CHARLESTON, W.Va. - Utilities in several states are turning to new charges to make up for revenue they're losing to homes with solar power.
The price of solar panels has fallen dramatically, and more people are installing them. In response, industry groups are urging states to let power companies add charges or credit homeowners less for the excess electricity they generate.
Gabe Elsner, executive director of the Energy and Policy Institute, said home solar had been considered too small to worry about - but no longer.
"The problem for the utility company is that they make money by generating power and selling it to customers," he said. "So when you decide to create your own power, suddenly they just lost a customer."
Elsner said the push for the new fees started with the industry trade group Edison Electric Institute and was promoted by the American Legislative Exchange Council. EEI declined to comment, but a report called "Disruptive Challenges" that was done for the group talked about the issue. It said that if too many homeowners generate their own power, utilities could be stuck for the cost of maintaining the grid. However, Elsner said studies, including a recent one in Utah, have shown that home solar systems are good for the grid.
"They ease congestion on transmission lines," he said, "They create clean power locally, so it's more efficient, instead of building more, big power plants."
Elsner said a power company in Arizona is willing to pay homeowners for the right to put utility-owned solar panels on their roofs, while at the same time wanting to charge folks who do it for themselves. He said the industry is coming to recognize that distributed power generation has great potential.
"The fact that our grid is so centralized actually leaves us vulnerable," he said, "Solar power creates a more distributed electricity system that's more secure and more resilient."
Appalachian Power has asked the state of Virginia for permission to add a fee to the bills of homeowners in that state with the capacity to generate from 10 to 20 kilowatts. The company points out that almost all homes with solar panels or other generating systems would fall below 10 kilowatts. The company has customers in West Virginia, although it has not requested the fee here.
The EEI report is online at eei.org.
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Missouri homes and businesses have installed enough solar energy to power 68,000 homes each year.
A new report released by the Solar Energy Industries Association showed more than half of all solar installations in the United States have come online since 2020, with more than 25% installed since the Inflation Reduction Act passed almost two years ago.
Abigail Ross Hopper, president and CEO of the association, noted for Missouri farmers and rural residents, the most significant expense is power, needed for pumps, heating grow houses and running equipment.
"They're not paying for the sunshine," Ross Hopper pointed out. "And so, when they install solar to run their pump, or when they install solar on top of a chicken house, it saves an incredible amount of money because they are now using the sun to energize their system."
The report noted in 2012, only California had more than 25,000 solar systems installed. Today, 23 states and territories can make that claim, and 11 have surpassed 100,000 solar installations. More than 38,000 are in Missouri, which ranks 34th in the nation.
Ross Hopper emphasized not only is the growth in solar energy happening quickly, but it is sustained and she predicts it will continue to be.
"It took 40 years for the United States to install a million solar projects, and then it only took eight years to get to 5 million, and that is indicative of the rapid growth," Ross Hopper stressed. "We think it'll only take six years to get to 10 million."
She added the solar industry supports the careers of about 2,900 Missourians and has invested $1.6 billion in the state's economy.
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A new rule from the Federal Energy Regulatory Commission could improve Virginia's electric grid transmission capacity.
It requires utilities and grid operators to plan 20 years ahead to accommodate expected changes in energy production. The rule is designed to help Virginia meet the high energy demands of the growing data center market and prevent service disruptions in extreme weather.
Nick Guidi, senior attorney for the Southern Environmental Law Center, said the rule will help the state reach its climate goals.
"For the first time in a lot of these states, the transmission planning process will have to explicitly take into account state goals and corporate clean energy goals," Guidi explained. "That hasn't really happened before."
He added the current process holds back state activity. The rule faced sharp criticism from FERC Commissioner Mark Christie. He characterizes it as a way to enact policies never passed by Congress and calls it "a blatant violation of the major questions doctrine." Guidi thinks it could lead to legal challenges.
Another new rule makes transmission siting easier.
Jon Gordon, policy director for the group Advanced Energy United, feels the FERC orders create advancements in transmission infrastructure development, calling it an arduous but necessary process to improve transmission capacity.
"I think as a country we've sort of gotten behind the 8-ball on upgrading our transmission infrastructure," Gordon asserted. "Now we've reached a point where we need to move quickly on transmission upgrades to ensure reliability."
He added more comprehensive long-term transmission planning is needed to ensure the lowest-cost transmission is built for reliability.
Virginia passed legislation making transmission easier. It comes as the state's grid operator, PJM Interconnection, which ranked poorly in a report due to a backlog of interconnection projects. The law means an additional 40% capacity for the current grid and saves the state congestion costs.
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A federal agency today is expected to announce reforms related to the power grid, which is stretched thin as the nation transitions away from fossil fuels.
It's a complex issue clean-energy advocates in the Midwest know far too well.
There's a push to expand transmission lines to accommodate the tidal wave of wind, solar, and other renewable projects.
Rules being unveiled could address the thorny issue of cost-sharing among states for the build-out.
More broadly, the Midwest Renewable Energy Association's Executive Director Nick Hylla said market dynamics are tricky - noting competing interests among utilities and developers in expanding the grid.
He said another issue is protecting wildlife.
"The history of management of transmission lines isn't some solid track record from an environmental-conservation point of view," said Hylla. "We could be doing a much better job in transmission corridors."
In these cases, decarbonization groups and conservationists are at odds with each other. Notably, a recent court ruling is allowing a transmission line project involving Wisconsin to advance.
Hylla said "non-wire alternatives" are emerging to help the movement without turning to the grid.
In Minnesota, Xcel Energy has been testing a program that incentivizes customers to curb energy use during peak demand.
Similar programs are taking shape elsewhere, but industry analysts say these initiatives are navigating their own barriers as they try to get off the ground.
Still, Hylla said an example of this approach along the East Coast is turning some heads.
"It's a BYOB program - Bring Your Own Battery program - that now, over 24,000 customers in three eastern states have subscribed to," said Hylla. "It's basically a subsidy to put a battery in your house and just to make sure that you're not using electricity in peak times. "
As governments, utilities and other entities face pressure to meet climate goals amid soaring demand for electricity, Hylla suggested these solutions will have to work hand-in-hand.
His group is focused on efficiencies, such as rooftop solar, to reshape the distribution of energy.
But he said large-scale renewable projects play a role, too, including the economic benefits for communities in which they're located.
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