COVER STORY

WHAT'S THE COST OF SOLAR?

JEA’S proposed changes to its net metering program have renewable energy advocates up in arms

Posted

In an epoch when our president speaks of a future without fossil fuels and many consumers care deeply about buying green, solar advocates say a JEA proposal to cut what it pays for solar power will kill the local solar market.

At a board meeting in February, JEA proposed dramatically reducing the value the utility credits those who produce power with solar panels. JEA says it’s lowering the rate to be fair to all its customers. Right now, the utility claims, JEA’s other customers subsidize solar by paying a disproportionate share for upkeep of the electric grid; for 11 cents a utility customer is charged, five to six cents of that goes to upkeep of
the grid.

Proponents of solar say cutting the rate they are credited for power they produce will kill the cottage rooftop solar industry in Jacksonville — the economics just won’t work. People who buy solar panels pay for them through their savings on power. An important part of that equation is the credit they receive for power that goes back into the system.

“Cutting the rate will drastically affect the economics of rooftop solar to the point it’s non-economical,” said Pete Wilking, president of A1A Solar Contracting. “They are using that yardstick to crush rooftop solar.”

Wilking said there aren’t enough solar customers to make that much of a difference; only 500 of JEA’s approximately 427,000 customers generate power with solar panels. Solar advocates say JEA’s proposal will put solar companies out of business, and they wonder if that is the utility’s intent.

This is a small battle in a big war being waged nationally between utility companies trying to hang on to their monopoly and a growing legion of customers who generate their own power, solar proponents say,
who may not need to turn to the utility company when they cook the kids breakfast or run a stream of hot water for their morning shower.

Solar is the first alternative energy source to compete with centralized power providers, and some utilities are fighting the coming green wave.

“Fossil fuel interests have identified rooftop solar as a threat, and I think rightfully so,” said Mike Antheil, executive director of the Florida Solar Energy Industries Association. “I can’t burn nuclear power, natural gas or coal at home. Edison Electric Institute [a lobbying group for the nation’s utilities] identified rooftop solar as the most disruptive challenge to the industry, this shift to distributed energy generation from centralized power.”

If there’s a corporate conspiracy against rooftop solar, it makes sense to some that the Koch brothers’ fingerprints are all over it. JEA’s rationale for the reduction in what’s called net metering, as presented in February to its board of directors, could have been lifted from model legislation created by a Koch brothers-funded think tank, Americans for Prosperity, which is being pushed in states across the U.S. (See ALEC legislation at bit.ly/1L7mJoJ.)

Poster boys for the New American Oligarchy, Charles and David Koch, multi-gillionaires worth at least $80 billion, are ultra-conservative siblings who’ve budgeted nearly a billion dollars — $899 million — to spend on the 2016 presidential race. The Kochs are also working to change laws in states around the nation to make everything more corporate and profit-friendly, to limit oversight and privatize, privatize, privatize. Through another think tank the Kochs heavily support, the American Legislative Exchange Council (ALEC), legislators all over America receive model legislation and talking points on a wide array of topics, including dismantling environmental protection laws, privatizing public schools, reducing individual and corporation taxes, weakening labor unions, and, yes, making solar power less affordable and less viable.

Wilking believes the movement against solar is about keeping power within the control of utilities.

“JEA [is] being extremely proactive limiting rooftop solar by putting in regressive policies. This is stepping on rooftop solar very hard and very early,” he said.

JEA’s staff didn’t notify Antheil or others in the solar power industry about the presentation they were making to the board on reducing the metering rate until the 11th hour. But Antheil said they did notify the Consumer Energy Alliance, a nonprofit vigorously supported by the Kochs that’s described as a front group for the energy industry.

The JEA board is made up of mostly new appointees named by Jacksonville Mayor Lenny Curry. Antheil said they don’t have a nuanced understanding of the issues.

The recent board meeting wasn’t the place to acquire that understanding, either. While JEA staff made a lengthy presentation to the board on the proposed fee change and the justification for it, solar proponents could make their case only in three-minute segments during the public comments portion of the meeting, on which Folio Weekly Magazine reported. (“Sticking It to Solar,” Claire Goforth, Feb. 16)

Although the number of solar customers in Northeast Florida is increasing, it’s still a tiny fraction of the utility market. When JEA first began working with solar customers, it established a kilowatt-hour rate to credit them if they sent excess energy back into the grid. Like the Florida Legislature-created Public Service Commission decreed in 2008 for private utility companies, JEA credits rooftop solar for its excess power at its retail power rate. (The upcoming November election ballot in Florida was originally set to include dueling solar initiatives that would supersede the PSC requirement but one failed, leaving only the utility-backed initiative on the ballot.)

JEA spokesperson Gerri Boyce explained that JEA credits solar customers for the energy they produce at 11 cents per kilowatt-hour, the same rate it charges electrical customers for power. But using the same rate for both kinds of customers gives solar customers an advantage, she said.

According to Boyce, the true cost for the utility to produce power is 4 to 5 cents per kilowatt-hour. The rest of the fee pays for utility grid maintenance, including lines, poles, transformers, wires and substations. Solar customers pay that rate if they buy power, but they are reimbursed or credited for power they produce at that same rate, almost twice the actual cost. Boyce said that reducing the credit rate to something like 7 cents per kilowatt-hour would bring it closer to the actual price of power.

