Photo: kievith - Getty Images
Solar panels on house
For Paul Harder of Whitefish Bay, the solar panels he had installed on his house nearly six years ago are far more about the return on investment than concern for the environment.
According to Harder’s calculation, his savings on electricity bills amount to 8% percent a year. A 30-year treasury bond. notes Harder—who owns the mortgage brokerage White Oak Mortgage LLC—yields only a little over 2% annually.
That’s why it’s a cause of some surprise for Harder that not more homeowners have followed him in taking the solar plunge. With interest rates having hovered around historic lows for years on end, Harder can name almost no others way of obtaining such yields save in the stock market, with its far greater risks.
The environmental benefits are almost an afterthought.
“I think a lot of people are making an error when they look at solar,” Harder said. “They aren’t looking at it the correct way—as yield versus risk. They aren’t seeing it as a conservative investment.”
Cost Still an Obstacle
Yet, no matter how enticing the prospective returns, there remains one large obstacle preventing many homeowners from going solar. J.D. Smith, business development coordinator at Milwaukee-based Arch Electric, said the cost of installing a residential solar array runs anywhere from $10,000 to $30,000, depending on factors ranging from the size of the system needed to the amount of sun a particular property gets.
Unfortunately, Wisconsin’s policies supporting the solar industry are among the weakest in the U.S. Whereas the federal government provides a 26% tax credit for residential project, Wisconsin contributes a mere $500 through its Focus on Energy program. Making matters worse, Wisconsin’s net-metering policies—which govern what homeowners and businesses receive when they generate more energy than they can use and put the excess on the grid for distribution—vary from one utility jurisdiction to the next. The lack of uniformity complicates estimations of expected returns.
A pair of bills before the state legislature promises to greatly improve the situation. One proposal, still in its draft form, would explicitly allow so-called third-party financing in Wisconsin. In this type of financing, an independent solar company—a third party—leases rooftop space from a homeowner or business for a nominal amount and then install its own equipment there. Any money saved on energy bills is then split between the installer and the property owner.
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Found in almost every other state, third-party financing exists in a legal gray area in Wisconsin. Large utilities like We Energies in Milwaukee have taken legal action against third-party installers in attempts to maintain their monopoly right to undertake generation projects in their own territories.
Clarify the Rules?
Heather Allen, executive director of the renewable-energy group RENEW Wisconsin, said even though third-party financing is not strictly illegal in Wisconsin, no homeowner is going to risk a lawsuit to pursue it.
“We need clarification from the legislature,” she said. “Nobody wants to go through the work of getting a project built and dealing with the financing it if a utility could then just challenge it in court.”
The second bill due to appear before lawmakers this year would allow homeowners to take part in “community-solar projects.” These are specifically meant for people whose properties don’t get enough sunshine or are otherwise not suited to solar generation.
Community projects allow homeowners to essentially pay to obtain power from a large solar farm lying at a distance, often in a rural area with few obstructions. Once again, community projects are fairly common in other states, but not in Wisconsin.
“This would be ideal for customers who have high energy needs but don’t have a lot of roof space,” Allen said.
Both bills are giving solar advocates like Allen reason for hope. Unlike previous proposals of a similar ilk, they’ve already attracted a fair amount of interest from at least some of the Republicans who control the state legislature.
Investment by Energy Companies
When such policies were pushed for in the past, they often ran aground on opposition from large investor-owned utilities. But many of these same companies have now themselves come to embrace solar. We Energies and its sister company Wisconsin Public Service have joined forces with Madison Gas & Electric to invest in at least five large projects throughout the state, including the massive 300-megawatt Badger Hollow Solar Park in Iowa County.
Smith of Arch Electric said he’s convinced there remains plenty of pent-up demand. Adopting legislation to explicitly allow third-party financing and community-solar projects, he said, would go a long way toward meeting it. The pandemic, Smith said, has made people not only more aware of how much energy they are using at home but also eager to find ways to reduce their bills.
“Many people have just been locked in their home and shut off from outside world,” Smith said. “So the issues of energy use and security have become of intense interest.”
Smith said professionals in the solar industry tend to talk about states hitting a tipping point. Places where solar arrays were once rare all at once find themselves almost rushing to install the systems. California, which gets almost a quarter of all its electricity from the sun, hit that point around 2016. Minnesota, which gets nearly 4% of its power from solar, came to it more recently.
With the right mixture of policies and incentives, said Smith, Wisconsin could soon reach its own tipping point. A report released in October by the consulting firm Cadmus found that Wisconsin could one day get as much as two-thirds of its energy from rooftop solar installations. The only thing standing in the way is a lack of the right policies.
“Wisconsin is a state of practical people,” Smith said. “There’s a lot of farming culture here. So the fact of the matter is the vast majority aren’t going to do unless it’s a really good financial move.”
