The cost of producing and distributing renewable energy continues to decline. That is changing the energy marketplace. Still, there are a lot of hurdles to overcome in both legislative policy and in the behaviors of individuals and communities. In this week's "Issues of the Environment," WEMU's David Fair discusses the near and longer-term energy future with Laura Sherman, president of the Michigan Energy Innovation Business Council.
- Rooftop solar panels tend to be a costly investment on the front end. Until recently, Michigan homeowners could count on some of that investment to be recouped by selling excess generated power back to the utility company.
- Under state law, utilities are required only to reimburse private customers for renewable energy given back to the grid until the sum of that energy reaches 1 percent of a utility’s average peak demand. That allotment is further broken down by size, with installations that produce small quantities of energy, such as residential solar arrays, allowed to make up .5 percent. Throughout Michigan, utilities are now bumping up against those caps.
- Consumers Energy hit its cap this past fall. Upper Peninsula Power Co. (UPPCO), the U.P.’s largest utility, is about to hit its residential cap for a second time after raising it to 2 percent as part of a settlement last year. Solar advocates say caps are looming in other territories, too, including those of DTE Energy, removing a powerful incentive for homeowners to invest in solar.
- Utilities contend the cap is necessary because rooftop solar owners are compensated too generously for the power they feed to the grid, resulting in a subsidy that other customers are forced to shoulder.
- Solar advocates respond that the current method of compensating rooftop solar owners dramatically undervalues the benefits they provide, and overestimates solar’s use of utility infrastructure. For example, Sherman said, because rooftop solar energy travels short distances on power lines before it’s used by neighboring homeowners, it suffers fewer “transmission losses” along the way—an increase in efficiency that translates into cost savings for utilities. “Retail net metering is not even fully compensating for those benefits,” Sherman said.
- Solar panels are helping Michigan achieve its greenhouse gas reduction goals. With the cap looming, solar installation companies are uncertain about the financial viability of rooftop solar and business has already slowed.
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