On JEA’s website, the utility further explains that while solar customers generate power, they are still connected to the grid and use traditional electricity. Therefore JEA must maintain the capacity built into its system to provide solar customers with consistent access to electricity they use above and beyond what their solar panels produce at any given time. This means that a rooftop solar system producing electricity for its own use is not paying for the cost of providing that electrical capacity.

Instead, Boyce said, traditional customers subsidize the cost of the system. That was the intention when the program was set up, as a way to encourage solar, JEA’s website explains. But now, with increases in the number of customers who have solar panels, the utility is moving to reduce the rate of the credit for excess power so that it’s closer to the actual cost of electricity production.

Boyce said the reduced rate would be applied only to new customers. Eventually, the utility would link the rate of what it credits solar customers for the power they generate to the actual rising and falling costs of solar power. Lakeland Electric is considering revising how it treats solar customers and Ocala Electric is also making modifications. Both are municipal utilities. Although there hasn’t been an ALEC bill introduced in the Florida Legislature to change net metering, Antheil said that ALEC-style changes have been slipped into bills that the solar industry favors, like bills that would allow a company to install a solar system on a customer’s roof and then charge them for power.

“Our approach is to have a fair rate based on what we are buying and selling. And to have rooftop solar based on the same rate. We are a municipal utility. We want to make this fair, to buy and sell solar based at the same rate. Right now, we can buy solar at a lot less than 11 cents per kilowatt-hour. That means all JEA customers are paying solar customers that 11 cents because it is very highly subsidized,” Boyce said. “It’s not fair for a poor customer to subsidize solar.”

JEA is also planning to offer customers solar power through a new program, SolarSmart. JEA will buy solar from large solar gardens or farms and sell it to customers in the same way it sells electric. Customers will be able to choose what percentage of their power comes from solar, up to 100 percent. Boyce described it as an option for an apartment dweller who can’t install their own solar system. The utility plans to charge a higher rate for electricity produced with solar energy.

Antheil says that JEA is devaluing what solar contributes to the system and its future potential as a power source. He supports solar farms, but he says rooftop solar adds capacity without cost to the utility or the need for large tracts of real estate. Also, developing technology will enable utilities to store power generated by solar customers in batteries for later distribution. 

“Unfortunately, JEA has bought into the very misguided and misinformed thought process,” Antheil said. At the February board meeting, Antheil said he expected such a move from private utilities, but not from publicly owned JEA.

As the solar market grows, said Antheil, there may be a time to reduce the net metering rate, but it’s too early when the industry still trying to get off the ground.

Solar is attractive to many because it can pay for itself well before the end of the 25-year (average) life of the system. After applying the federal tax credit, it can cost upwards of between $25,000 and $35,000 for a rooftop system. Most customers finance the cost, Wilking said. They then pay off the loan with the money they save on utilities. If a $180 electric bill is reduced to $20 a month, the $160 saved goes to finance the system. The way things work out, through the savings and by essentially selling power to JEA through net metering, a customer can pay off the loan a decade - at least - before the system needs replaced. But if JEA reduces the credit for excess power production from the current 11 cents per kilowatt-hour to 7 or 7.5 cents a kilowatt-hour, the numbers won’t work, said Wilking.

“Their proposal also states they are going to take the value of solar and adjust it every year based on market conditions. Why anybody would choose to invest in solar with it not being economical out of the gate, and even if it was, why do it if you have no idea what the future value of solar is?”

JEA and other utilities value only revenue, Wilking said. They value solar only when the solar customer has to buy power. Otherwise, solar is often regarded as negative potential revenue.

Wilking and Antheil pointed out that when a solar system generates excess power, it doesn’t necessarily go through the complex network of transmission lines. It goes where it’s needed, perhaps even a neighbor’s house. Whereas solar power from a solar farm will traverse the grid’s transmission lines, solar doesn’t utilize that extensive grid. There is no loss of energy as it travels next door. It saves money that way and is less taxing on the grid, and the neighbor pays the full 11 cents per kilowatt-hour for the power. If the number of solar systems increases significantly, the need for new generating plants would decrease, Antheil said.

“We would firmly say that asserting solar not paying its fair share is exactly the opposite of the truth,” said Antheil, “and what we want from JEA is a true public dialogue … I really do believe they might see the light.”

____________________________________

The board meeting has engendered promise of more talk and consideration of JEA staff proposals:

The United States Green Building Council (USGBC) hosts a forum on solar in Florida 6:30-8 p.m. March 9 at Jacksonville University’s auditorium, 2800 University Blvd.

JEA had scheduled three community forums on solar energy but informed FWM on March 7 that those were being cancelled because the utility “did not see the need to duplicate [USGBC’s] efforts.”

------

Editor's note: a previous version of this article incorrectly stated that it would take approximately 25 years of energy savings (through JEA's current net metering system) to pay off a $25,000 to $35,000 rooftop solar system

No comments on this story | Add your comment
Please log in or register to add your comment