Americans installed solar panels at their homes last year at a record pace, and backers of rooftop solar picture a not-too-distant future, where entire neighborhoods power themselves with the sun’s rays. For now, users and the industry rely on generous tax incentives and special agreements with electric utilities to reach affordability. Duke Energy wants to reduce how much it pays customers for the energy they produce. Rooftop solar advocates call it an attack on a burgeoning industry, while the utility says it is about cost.
Vivian Lord points to the solar panels newly-installed on her roof.
“They have to be on the south side,” she explains. “Without cutting these trees they could put up 10 panels, so there’s five there and five over there.”
Lord and her husband Allen Cowan had the system installed in December. The power it generates is projected to cut their household utility bill an average of 75 percent a month. Lord says the savings made it doable, but were not the draw.
“I’m more into it environmentally, and any way I can reduce the amount of carbon footprint,” she says. “And, quite frankly, the amount of dependency we have on Duke Energy.”
Reducing that dependency is not cheap—Lord paid Greenspring Energy in Charlotte about $20,000 to install and hook up her new solar power. Still, Greenspring’s regional president Jay Radcliffe says that price is almost half what it was three years ago. State and federal tax credits can reduce the total cost by half again. Radcliffe says the right customer can get a loan to install the system, and save more on energy than they pay on the loan.
“We can come to your house, put you in a system for $70 or $80 a month, and it’s going to reduce your bill in half,” Radcliffe says.
In addition to diminishing costs and generous tax credits, the rooftop solar industry relies on agreements with utilities called net metering.
In Lord’s case, her new solar panels generate more power than the household uses during the day. That excess energy goes into Duke’s grid, and becomes part of the rest of our energy mix. At night, the household has to use energy from the grid. The amount Lord’s house puts into the grid gets subtracted from the amount it uses, and Duke charges for the difference.
But, utilities in about a dozen states, including Duke, say they are paying customers too much.
“Rooftop solar is a good energy technology; it’s very useful. And, for a lot of people, it works for them,” says Duke spokesman Randy Wheeless. “Our only issue is that when it comes to selling power back to the utility, we think we should be paying the same as we would pay for that same power from a solar farm, or any other developer.”
Duke pays solar companies about 6 cents per kilowatt-hour. It essentially pays rooftop solar owners 11 cents for the same amount of energy. Wheeless says that doesn’t make sense.
“It’s the same kilowatt-hour coming from a rooftop as it is coming from any other developer,” Wheeless says. “We buy it wholesale from everyone. We should buy it wholesale here.”
In this scenario, a customer who gets $900 a year off his bill through net metering would instead save less than $500.
“That would severely handicap the industry,” says Radcliffe. “When you make these decisions, the impact is so monumental, that as quickly as the solar industry has had a lot of success, it could quickly go away overnight.”
Right now, the industry is beginning to boom. about 200,000 U.S. homes and businesses installed rooftop solar in the past two years, according to a report from Bloomberg.
North Carolina is still new to the game—Duke says only 1,300 households it serves in the state have it—but companies like Greenspring are moving in. Radcliffe opened his office in 2011 with four employees; it now has 16, and they have added rooftop solar to 200 homes.
Greenpeace spokesman David Pomerantz says Duke sees rooftop solar as a threat it can nip in the bud.
“It’s going to result in customers paying them less money for energy, because they can do it themselves, and that’s terrifying for Duke,” says Pomerantz. “So, they’re going to try to put up all of these obstacles, try to prevent people from going solar as quickly as they can.”
The industry faces other obstacles, for instance the state tax incentive expiring. Right now, North Carolina offers a 35 percent credit for rooftop solar owners, but it is scheduled to sunset at the end of 2015. Wheeless suggests Duke would not be sad to see it go.
“I think the incentives were in place to encourage solar in North Carolina. You could say solar has been a big success story, mission accomplished. And maybe those incentives could be used for other things,” says Wheeless.
Wheeless points out a market research firm just ranked North Carolina second in the nation for developing new solar energy. Almost all of it comes from large solar farms, though, with rooftop solar making up just a fraction. Steve Kalland, executive director of North Carolina State University’s N.C. Solar Center, says the point of the incentives is to get the technology up and running.
“What we’re looking to do with renewable incentives is to bring new technologies to the marketplace so they can be a valuable and contributing part of the utility portfolio,” Kalland says.
Kalland says rooftop solar is still four or five times more expensive than solar farms. But, he thinks a day will come when panels on rooftops are a common sight. And, he has recent backup from a long-time energy executive.
In an interview in EnergyBiz magazine, that executive said if he were starting over again today, he would want to run a rooftop solar company.
“My goal would be to take customers away from utilities as fast as I could, because I think they're vulnerable,” the executive said.
Former Duke CEO Jim Rogers.