Solar advocates say new pricing plans will hurt progress

Source: By Donnelle Eller, Des Moines Register • Posted: Wednesday, April 6, 2016

Iowa’s two largest utilities want to build big community solar gardens that could give customers record access to alternative energy from wind and solar.

But their plans come at a potentially high price, renewable energy advocates contend. MidAmerican’s and Alliant’s proposals for paying consumers for the solar energy they generate at their homes, businesses and stores could double or triple the time needed to recoup the investment, essentially quashing development of the fledgling industry in the state.

“The negatives are significantly bigger than the positives,” said Josh Mandelbaum, an attorney with the Environmental Law & Policy Center. Under the utilities plan outline, “it could completely end or significantly diminish the number of projects that would be built in Iowa.”

Nathaniel Baer, energy program director at the Iowa Environmental Council, also is worried about pilot proposals on pricing. “There are a lot of details to work out, but the changes would likely make the economics for a business, farmer or homeowner to install” solar “a lot less favorable.”

The Iowa Utilities Board asked the state’s publicly traded companies to submit pilot plans that would boost distributed generation such as wind and solar in Iowa.

Solar energy in Iowa is less than 1 percent of state’s power profile, while wind provides about 30 percent of energy generation.

But analysts say Iowa’s solar potential is great as well. Rooftop solar in Iowa could meet nearly 36 percent of Iowa’s annual electric needs, according to a National Renewable Energy Laboratory report released in January.

Des Moines-based MidAmerican expects to significantly ramp up solar use, with a plan to add community solar gardens with up to 35 megawatts of energy. Depending on interest, MidAmerican would add about 5 megawatts of solar energy at a time.

Alliant, too, plans community gardens, but it hasn’t determined how large the project will be. It too depends on interest, said Justin Foss, a spokesman for Alliant.

MidAmerican and Alliant officials say their proposals are designed to start discussions about increasing solar use in the state — and the cost to do it. But the plans’ changes, they say, address concerns about shifting fixed costs from solar adopters to nonsolar users.

“We’re not opposed to private solar. Our primary interest in pricing is to make sure there’s not cost shifting — that any pricing is beneficial to all customers,” said Michael Fehr, vice president of MidAmerican Energy’s resource development.

MidAmerican and Alliant said in state filings that current solar customers aren’t paying their fair share of the fixed-grid costs — such as the expense of poles, transmission lines and substations.

MidAmerican said the power grid is “needed all of the time,” for example, to send solar customers’ excess energy and receive power when it isn’t sunny, the filing said. But solar users’ customers are only covering part of those costs.

Mandelbaum said the utilities’ rate proposals, although different, would both “significantly change the value, reducing the amount going back to the resident or small business that wanted to use solar.”

MidAmerican’s plan would add another fixed cost that solar energy-generating consumers would have to pay, while reducing the credit they would receive for that private power generation, he said.

And Alliant would significantly decrease the amount of credit consumers would receive for generating energy, Mandelbaum said.

“Instead of customers having an eight- or 12-year payback period, it could be two or three times that range,” he said. “That’s something customers aren’t generally willing to do.”

It costs an average Iowa homeowner about $15,000 to install a solar array. Adopters also can receive state and federal tax credits.

Foss said the Cedar Rapids-based company proposes a two-tier pricing schedule that encourages residential and business customers to “right-size” their solar development.

“We’d purchase energy up to the amount they’d use in a month … at an average retail rate,” Foss said. “After that, if a customer generates more than he would use in a month, we’d purchase that energy … close to a market cost.”

Although pricing details aren’t available in the proposal, Mandelbaum said Alliant’s plan could mean solar customers receive half of the current credit the utility now provides — or less.

“Both proposals are very detrimental to customers” being able to add solar, said Steve Guyer, president of GWA Solar in Altoona.

The changes aren’t expected to affect current solar customers, just new ones.

Mandelbaum and the Iowa Environmental Council’s Baer say the state needs a comprehensive evaluation of the benefits and the costs of solar generation.

So far, Mandelbaum said, utilities are only counting the solar costs and none of the savings — such as reduced need for future generation plants with added private energy production.

Community solar gardens enable a utility customer to buy into a larger project. Subscribers could be required to pay an upfront investment or a monthly fee, enabling them to benefit from the solar energy generated from the project.

Several utilities in the state have adopted different community garden plans.

Baer said his group likes the community garden. “That’s a positive,” he said.

But Mandelbaum was concerned about how the pricing for those projects, too, would be structured.

MidAmerican and Alliant are discussing how utility customers would pay to participate in the solar garden.

“We think that piece can be more positive,” Mandelbaum said. “The details will matter. Will it be something that customers will use, and will it provide value and allow for additional distributed generation growth in the state?”

Central Iowa Power going solar

Last week, Central Iowa Power Cooperative said it would build 5.5 megawatts of solar energy at six member locations across the state. It would be the state’s biggest utility-scale solar project to date, with construction starting soon.

And last month, a California company said it’s interested in building about 100 megawatts near Fort Dodge for its customers.

Kerry Koonce, a spokeswoman for CIPCO, the state’s large electric cooperative, said the project would cost about $7 million.

The utility-owned solar farms provide a “significant reduction in costs compared to community solar,” Koonce said, adding that the project will lower the cooperative’s carbon footprint.

More than half of the cooperative’s generation is carbon-free, she said, because of wind, nuclear and hydroelectric generation.