YPSILANTI, MI — The city of Ypsilanti, one of the nation’s leaders in per capita solar energy production, is expressing its opposition to a Republican-drafted bill that opponents say could cripple the state’s growing solar energy industry.
At its Tuesday night meeting, the Ypsilanti City Council unanimously approved a resolution stating its opposition to Senate Bill 438, which would eliminate the current net metering system. Instead, those with solar panels would be forced to sell their energy to utility companies at a wholesale rate, then buy it back at a retail rate.
“It’s kind of like if I raise tomatoes in my garden, then I’m told I have to turn them into Meijer’s produce department and buy them back at ten times the price. It makes you scratch your head,” said Allan O’Shea, who with his three sons runs CBS Solar, a panel manufacturer near Manistee.
“(The solar industry) would all be decimated if this bill goes through as is.”
Michigan is one of 44 states that uses a net metering program, according to the National Conference of State Legislatures, and a 2015 Michigan Public Service Commission report found 1,840 customers statewide using net metering.
The bill, introduced by Sen. John Proos, R – St. Joseph, and supported by the utility industry, purports to improve access to renewable energy. But local officials, many state representatives and experts on the utility industry say it would do the opposite in a state already paying among the nation’s highest rates.
The solar changes are part of a larger bill in committee that would strengthen Consumers Energy’s and DTE Energy’s grip on the state’s utilities while eroding consumer protections, opponents contend.
James Clift, a policy director with the Michigan Environmental Council, which spoke on the issue before the Senate Energy and Technology Committee, called the bill “a step backwards” in encouraging residents to use solar and renewable energy.
“In general it’s a giveaway to the utilities in a number of different places, and that’s why I think they’re struggling to get support – it doesn’t put Michigan customers first, and this bill really is not designed to provide them any relief,” Clift said. “But the utility companies would do really well on the bill as proposed.”
The city of Ypsilanti has solar arrays in several public facilities including city hall, its DPS yard, the Parkridge Community Center, its senior center, and the Ypsilanti FreightHouse. The city and Highland Cemetery are also working to establish a large solar array near Clark Road and River Street.
In addition, Solar Ypsi founder Dave Strenski is partnering with dozens of residents to turn Ypsilanti into a “solar destination“. Once the cemetery installation is complete in the coming months, Ypsilanti will have 974kW installed, or 49.2 watts per capita – the ninth highest per capita rate in the nation, Strenski said.
And in Ypsilanti Township, VMax USA is building a 30,000-square-foot solar energy research center.
Council Member Pete Murdock brought the resolution to council. He noted the changes come as the solar industry could overtake the oil industry in terms of job creation by the year’s end.
“This would really take a lot of the incentive out of doing solar. The people who I know who have done it say it’s the net metering that makes it possible … so if you end up paying retail rates, then there’s no advantage,” he said.
How net metering works
Those with small solar panel arrays are able to connect to the utility companies’ grid through the net metering program. It allows customers to offset their electricity costs by producing their own solar energy, then “selling” their excess energy to the power company.
Strenski explained that a typical Michigan house on average needs a little over 600 kilowatt hours (kWh) per month, or 20 kWh hours per day, throughout the year. The peak solar panel absorption period lasts between 11 a.m. and 3 p.m., and the panels can generate 20 kWh an hour in that timeframe.
During the day, solar producers use the electricity they generate in their home and push the excess to their neighbors. Credit for the excess energy is used to buy electricity at night when solar power can’t be generated, so the producer is either generating electricity or using credits to buy it back.
In that way, a solar producer is essentially a small power plant, Strenski said, and the savings found in eliminating electricity costs over a seven-year period covers the $15,000 to $20,000 cost of a solar installation.
“I’m now a power producer and getting credit for everything I push to the grid during the day, but then the sun sets, I’m out of power, so I start bringing power back in and buying coal power,” Strenski said. “But I’m not paying for it because I have solar credit, so now I bring it back in for free at night.”
