By Travis Hoium | The Motley Fool.com
The battle over the future of net metering is taking place in Arizona, and it’s a brutal fight right now. Arizona’s monopoly utility Arizona Public Service has proposed putting either a monthly fee on owners of solar for access to the grid or a lower rate than net metering for solar, both of which would reduce the return on installing solar.
On the surface, it seems like a reasonable request, because solar owners have access to the grid when they’re not producing energy and pay very little to the utility because their net use is low. APS also argues that solar pushes the cost of the grid (transmission and distribution costs) onto those without solar.
What APS doesn’t talk about is the benefits of solar. The use of solar offsets power from other energy sources, providing cleaner energy, and also reduces stress on the grid because it’s used locally. From a financial perspective, solar power is also produced when grid demand is at its highest in Arizona. When air conditioners are blasting, it’s most likely sunny, and when it’s sunny, solar is producing power. If it weren’t for solar power, APS would have to buy that power from a peak producer, which can be four or five times the cost of the average power bill, so solar is much lower cost than the peak power it is often replacing.
It’s also hotly debated whether more solar actually raises electricity costs overall. Germany recently hit a new solar peak of 23.9 GW, which is about 40% of the country’s power needs, and there hasn’t been chaos or spiking prices as a result. Arizona is only a fraction of that exposure to solar, so the stress on the system is far less.
APS appears to be losing the battle against net metering, and that’s good for SunPower, SolarCity, Sunrun, and others, but this is the first of many battles to come. The industry needs to learn how to live with solar and profit from it, rather than fighting solar’s inevitable adoption. That’ll take time and will often take different shapes, given the localized nature of both utilities and solar power’s adoption rate. There will no doubt be more to come about this topic.
If you’d like to discuss energy issues, contact Court Rich, Co-Chair of Rose Law Group’s Renewable Energy Department at crich@roselawgroup.com
