Since the extension of the solar Investment Tax Credit, solar growth has continued to boom with no sign of stopping. In response, new state policies have been popping up around the country, making sure grid-connected solar customers still pay their dues to the public utilities. Each state is proposing their own, unique response to residential and commercial solar customers, but all of them hinge on imposing new tariffs and lowering compensation for power sold back to the grid.
There’s good news, though: with a home battery, you can break free from the grid, and kick extra fees to the curb. You can keep your own, valuable solar energy, without having to sell it to the grid, and buy it back at a higher rate. With a home battery, you get cheaper, more realiable power whenever you need it. New fees and tariffs? No longer your problem.
Remind Me: What is the Investment Tax Credit?
In short, the solar Investment Tax Credit, or ITC, is a federal tax credit that pays back 30 percent of the installation of solar systems for residential customers (think rooftop solar panels) as well as commercial and utility-scale projects. The credit is used by the company that installs, develops, or finances the solar project in the case of commercial properties. For homeowners who purchase solar systems and have them installed on their own property, the credit is applied to the homeowner’s income taxes. Tax credits like the ITC provide a dollar-for-dollar reductinon of the income taxes of the person who is able to claim the credit. This money would otherwise go to the federal government, but in the case of a tax credit, the money stays exactly where it is: in the pocket of the homeowner. The credit is based on the amount of money the investor put into the solar panels they installed on their property. However much money is invested, 30 percent can be credited back. For residential customers investing their own money in solar panel installations, this awesome. Along with the falling price of solar panels and the great benefits of… ahem… free, clean solar energy, the ITC makes rooftop solar installations a lot more viable for residential customers.
This is why the ITC is credited with the dramatic growth in solar installations, both residential and commercial, since it was initially set in place in 2006. In the past ten years, annual solar installation has grown by 1,600 percent. That’s not a typo. Solar panel systems have been installed at a crazy fast rate recently. Not to mention the 86% growth in solar employment in the last four years, making the job creation rate in the industry almost 20 times higher than overall employment growth in the country. Excited yet? This is just the beginning.
Experts are saying that because of the the extension of the ITC, solar growth is set to continue for the next five years. They’re estimating a total of 25 gigawatts of solar capacity will be added, with at least 35% growth in residential solar installations, and 51% growth in the commercial sector. The solar industry has been hot for years, but it’s about to get even hotter. This is awesome news for new residential and commercial customers, but public utilities are starting to get a little nervous.
States Re-Evaluate Net Metering Policies
As soon as the ITC extension was announced, states around the country started taking a second look at their net metering policies.
What is net metering, exactly? Net metering is a billing system that allows grid-connected electric customers to sell to the power company any excess electricity they generate with their own solar panels, that they don’t need to use right away. Many households with solar panels generate a good deal of electricity during the day when the sun is at its peak, but don’t actually need to use the electricity very much in the middle of the day. Often, they’re out of the house entirely, and don’t really need to run the washing machine or flip the light switches on until later in the evening. So rather than let that generated electricity go to waste, it gets transferred back into the traditional power grid, and used somewhere else. Net metering programs offer payment for this provided electricity, often in the form of credits that deduct from the customer’s power bill.
As you can imagine, net metering is a pretty big deal for customers who own solar panels. They’re basically being paid to own their photovoltaic panels. Net metering programs have been credited for the major rise in solar system installations in states like Hawaii and California, as they help to offset the initial investment of the solar panel systems themselves. Without energy storage, like home batteries, so much of the generated electricity is without value to solar panel customers, unless a net metering program exists.
While utility companies see some benefits from residential and commercial solar installations, like a decrease in demand and less stress on the grid, generated solar energy doesn’t totally align with peak demand hours. Many grid-connected solar users don’t store their own energy in home batteries, so they rely on the grid when the sun goes down… like everyone else. This means, during the evening hours, the grid is working just as hard as it ever was. Because of this, utility companies feel like they’re not getting enough bang for their buck when it comes to buying electricity back from residential customers. They want more, especially since the number of solar users are growing at a crazy rate. They also bring up “the fairness issue:” the fact that non-solar users end up paying more for their grid electricity than solar customers do. They claim they aren’t just out for their own interests, but are also concerned about being fair to their solar-less clientele. Their response? Getting states to change their net metering policies… or getting rid of them all together.
Hawaii: Out with Net Metering, In with New Tariffs
The Hawaii Public Utilities Commission (PUC) issued a ruling that will end its existing net metering program which compensated customers who generated their own power through solar panels buy buying back excess energy at a retail rate. Now, if customers want to supply power back to the grid for a profit, they are compensated with a lower, fixed rate, or with fewer credits toward their total bill.
The new ruling will present Hawaiians with quite a big change from what they are used to. Because there are so many residential units with rooftop solar across the state, many customers have gotten in a routine of allowing energy supply and demand to mismatch, since a surplus of power would still be advantageous because the grid would simply buy it back. Some even relied on the lowered bill they received for their own electricity usage. Solar photovoltaic owners are going to have to get used to a new normal.
Hawaii’s new policy makes home battery storage indispensable. Since selling back to the grid will now be less profitable for solar users, energy storage will prevent customers from inadvertently leaking energy back to the grid without compensation. A home battery acts as a barrier between customers and the grid, providing independence and control over energy usage. Consumers with a home battery no longer have to worry about fluctuating energy policy; the power is in their hands alone.
Here’s how it works: Households generating energy through rooftop solar don’t have to use all the energy they are generating right away. Instead, energy is stored in a home battery, stocking it away for later use, when solar panels are no longer generating (think the evening hours, after the sun goes down, which also happen to be the hours of highest electricity demand, according to power companies.) With a home battery, all the energy generated by the solar panels gets used in-house, assuring customers that they get the full value of the energy they produce. No more power leaking back into the grid with sub-retail compensation (or worse, no compensation at all.) With this in mind, home batteries seem to be far and away the best option for households with rooftop solar. And if home batteries are smart for Hawaiians, their a no-brainer for solar owners in Nevada.
Nevada: Net Metering Gone for Good
In Nevada, the Public Utility Commission voted to end retail-rate net metering all together, both for new and existing solar customers. The change took effect on January 1, and was met with a huge protest from solar advocates. some customers even signed long-term solar contracts, banking on Nevada’s previous net metering policy. Now, all of that has changed.
With Nevada’s new deal, some solar owners have significantly higher electricity costs than their neighbors without solar. Seems backwards, doesn’t it? Solar customers certainly think so, and they’re going to try to fight the changes, and hopefully get them reversed.
In the meantime, though, solar users in Nevada are looking for other options that will help them keep the value of the solar energy they are generating. Just like in Hawaii, home batteries are starting to look very, very appealing. With a home battery installed, Nevada solar customers can store the electricity they generate, and use it whenever they need it, giving them the ability to sever all ties with the public utilities if they want to. With a home battery, households can use their own generated solar power day and night. That’s clean, free energy from the sun… and freedom from the grid.