwal

Yet despite consumer-friendly prices, solar installers are still having a difficult time acquiring customers. Nearly 70% of the 360 respondents that completed our 2016 Installer Survey stated that customer acquisition either got harder or remained the same compared to the year prior. We expect this trend to continue in coming years as more solar installers enter the industry and successful installers expand their geographic footprint. Half of all solar installers surveyed said they directly compete with 20 or more competitors in their sales territories.

To compete in this changing market, solar installation professionals would benefit from better addressing two emerging trends among today’s solar shoppers – they’re shopping around more than ever, and they’re increasingly value-conscious.

Recently, SolarCity announced it would no longer sell solar door-to-door – a sales tactic that has fallen out of favor among consumers. Today’s modern consumers are much more sophisticated about how they want to shop for solar. They’re seeking an online-first experience that allows them to research solar equipment, prices, and companies from the peace and anonymity of their laptops. They’re comparison-shopping multiple offers before making a decision. Not surprisingly, only 2.7% of our shoppers indicate that they would prefer to speak with or invite an installer for a site visit before receiving quotes online.

The number of quotes consumers want when shopping for solar is going up, as well. According to the installers surveyed, the average number of quotes seen per customer increased from two to three, with many seeking five or more. What’s behind this shopping trend? As more solar companies enter the market, and as it becomes easier to find these companies online, solar shoppers are having an easier and faster time getting multiple quotes.

Customers don’t necessarily want the lowest price, but they do want peace of mind in knowing that they’re paying a fair price for the right quality product. Qualitative benefits such as an installer’s experience, aesthetically pleasing designs and responsive sales process may appeal to some. However, other savvy consumers will seek more measurable benefits, such as length of labor warranties, production guarantees and financing that maximizes savings. This is the type of information that today’s solar installers must focus on if they want to stand out. They’ll need to quantify their value proposition, especially if they’re hoping to charge a premium.

A recent report by the National Renewable Energy Laboratory (NREL) found that the country’s largest solar installers are charging, on average, 10% higher prices than smaller installers. NREL studied our solar quote data versus quotes received by the same consumer from large installers to study the effects of company size on solar pricing.

Value-conscious consumers see through this overpricing when they comparison-shop across multiple options. These shoppers are looking for the rationale behind why they’re getting charged 10% more, and the “bigger is better” answer isn’t as believable as it was before a wave of large solar installers exited the industry.

To grow business and close more sales, installers must present prospects with quantitative information to make calculated decisions based on the long-term return on investment. The installers that come to the table with tangible and measurable benefits, such as payback period and 30-year savings, will be much better positioned to win over today’s value-conscious solar shopper.

Vikram Aggarwal is the CEO and founder of EnergySage, an online comparison-shopping marketplace for rooftop solar, community solar and solar financing. For more on the reports mentioned in this op-ed, visit energysage.com/data and nrel.gov.

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Renewables To Persevere Amid CPP Rollback

Posted by Todd Foley

· April 24, 2017

On March 28, President Trump formally shifted direction in U.S. climate and energy policy with the release of an executive order to review and likely attempt to roll back the U.S. Environmental Protection Agency’s Clean Power Plan (CPP), as well as other climate executive actions. Aimed to reduce carbon pollution from existing power plants, the CPP was the cornerstone of President Obama’s climate policy to transform the nation’s power sector and deliver on the country’s commitments outlined in the Paris Climate Agreement. Interestingly, the Trump order was largely silent on whether the U.S. should stay or withdraw from the accord – though later reports indicate the White House could make a decision on the pact in advance of the G-7 meeting.

Todd Foley

As we wait for the full picture of Trump’s energy policy to take shape, it’s important to take stock on what the likely demise of the CPP will mean for the booming renewable energy sector. There is no denying that long-term investment in the nation’s renewable energy infrastructure would have benefited from the CPP’s goal of reducing carbon-dioxide emissions from the power sector by 32% by 2030. The near-term reality, however, is that the president’s order is unlikely to impact the continued growth in the renewables industry.

