by: Kayla A. Currie
On Tuesday, February 23, 2016, the Alabama Environmental Council will host its fourth POWER-UP Energy Forum.[i] The forum will feature experts speaking on the topics of solar power and other renewable energy sources.[ii] These sources have been expanding throughout the nation, including the South, where nearly every regional utility committed to expanding solar investments in 2015.[iii] Despite the apparent commitment to solar energy, the market in Alabama remains underdeveloped as utility companies refuse to adopt policies that are supportive of solar customers that remain tide to local grids.[iv] The utility companies’ reluctance to adopt policies that are supportive of solar use is understandable given the huge technical and economic disruptions such policies would have on the companies’ business plans.[v] Given these disincentives, it is ultimately up to the Alabama Public Service Commission to take other states’ lead and implement a state net metering policy to address the lack of solar development in Alabama.[vi
States throughout the nation are adopting net metering policies and sparking growth in solar energy markets.
States throughout the nation are adopting policies known as “net metering” as a means of encouraging growth in their solar energy markets.[vii] In fact, our neighbor to the West, Mississippi, recently became the forty-fourth state to adopt such a policy.[viii] Essentially, “[n]et metering is a billing system that allows electric customers to sell to their electric company any excess electricity generated by their” own small-scale, on-site renewable power sources, such as rooftop solar panels.[ix] These small-scale solar panels typically do not have battery storage.[x] Due to the lack of power storage, “net-metered customers remain connected to the local electric grid” for times when their energy use exceeds their system’s output.[xi] Because most net-metered customers receive credits for the power they “sell” back to the grid, using energy from the local electric grid when necessary comes at a low cost to them.[xii]
The savings that net-metered customers receive on their energy bill allows them to recoup the cost of their solar installations and encourages further growth in renewable energy markets.[xiii] While the majority of solar advocates favor net metering policies, “a growing faction of onlookers maintain that the cost of savings realized by solar customers are coming from other utility customers’ pockets.”[xiv] Furthermore, some economists and state legislators view net metering as anathema—a way of excessively subsidizing the solar industry at the expense of customers and existing industries.[xv] Despite such concerns, the Mississippi Public Service Commission recently voted to bring net metering to the state.[xvi] The commission asserted that “net-metering supports a consumer’s right to self-supply electricity, as balanced by the need and right to connect to the grid, and also provides increased consumer choice while introducing innovation into a market dominated by monopolies.”[xvii] Mississippi’s adoption of new net metering policies (as well as the arguments undergirding the decision) will likely lead to even more growth in the state’s solar market.[xviii]
Alabama’s lack of a net metering policy has stalled the state’s solar development.
Unlike its neighboring states, Alabama’s renewable resource market has seen little development.[xix] According to Alabama Power, only about sixty customers out of the utility’s 1.2 million residential customers are grid-tied solar generating customers.[xx] This lack of development in Alabama’s solar energy market is largely due to political impediments and policy barriers.[xxi] One of the major policy barriers is the lack of a net metering policy protecting solar customers who remain tied to the local utility’s grid.
In the absence of a state net metering policy, Alabama Power charges residential customers an extra fixed fee to use solar power and pays customers much less for solar energy sold back to the grid than other utilities.[xxii] The fixed fee costs customers five dollars per kilowatt based on the size of their solar array.[xxiii] Because residential arrays are typically between four and five kilowatts, the fee costs solar customers twenty to twenty-five dollars a month.[xxiv] Additionally, Alabama Power customers have to sell three to four kilowatt-hours back to the grid to offset the charge of one hour used when their systems are not producing.[xxv] These company policies give Alabama Power’s residential customers no incentive to go solar, and make it extremely difficult for existing solar customers to recoup the cost of their systems.
