One of the biggest questions as solar panels and related components continue to drop in price is: How much of the market for solar power will belong to large utilities?
Renewable-energy advocates believe that a couple of policy proposals put forward by We Energies will leave little room for anyone but big companies like itself.
We Energies, a company whose service area takes in not only Milwaukee but much of southeastern Wisconsin, officially sought regulators’ permission on May 3 to begin charging solar customers a $3.53 “fixed cost recovery charge” for every kilowatt they can generate with their own equipment. The new proposed charge, which would take effect in 2021, is expected to cost homeowners who generate solar power from $12 to $15 a month. It’s also undeniably similar to a so-called demand charge that We Energies had put forward nearly five years ago only to see it rejected in Dane County Circuit Court.
This time around, We Energies is back not only with what it says are new data supporting its request but also an old argument. Back in 2014, We Energies officials had contended their proposed demand charge would prevent people from getting out of paying their “fair share” for the upkeep of the electrical-distribution grid that even solar users still must rely on from time to time. According to We Energies, those who come close to eliminating their electricity bills by producing their own power are no longer doing their part to pay for the grid. That burden is then shifted onto other, non-solar customers.
It’s a contention that many renewable-energy advocates regard as specious. Tyler Huebner, executive director of the nonprofit group RENEW Wisconsin, says one flaw in the argument is that it fails to take into account the many ways generators of solar power benefit other energy users. People with solar arrays, for instance, are often producing more power than they can use during the daytime and putting the excess onto the grid. “We think they are providing peak power and reducing the pull on the transmission system,” Huebner explains.
Brendan Conway, a spokesman for We Energies, says it’s nonetheless undeniable that solar producers aren’t paying for the full benefits they continue to receive from the power grid. And even with an additional charge, solar producers will still be paying about $600 less a year for energy than other utility customers, he said. “So it’s not only a reasonable amount of money,” he says. “Just as importantly, it creates fairness.”
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Monopolize the Sun?
For many who are interested in solar, We Energies’ proposed policies seem aimed chiefly at muscling possible competitors out of the solar market. Another policy the utility is pursuing would, if accepted by regulators, further add to the obstacles standing before anyone who might be considering going solar.
Last year, We Energies rejected a proposal to let a separate company, Eagle Point Solar, connect 1.1 megawatts worth of solar arrays that were to be installed atop seven Milwaukee municipal buildings. In making that decision, We Energies argued that state law gives it the exclusive right to produce power “for the public” in its service territory. Since Eagle Point is not proposing to generate electricity for itself but rather for public buildings, We Energies argues it is trying to act like a utility.
Sadly for renewable-energy advocates, the regulators on the Wisconsin Public Service Commission recently declined once again to take up the question of whether companies like Eagle Point Solar do fit the definition of a utility. That leaves only the question of whether We Energies was within its rights to deny a connection to the Eagle Point municipal project.
So, no matter the outcome, the sorts of “third-party financing” arrangements that are used in many other states to ease the cost burden of solar installations are likely to remain in a gray legal area in Wisconsin. In Eagle Point’s proposed solar project with Milwaukee, third-party financing would let the city own only about 20 percent of the solar arrays upfront. The rest would belong to Eagle Point and be essentially leased to the city, which would have the option to buy remaining parts of the project outright after seven years.
For renewable-energy advocates, the current lack of third-party financing is one of the biggest obstacles now standing before the solar industry in Wisconsin. Even political conservatives, long skeptical of the benefits of renewable energy, are questioning why We Energies’ monopoly should extend to solar projects.
“If we believe in free markets and competition, you have to believe in allowing third-party providers,” says Scott Coenen, executive director of the Wisconsin Conservative Energy Forum.
Ed Zinthefer, owner and president of Arch Electric, says that installation costs remain insurmountable for many homeowners and small businesses. Third-party financing would greatly lessen that burden by letting people pay for equipment over a period of 25 years, a time in which they would also be lowering their utility bills.
As for the new proposed solar charge, Zinthefer warns that We Energies’ plans might backfire. Back in 2014, when We Energies officials put forward a similar charge—which was approved by utility regulators before being shot down in court—they infuriated many customers. Some of those people decided to express their displeasure by going out and buying a solar-generation system.
“And we were there to support their needs,” Zinthefer says. “We put in far more systems that year than the previous year. We did more battery systems that year than in the previous five years combined. We don’t know what’s going to happen this time around. But if last time is any indication, it could be another uptick.”
