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Sun Wars: The Solar Debate

June 18, 2015
Some distributed solar advocates frame today’s solar debate in a Star Wars-like context, with "good" rooftop solar rebels fighting the "evil" empire utilities to save the planet.

Now 38 years after the saga began, another installment of Star Wars is scheduled for release this year. For the few who are not familiar with the film epic, the story is about good rebels who are engaged in a desperate struggle against an evil empire. At stake is the fate of their galaxy. The story is one where the distinction between good and bad is vividly clear.

Today we find ourselves embroiled in a real "star war." Well, the star in this case is the sun, and the war is about how to best use the energy we receive from our nearest star. These "sun wars," simmering for decades, have grown more intense. Some distributed solar advocates appear to frame the solar debate in a Star Wars-like context, with "good" rooftop solar rebels fighting the "evil" empire utilities to save the planet.

Like most things in our complex world, it’s not that simple. Questions abound around solar cost, reliability, ratepayer equity and on the best way to deliver solar value. Instead of two sides and one battle, there are multiple perspectives. This includes solar-on-solar fights, as well.

Also, does a utility’s natural focus upon reliability and cost necessarily make it bad? Given the beating that utilities receive when the lights go out or when they request a rate increase, it is a small wonder that cost and reliability are a utility priority. On top of everything, the level of acrimony surrounding the solar debate almost precludes rational analysis and discourse.

Last month, the MIT Energy Initiative (MITEI) weighed into the fray with a study titled  "The Future of Solar Energy." The study states that massive growth in global solar generation "is very likely an essential component of a workable strategy to mitigate climate change risk."

The MITEI study identified the three "preeminent challenges" for solar generation:

• Reduction in the installed cost of solar capacity

• Availability of solar technologies that can be deployed at scale and at low cost

• Easing solar energy’s integration into the existing grid.

Solving these challenges will be no small undertaking. Some of the study’s findings will not likely endear it to rooftop solar rebels. In comparing residential rooftop solar photovoltaic to utility-scale photovoltaic, the authors found the residential systems to be 80% more expensive on an estimated cost-per-peak-watt basis. Additionally, the report said the current federal investment tax credit favors residential solar. Because residential rooftop solar systems are more expensive, and since the investment tax credit is calculated at 30% of the investment, the residential tax credit on a dollar-per-watt basis is greater for residential systems. On an energy basis, the report further found that "photovoltaic generation by residential systems is, on average, about 70% more costly than from utility-scale photovoltaic plants" when solar energy is valued on a wholesale basis.

The MITEI study even strolled across the "net metering" minefield, stating that when net metering is combined with current rate structures "the result is a subsidy to residential and other distributed solar generators that is paid by other customers on the network." They noted, "This cost shifting has already produced political conflicts in some cities and states — conflicts that can be expected to intensify as residential
solar penetration increases."

Utility-scale solar companies like First Solar concur. In support of Arizona Public Service in 2013, First Solar CEO James Hughes stated that the result of net metering is "a very substantial ‘cross-subsidy’ funded by all other utility customers who must pay proportionately more in rates."

Adding net metering to the federal, state and local solar incentives that exist in some jurisdictions raises serious questions of fairness about the practice of buying power for other consumers at retail rates. To illustrate, imagine that a California electric utility contracted to buy energy from a multi-megawatt solar plant owned by ExxonMobil, and the utility agreed to pay a fixed-price equivalent to its retail rate. I am certain the resulting consumer outcry would register on
seismic devices across the state.

Let me offer another example of the growing inequity. Jim Kennerly, project manager for the "Going Solar in America" study, recently stated that residential solar for electric customers in many places "is a better investment than many of the stocks that are in their 401(k)." Wait, I thought solar was about reducing carbon emissions and not about providing investment options for well-off customers. I wonder what the half of all residential customers who do not have solar-suitable rooftops would think if they knew they were paying for that investment opportunity.

Given our current special-interest-fueled political environment, it is certain that these "sun wars" will continue. If we are serious about reducing carbon emissions, we need to closely examine the least cost and most equitable way to achieve that end. Solar will play a pivotal role, but borrowing another Hughes quote, "The rules governing solar installations — no matter what the size — need to be fair to everyone."

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