Sparks of Hope
Despite restraints on customers’ individual rights to go solar, multiple corporate and municipal commitments to solar are on the horizon in the Southeast.[xxvi] In our own backyard, Alabama Power established a renewable energy program aimed at increasing its power from renewable sources to five hundred megawatt hours over the next six years.[xxvii] Under this program, “[t]he Alabama Public Service Commission has given Alabama Power the green light to move forward with two large-scale military projects at the Anniston Army Depot and Fort Rucker.”[xxviii] These projects are Alabama Power’s largest to date,[xxix] and are expected to add up to twenty megawatts of renewable energy to Alabama Power’s portfolio.[xxx] Additionally, these projects will assist the Department of Defense in meeting their congressional goal of filling at least twenty-five percent of the Department’s energy needs with renewable sources by 2025.[xxxi] While Alabama Power commits resources to these large-scale projects, their individual customer’s ability to go solar remains frustrated.[xxxii] The Alabama Public Service Commission should consider implementing its own net metering policy to address such consumer frustrations, encourage development of solar markets, and protect future solar customers.
Although net metering policies will not be the central issue discussed at Alabama Environmental Council’s Power-Up Energy Forum, the consequences of the lack of such a policy will be discussed in detail. The first panel featured at the forum, which will be held from 9:20–10:30, will discuss issues that customers face in financing residential solar.[xxxiii] Two particular speakers to watch for are former Alabama Customers who have chosen to go off-grid for most of their needs, relying battery backup systems.
[ii] Strengthening solar in the Southeast, despite obstacles, Southern Envtl. L. Ctr. (Dec. 31, 2015), https://www.southernenvironment.org/news-and-press/news-feed/strengthening-solar-in-the-southeast-despite-obstacles.
[iv] See Dennis Pillion, With potential solar energy boom on the horizon, Alabama lags behind, AL.com (Dec. 24, 2015) http://www.al.com/news/index.ssf/2015/12/alabama_residential_solar.html.
[v] Kyle Whitmire, Let there be light: How solar could radically disrupt electric utilities’ business models: opinion, Al.com (Oct. 7, 2014, 9:58 AM), http://www.al.com/opinion/index.ssf/2014/10/let_there_me_light_how_solar_c.html. See also Brad Plumer, Rooftop solar is growing so fast that electric utilities are now trying to slow it down, Vox.com (Sept. 29, 2014, 10:10 AM), http://www.vox.com/2014/9/29/6849723/solar-power-net-metering-utilities-fight-states (discussing the genuine problem that net metering policies pose to utility companies as a result of solar customers paying for less energy from the grid, yet costing more to connect to the grid).
[vi] See The State of Solar: Our elected officials can harness solar power starting today, Southern Envtl. L. Ctr., https://www.southernenvironment.org/the-state-of-solar (last visited Feb. 18, 2016).
[vii] See Valerie J. Faden, Net Metering of Renewable Energy: How Traditional Electricity Suppliers Fight to Keep You in the Dark, 10 Widener J. Pub. L. 109, 110 (2000) (“[A] particular net-metering program is an essential element in assessing the economic incentive for residential customers, rural electric cooperatives, and private investors to switch from purchasing electricity from fossil fuel energy sources to generating their own electricity by using renewable energy sources.”).
[viii] Pillion, supra note 4.
[ix] Straight Talk About Net Metering, Edison Electric Institute, (Sept. 2013), http://www.eei.org/issuesandpolicy/generation/NetMetering/Documents/Straight%20Talk%20About%20Net%20Metering.pdf.
[xi] Id. (“For example, the sun does not shine at night, and solar power can appear or disappear rapidly over the course of a day. Net-metered customers also use the grid to sell power to their electric company when their systems are producing more electricity than is needed.”).
[xiii] One of the most favorable aspects of net metering policy is its ability to facilitate private investment in renewable energy technologies. In particular, net metering programs that are cost-efficient to customer-generators encourage more participation in renewable energy markets and create various opportunities for renewable technology manufacturers. Faden, supra note 5 at 111–12.