Renewable energy provided 70% of the nation’s electricity capacity additions over the past two years, with more than 22 GW of new solar and wind generation installed in 2016 alone. In fact, the renewable energy sector garnered a whopping $96 billion in investments over the same period and is currently the largest source of private-sector infrastructure investment in the U.S. This growth has created hundreds of thousands of new jobs and generated hundreds of millions of dollars in tax revenue for local communities, mostly in remote rural areas. This market momentum will no doubt continue, with more than 90 GW of solar and wind contracted or expected to be installed over the next five years.

What’s driving this growth? The simple answer: economics! America’s renewable energy industry is growing rapidly because of declining costs and increasing demand by residential and corporate electricity consumers alike – a trend that will continue for the foreseeable future, aided by bipartisan federal tax policy and forward-looking red- and blue-state policies.

Of course, any federal energy policy limiting carbon would help renewables. Yet even without a regulatory mandate, the current renewable energy growth trajectory being driven by competitive power market economics suggests we may be able to stay on track with the CPP’s original emissions-reduction objectives. The renewable energy sector will continue to be a major source of modern, price-competitive and virtually emissions-free power. That’s a win-win-win – for consumers, system reliability and the environment.

Furthermore, Trump is a businessman and a politician. He has surrounded himself with a number of other notable businessmen and advisors, including Energy Secretary Rick Perry, who are well versed in the role of renewables as an infrastructure and power generation engine of investment and economic growth. In April, Perry said, “We are committed to developing, deploying and commercializing breakthrough technologies and developing the necessary policies that will help renewables become competitive with traditional sources of energy.” This is an encouraging sign from an administration that will need to work with Congress to decide on whether to move forward with a truly “all of the above” energy strategy, which includes a major role for renewables.

We are also looking ahead to possible tax reform. Renewable energy incentives are scheduled to ramp down; meanwhile, conventional energy tax incentives are permanent. Tax reform will offer the opportunity to update tax and energy policy to drive more investment in energy infrastructure and innovation. Will the administration and Congress invest in continued renewables growth and ensure a level playing field? Let’s stay engaged to ensure as much.

Todd Foley is senior vice president of policy and government affairs at the American Council On Renewable Energy.

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Adapting To DG Project Financing Changes

Posted by John Marciano III

· March 27, 2017

The financial picture for distributed solar projects is in the midst of a substantial evolution. Deals are getting more complex. Transactions have started to involve more players, new issues have arisen, and the total revenue available from a project has decreased due to falling power off-take prices. The following are three considerations you should take in order to adapt to these changes:

1. Fill out and optimize the capital stack.

When the solar industry started to take off, developers had a hard time raising capital to cover the cost of a project. At best, a developer could expect only to raise tax equity (investments in which the primary source of return was benefits). These transactions only covered 35% to 50% of the capital stack. The rest of the project cost was covered with the developer’s equity. There were no other partners, and there was no debt.

John Marciano III

Some developers make the mistake of assuming a simple structure copied from earlier transactions will work today. But, with margins coming down, it is ever-more important to take a more sophisticated approach. Most projects now have either project-level debt or back-leverage, at a minimum. Back-leverage is debt that is subordinate to the tax equity – the only security is the developer’s interest in the partnership with a tax equity investor.

Consider equity participants that can buy into a developer’s cashflow stream at a lower weighted average cost of capital. New entrants are coming to the market every day. Insurance companies are a popular source. Many have recognized the stable cashflow stream and diversification of distributed solar. Some banks and funds will offer a similar mezzanine debt product, which we call “back-back leverage,” as it sits behind other debt in the transaction.

Each rung of the capital stack needs to be set up such that you can extract the most value from it. Separate cashflows for each capital source as much as possible.

2. Don’t blindly cost cut.

Distributed projects are the hardest to finance. They have the diligence needs of a utility-scale project without the economies of scale. Many assume this means they should cut all costs at all costs. It does not. Sloppy project documents will sour the economics of an otherwise good project. Make sure you have a crisp site lease and off-take agreement. Try to follow the Department of Energy forms, at least as a base. We see many distributed deals in which the project documents need to be reworked (and recalcitrant off-takers); this often leads to an unfinanceable project.