The proposed changes
Under the proposal, homeowners with solar installations would sell all of the energy they produce at a wholesale rate, but buy it back at a retail rate.
Strenski explained that the rules would require solar producers to immediately send their energy to the grid instead of first powering their own house.
“For them to force me to first push out anything I make, then buy it back is totally stupid,” Strenski said. “If I sell electricity and buy it back at a higher price, then I’m not getting the full benefit of the power I’m making.”
The upshot is a change in the economics to installing rooftop solar panels, Strenski said. It now takes around seven years of utility savings to pay off the up front cost of a rooftop solar installation. It could take many more if the rule changes are approved.
“It still works. It’s still a positive return on investment, but the payback period is longer, so it’s less attractive,” Strenski said
That makes it much harder for someone to justify the investment, Clift said, and the formula isn’t fair to ratepayers.
“They’re saying ‘You make the investment and we’ll let the utility company make the profit. It’s your investment, but we’ll require you to sell your energy to DTE at a big discount,'” he said.
DTE Energy is a for-profit company that essentially has a government-sanctioned monopoly on utilities because the state doesn’t want multiple companies setting up the utility grid, Strenski said. But it’s tightly regulated with strong laws designed to protect consumers from being gouged.
“(The government) says ‘We’ll let you be a monopoly, but you have to play by these rules.’ So their job is to sell electricity, to be profitable, and maintain the grid,” Strenski said.
Still, DTE is a for-profit company, and when customers are using less electricity by switching to LED, installing solar panels, or paying less for renewable energy, it hits DTE’s bottom line.
“At some point DTE is going to make choices about what’s best for shareholders versus what is going to be good for ratepayers,” Clift said. “This legislation is a step in the wrong direction, and it allows DTE to make decisions that favor shareholders at the determent of ratepayers.”
Under the current system, solar installations are growing. At the end of 2014 net metering systems in the state had a 14,210-kilowatt capacity. That’s a 25-percent increase over net metering capacity in 2013, but still represents just 0.015 percent of Michigan’s total retail electric sales.
As the number of customers using solar increases, DTE Energy uses and buys less coal, but there are fewer customers paying to maintain the grid, Strenski said.
DTE officials have argued that’s when coal customers subsidize those using solar.
The company didn’t respond to a request for comment on the issue. But last year, Irene Dimitry, vice president of Business Planning and Development for DTE Energy, told MLive that while net metering pilot programs for solar had been successful, it’s not a new technology anymore and DTE shouldn’t be subsidizing or incentivizing it.
“We support solar when and where it makes sense, but we want to do it from an objective point of view where everybody understands the cost,” Dimitry said.
O’Shea said he can understand DTE’s argument, but says the subsidy is more like a penny per kilowatt, not the eight to nine cents the utility industry claims. And he said solar producers are doing a positive thing that has widespread support.
“Where are all these people who are objecting to solar? Where are the objections?” he asked. “Consumers Energy and DTE want to control the industry because they found out solar performs much better than they ever thought it would, and now they’re excited.”
Clift acknowledged that solar and renewable energy customers aren’t contributing to distribution costs, but he notes they are generating electricity, and that’s valuable, especially on hot summer days when the grid is strained and at risk of a brown out.
“So at that point they’re subsidizing (coal) customers by adding electricity to and taking pressure off the system,” Clift said. “I don’t think it’s much of a subsidy because the system is better off with these people out there generating electricity, and it’s something we should encourage.
“It’s more complex than DTE would like you to think it is.”
Strenski contends options other than penalizing those using renewable energy or use less electricity are available. He suggested a flat fee for grid maintenance instead of hiding that cost in the larger bill.
“One could argue it’s part of DTE’s job to redo the economics on how the grid is set up,” Strenski said.
Original article link: http://www.mlive.com/news/ann-arbor/index.ssf/2016/05/ypsilanti_city_council_express_1.html