[xiv] Alexander D. White, Compromise in Colorado: Solar Net Metering and the Case for “Renewable Avoided Costs,” 89 U. Colo. L. Rev. 1095, 1098 (2015). Facilitating the growth of renewable energy through net metering comes with some challenges. Such challenges include: restructuring distribution system engineering, questions of ratepayer equity, and disruptions to age old utility regulation. See id.
[xv] See Julia Pyper, Ditching Net Metering is in the “Best Interest” of Solar, Says MIT Economists, Greentech Media (May 5, 2015), http://www.greentechmedia.com/articles/read/MIT-Economists-Say-We-Should-Ditch-Net-Metering. Richard Schmalensee, economic professor at MIT’s Sloan School of Management, stated, “if you’re going to subsidize solar, there’s no reason not to subsidize them . . . [b]ut there’s no reason to excessively subsidize them, or to subsidize them in a way, as net metering does, that’s going to produce a pushback.” Id.
[xvi] Recent Rulings on Net Metering, 4253 PUR Util. Reg. News 4 (Jan. 15, 2016).
[xvii] Id. (citing Re Net Metering Programs and Standards, Docket No. 2011-AD-2, Dec. 3, 2015 (Miss. P.S.C.)).
[xviii] According to The Solar Foundation’s 2015 State Census, Mississippi showed strong job growth in the solar industry last year. Julia Pyper, States See Robust Solar Job Growth, But Are These Jobs Secure?, Greentech Media (Feb. 10, 2016), http://www.greentechmedia.com/articles/read/states-see-robust-solar-job-growth-but-are-those-jobs-secure.
[xix] Dennis Pillion, With potential solar energy boom on the horizon, Alabama lags behind, AL.com (Dec. 24, 2015), http://www.al.com/news/index.ssf/2015/12/alabama_residential_solar.html (“While Georgia now has a solar installation industry that employs 2,900 people, central and south Alabama has barely scraped up enough residential solar customers to make a football team.”).
[xxi] See generally Solar power will work in Alabama, just ask Georgia, Southern Envtl. L. Ctr. (Jan. 14, 2015), https://www.southernenvironment.org/news-and-press/news-feed/solar-power-will-work-in-alabama-just-ask-georgia (discussing Georgia’s supportive solar policies and noting that “Alabama has shown no similar inclination and even erected solar-killing barriers.”).
[xxii] Dennis Pillion, With potential solar energy boom on the horizon, Alabama lags behind, supra note 19.
[xxvi] Strengthening solar in the Southeast, despite obstacles, supra note 2.
[xxvii] Cliff Sims, Alabama Power’s latest solar-without-subsidies move could protect state’s military bases, Yellowhammer, (Nov. 4, 2015, 10:00 PM), http://yellowhammernews.com/business-2/alabama-powers-latest-solar-without-subsidies-move-could-protect-states-military-bases/.
[xxviii] Alabama Power approved for first major military solar projects, Southern Envtl. Law Ctr. (Nov. 11, 2015), https://www.southernenvironment.org/news-and-press/news-feed/alabama-power-approved-to-start-on-first-major-military-solar-projects.
[xxix] Strengthening Solar in the Southeast, despite obstacles, supra note 2.
[xxx] Ryan Phillips, North Carolina firm to install Alabama Power solar projects, Birmingham Business Journal (Nov. 11, 2015), http://www.bizjournals.com/birmingham/news/2015/11/10/north-carolina-firm-to-install-alabama-power-solar.html?ana=e_du_pub&s=article_du&ed=2015-11-10&u=jolFgfSkAPexUBJIVz85Ng0f38cc66&t=1447249256. A 10.6 megawatt air conditioning facility will be constructed at Anniston Army Depot and another 10.6 megawatt air conditioning facility at Fort Rucker. These projects combined would produce enough energy to power 4,200 homes. Id.
[xxxi] Cliff Sims, Alabama Power’s latest solar-without-subsidies move could protect state’s military bases, supra note 25.
[xxxii] Strengthening Solar in the Southeast, Despite Obstacles, supra note 2.