Community solar in the right jurisdictions offers a good way to address this issue, as power prices are closer to retail rates for these projects.

3. Recognize political risk on the horizon.

It is important not to be blindsided by looming law changes. There is always some degree of betting the curve when pricing off-take. Typically, this means betting that costs will come down is not a sure thing. The price you bid for the power contract may be out of the money if development or operation costs end up higher than expected. Do not assume they cannot go up.

Several states and utility districts have advanced plans to make it more difficult to connect distributed projects to the grid. A deal can still be financeable in a jurisdiction where these initiatives are contemplated, but they have to be understood when you are negotiating the off-take arrangement.

The Trump election has brought the possibility of tax reform into the foreground. It is likely that the corporate tax rate will decrease. For solar, this means that depreciation could be worth less. Buyers and lenders have started to change the way they price transactions. Many will assume a 20% or 25% tax rate in the model.

John Marciano III heads the Washington, D.C., office of Akin Gump Strauss Hauer & Feld’s renewable energy practice. His colleague Ed Zaelke also contributed to this piece.

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Consumer Protections: Myth vs. Fact

Posted by Tom Kimbis

· March 1, 2017

The U.S. solar industry is made up of more than 9,000 companies, most of which interact with customers every day. Word-of-mouth recommendations are vital for our companies and their reputations, and the emphasis the industry places on consumer protection is one of the reasons solar has such strong approval ratings.

The Solar Energy Industries Association (SEIA) has developed a comprehensive suite of materials and resources for consumers and companies that are being rapidly adopted across the nation. But I’ve been hearing and reading many myths that contradict this strong commitment to consumer protection and that might discourage consumers from exercising their right to go solar. I’d like to correct some of the more common myths and misperceptions.

Tom Kimbis

MYTH: The solar industry is unregulated.

FACT: The U.S. solar industry is heavily regulated today by state and federal agencies. It is subject to consumer protection laws on manufacturing, advertising, installations, contracts and more. Solar leases, for instance, follow the same regulations as other lease types that have existed for decades in a broad range of industries. The Federal Trade Commission and Federal Communications Commission have oversight in many areas of solar transactions, as do state attorneys general. This myth is plain false.

MYTH: Solar leases prevent home sales.

FACT: Lease providers who own the solar systems on consumers’ roofs need to make sure that both the county and potential purchasers of that home understand that the solar system is not owned by the homeowner. Therefore, the companies file notices with county offices to publicize their ownership of the PV system. These notices do not place liens on homes or prevent home sales. Many lease providers give options to consumers planning to sell their homes, including transferring the leases to the new homeowners. Some companies will even move the existing system to your new home. Solar leases, therefore, do not legally interfere with home sales.

MYTH: Solar is only for the rich.

FACT: The cost of solar in the U.S. has fallen 70% since 2010, allowing low- and moderate-income communities to benefit from clean, affordable solar energy. Utility-scale and community solar projects are choosing solar to supply power to these communities, and organizations like The Solar Foundation, Grid Alternatives and SEIA are working on ways to make solar more accessible and affordable. I can tell you that SEIA and our industry are committed to reaching all Americans, and doing so with a more diverse workforce than we have today.

MYTH: Solar companies prey on the aged and uninformed.

FACT: At SEIA, consumer protection is at the top of our list. The reputation and ability to sell solar depends on treating our customers right. Like every industry in our nation, solar has a few bad apples, and they target the most vulnerable. We’re working hard with states and federal agencies to put those bad actors in jail. They’re unwelcome in our industry. The vast majority of solar companies put consumers first and build their businesses on satisfied customers.

MYTH: There is no good way to resolve consumer complaints.

FACT: Under its consumer protection committee, SEIA has established a Solar Business Code with a complaint resolution process in which customer complaints are taken seriously and addressed properly. SEIA sends complaints to solar companies and engages in resolution of those complaints. SEIA meets regularly with government officials, both state and federal, to discuss solar industry practices, SEIA’s consumer protection work, and ways to help consumers. The Better Business Bureau is using our code in all 114 of its local offices. Our complaint resolution process complements government actions, and some governments have even begun referring consumer complaints back to SEIA to resolve under our complaint resolution process.

MYTH: Shopping for solar is too confusing.

FACT: SEIA’s Residential Consumer Guide to Solar Power gives consumers key tips to better understand their options for going solar and key questions to ask a solar installer. SEIA has developed disclosure forms that summarize key contract terms. The forms help consumers better understand offers and compare pitches from different companies. SEIA has released disclosure forms for leases, power purchase agreements and sales.

MYTH: There is nothing guiding solar companies in ethical best practices.

FACT: SEIA develops educational materials, maintains a consumer protection portal on its website, promotes consumer protection resources at conferences and provides free webinars on consumer protection. SEIA has developed a Solar Business Code that covers advertising, marketing and consumer interactions, and contracts rules to protect consumers while promoting competition. SEIA is developing compliance guides to help companies understand what they need to do to comply with ethical best practices.

Solar is now a mainstream energy choice, with hundreds of thousands of new residential solar systems being installed each year. SEIA is dedicated to ensuring that customers have all the information they need to make smart decisions when they choose to go solar, and the resources available on our consumer protection portal are designed to meet those needs. Solar only works for America if it keeps its good name. All of us associated with SEIA’s consumer protection efforts are working hard to ensure that our industry does just that.

Tom Kimbis is executive vice president of SEIA.

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In Defense Of NEM Changes

Posted by Gary Hoogeveen

· February 3, 2017

The way customers are using and getting energy is changing rapidly, and Rocky Mountain Power (RMP) is responding to those changes in a way that balances the interests of all of its customers – including those with rooftop solar panels. After the Salt Lake City-based energy company unveiled a proposal to change its net energy metering (NEM) program in November 2016, some clean energy groups opposed the proposal because they feared it would hurt the solar industry.

Gary Hoogeveen

The debate in Utah over NEM is between two industries with similar goals. The solar industry is standing up for its customers against anything making rooftop solar more expensive. RMP, which is part of the utility industry, is also standing up for its customers to keep electricity prices low.

Both industries are in transition. Energy companies are changing from using coal to using more renewable energy. The solar industry will be moving toward a time when customers may no longer get government tax breaks and utility subsidies.

The Utah Legislature in 2014 passed a law requiring the state Public Service Commission (PSC) to determine the costs and benefits of NEM. Later that summer, rate experts for the Utah Division of Public Utilities and the Office of Consumer Services testified at PSC hearings that the rate subsidy should be changed.

After nearly a year of exploring the arguments about how solar NEM should be valued, the commission directed RMP with specific parameters to make a detailed study on the actual costs and benefits of NEM.

The study found the average Utah rooftop solar customer receives an annual subsidy from other customers without solar panels of almost $400. With the substantial growth of the solar industry in Utah, this transfer of wealth between different residential customers is projected to total $667 million over the next 20 years.

How does someone who generates his or her own power gain a subsidy? NEM customers rely on the grid 23.99 hours per day, either to take power from the grid or to return their excess energy. These customers purchase less power from the energy company but continue to use the grid. This results in NEM customers underpaying their share of fixed grid costs. They are also currently being credited three to four times the market rate for their excess generation. Those costs are also passed on to customers who can’t or choose not to have rooftop solar.

In an effort to make costs fair, RMP is proposing that future rooftop solar customers pay a rate that matches their use and covers their costs without being subsidized by other customers. The rate includes a basic charge that closer reflects fixed costs like customer service and meters; a demand charge to cover poles, wires and generation; and a much lower kilowatt-hour use rate for electricity purchased from the energy company. The proposal would also credit rooftop solar customers for the value of the energy they contribute to the grid at a rate that removes subsidies from other customers.

RMP did not propose the new rate for customers with rooftop solar panels before Dec. 9, 2016, because of the financial decisions these customers already made in purchasing a rooftop solar system.

The commission will hold hearings in August before making a decision. It is easy to question motivations rather than try to work together, which is why at this writing, RMP is meeting with solar industry representatives and other stakeholders to hear their concerns and see if a mutual solution can be found.

RMP believes subsidies are a matter of public policy that should be addressed at the federal and state level instead of being included in rate making. Legislators are elected by the people and can decide whether incentives are needed for certain industries. We are interested in working with the solar industry in finding a path forward that is fair to all customers.

Gary Hoogeveen is senior vice president and chief commercial officer of Rocky Mountain Power.

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Lessons From Negotiations With The Utility

Posted by Rebecca Cantwell

· January 3, 2017

As executive director of the Colorado Solar Energy Industries Association, I spent much of my summer in corporate conference rooms at the headquarters of Xcel Energy, the utility serving about 60% of Colorado’s population. We had embarked on the most complex energy negotiations in state history and eventually reached a landmark settlement between Xcel and nearly two dozen organizations covering scores of issues, including many affecting solar energy.

Rebecca Cantwell

What struck me day after day was how uneven the playing field is when it comes to setting energy policy. If we are serious about developing a 21st-century system that encourages renewable and distributed generation, a vibrant solar industry, and storage and advanced grid technology, we must realize that processes designed to regulate monopolies from the last century are woefully inadequate.

Investor-owned utilities develop formal resource plans. In this case, Xcel presented three separate dockets for approval by the Public Utilities Commission (PUC). In one of them – a rate case affecting everyone who pays an Xcel electricity bill – the company spent more than $1 million developing its proposal. Guess who pays? Those same ratepayers.

Although PUCs have vast power, few citizens know anything about them. A small group of economists and analysts are charged with evaluating the utility’s plans on behalf of the public.

In Colorado and many different states, other parties that want to play in this game, such as our solar industry association, must “intervene’’ on their own dime. Each case requires a lawyer and subject matter experts with expertise in arcane rules and complicated procedures of the PUC and the utility. In short, getting involved is very expensive.

In one of these three cases, we faced a proposal from Xcel to build a 50 MW retail solar farm in direct competition with our industry. Because the maximum permitted size of a community solar farm is 2 MW, we compared this to being asked to approve a 50-story skyscraper for the utility in a two-story neighborhood.

Rather than face months of litigation, we agreed to embark on settlement talks with Xcel and other parties on all three cases because the issues were intertwined. Xcel had teams of lawyers, rate analysts, marketers and others at the ready to critique every idea and run sophisticated analyses.

What did our organization have? A virtually volunteer lawyer, a volunteer board president, some help from other volunteer board members, occasional paid help from experts hired by better-funded allies, and an executive director. We were expected to very quickly analyze and critique the impacts on our industry of sophisticated proposals with many moving parts.

We are pleased with the negotiated outcome. Certainly, hammering through these complex issues around a table was preferable to litigating. We are optimistic about four ongoing stakeholder groups that will continue to seek collaboration on complex issues, such as battery storage, advanced rate design and renewable energy programs.

But we had no real choice on some key utility issues, such as heavy reliance on demand charges for commercial solar customers. Supported with ratepayer dollars, Xcel has virtually unlimited resources, even though, as a public company, it uses those dollars to increase value to its private shareholders. To begin to lessen the disparity, changes are needed.

First, policymakers need to reconsider the rules of this game to ensure greater equity. For example, groups that intervene should be allocated budgets so they can afford to hire experts. Second, there needs to be more “public’’ in Public Utilities Commissions. From public education to public hearings, a greater effort is needed to bring these critical issues to the attention of the consumers they impact. Issues affecting the coming energy transformation need to be framed and discussed in a broader – and more public – context.

States will play an increasingly important role in setting the future of our industry, and we need to ensure that all the voices truly have a seat at the table.

Rebecca Cantwell is the executive director of the Colorado Solar Energy Industries Association.

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