Entrepreneurs Flock to Consumers' Solar Lottery
A winner eyes profit, helping country by expanding long-ago school project
February 29, 2012 | By Jim Dulzo
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When Doug Jackson was a high school senior, he was so fascinated by the power of the sun that he built an experimental solar panel for his school’s science fair.
Now, decades later, thanks to a little luck and Consumers Energy’s own experimental solar panel program, Dr. Jackson—a retired orthopedic surgeon—is revisiting his dream of using sunshine to build a better country.
He will likely make a nice profit doing it, too.
Early last month, he and 30 other Consumer customers won an unusual drawing that gave each of them a slot in the utility’s Experimental Advanced Renewables Program. The utility’s EARP is actually what most of the world calls a “feed-in tariff”; it allows the winning entrepreneurs to invest in their own solar panels, sell the power directly to Consumers, and earn a fair return.
Consumers first launched its EARP in 2010 as one way to help it meet its state-mandated goal of 10 percent renewable energy by 2015.
The company held the January drawing because twice as many people responded to this second phase of EARP as there were available slots. The deadline for the next drawing, which will be for the utility’s business customers, is March 29; the company is now accepting applications and holds an informational session in Saginaw on March 5. The drawings will eventually whittle down EARP’s long applicant lists to a group whose solar arrays collectively generate 3,000 kilowatts (three megawatts) of power for Consumers on sunny days.
EARP’s popularity—the company quickly “sold out” its 2010 two-megawatt cap—does not surprise feed-in tariff advocates. They point to FIT’s success worldwide, including in Germany, where homeowners eager to make money with their own solar panels triggered a boom in the domestic solar industry that now employs 300,000 people and makes the country a world leader in solar manufacturing and generation.
That is why last year, when Consumers wanted to hit the pause button on EARP before deciding whether to continue it, many Michigan solar manufacturers and installers rallied and persuaded the utility and state regulators to instead expand the program slightly. They said that Consumers could play a vital role in fostering the state’s budding solar manufacturing and installation sector.
At the drawing, held at Calvin College, in Grand Rapids, officials for Consumers, which recently cancelled a new coal plant and announced plans to mothball several old ones, presented some special guests to amplify their upbeat message about the firm’s renewable energy future.
Grand Rapids Mayor George Heartwell, whose city is aiming for 100 percent renewable energy by 2020, complimented the utility for the help it’s giving with its green generation program. Then state Representative Roy Schmidt, a vice-chair of the House Energy and Technology Committee, said Consumer’s EARP was another good outcome of the state’s 2008 renewables mandate.
“Our utilities have embraced that mandate, and I’m glad,” Representative Schmidt said. “It is amazing what we can do when we all work together.”
A company spokesman listed a number of projects mounted to meet that mandate, including power from seven wind farms, 17 landfill gas operations, 25 dams, six waste wood burners, three methane converters and, thanks to the first phase of EARP, completed last year, 100 solar panel systems.
Consumers, he said, is spending $930 million over the next five years developing its renewables capacity.
Mr. Jackson and his wife, Lori, traveled from Midland to be at the drawing. Doug Jackson spoke with Great Lakes Bulletin News Service by phone last week.
Great Lakes Bulletin News Service: Do you have experience with solar power, other than your high school science project?
Dr. Doug Jackson: Yes. I have helped several others do their installations. I attended several classes about it, and taught an alternative energy class at Saginaw Valley State University. I’ve learned it’s important to install when there is not a strong wind; the panels can catch a breeze pretty easily.
GLBNS: The folks who’ve you helped—how are they feeling about their systems?
Dr. Jackson: In general people have been quite pleased with them. There’s essentially no maintenance. We had a particularly sunny fall and even much of our winter there was more sun than we normally expect, so, if anything, the panels have exceeded their expectations.
GLBNS: And how does your wife feel about this?
Dr. Jackson: Lori shares my enthusiasm, but perhaps to a bit lesser degree because she’s involved in other things. But she agrees the more energy independent we all are, the better it is.
GLBNS: Had you paid much attention to Consumers’ solar program?
Dr. Jackson: I was aware of Consumers’ first [EARP] offering a few years ago, and was disappointed when it ended so rapidly. It was only open 14 days. I had considered doing net metering [which pays a retail, not a premium price for home-installed solar power], but when I heard about the drawing I decided to wait.
There was some incentive to get into the drawing because of the higher feed-in tariff Consumers offers. I figured I had a 50 percent chance. I’ve not done all the math, but with a FIT contract the return on investment is quicker than with net metering.
GLBNS: The application requires that you submit a lot of specific information to qualify.
Dr. Jackson: I did much of this on my own. I had some basic information: The annual electrical output of your array is limited to what your actual electric consumption was in the previous 12 months. Then you speak with solar vendors around the country, find out what it will cost you, and break it down to what that will run you per watt for installation. Then you make projections about what you should produce in an average year, and that helps you figure out when your return on investment is going to be complete.
My system is about 7 kilowatts. I have a less than ideal location for solar panels because shadows from some trees will cause problems at certain times. Consumers accepted my shading issues and allowed me to put up a somewhat larger array than the power usage at my house in order to compensate.
I think it will take about seven or eight years to pay off my investment, which is about five or six dollars per watt. They will pay me 25.9 cents per kilowatt-hour.
GLBNS: Why do you think this program is a good idea?
Dr. Jackson: We are clearly looking at becoming more energy independent, and we have an awful lot of energy coming to us from the sun all day and year long and we are not utilizing that resource very wisely. These feed-in tariffs are an additional inducement to get more people involved in doing that.
I certainly do not want the cost of everyone’s electricity to go up much to support a feed in tariff, but I’m not sure what the mechanism will be to provide that. We know that industry is very dependent on the cost of energy, and we want them to continue to thrive.
So there is a bit of a paradox; people would like to have more of these clean energy services available. Maybe a tax on oil imported into this country? I don’t know: there are pros and cons to every consideration.
GLBNS: The theory behind feed-in tariffs is that, as the industry scales up thanks to that kind of program, the cost of solar power will go down, and pretty soon you won’t need a premium rate, like 24.9 cents, to make a profit.
Dr. Jackson: I would hope that would be the case. We’ve certainly seen the price on solar power come down dramatically over the last 50 years. And we know the price of coal for generating electricity is going up and up. So very soon, there will be parity. And at that time, a feed in tariff will not be required for building solar installations.
Let’s say, just for discussion, that the price of solar is 12 cents per kilowatt-hour, and for coal it’s eight or nine cents. Within the next several years, as emission controls become greater, and the price of coal goes up, the price of coal power has to go up. At the same time, the price of panels is coming down. So coal-fired could become 10 cents, and solar is 10 cents.
In that case, utilities will be putting up solar panels to help them provide the energy.
Just in the last year I’ve seen some panels that once produced 210 watts increase to 240 watts with little cost increase. So the price is coming down.
GLBNS: How do you feel about Consumers having feed-in tariffs?
Dr. Jackson: I think it is very nice that they are participating in this. I know in the past there were a little reluctant to get involved in either solar or wind, but I hear that they have been very pleased with the performance of the wind farms they are involved with.
Solar is still a very small part, and they are looking at the dollars per watt, and are watching it closely. Some time in the future I think they will also be putting up solar on their own.
What is really good about solar panels is that they do a very nice job of providing the most power at exactly the time when the utilities have peak demands.
It will get to a point that at 4 pm, a company may be paying 75 cents per KWH just to buy the power their customers need at that time of day, and that’s when panels are producing the most. So the potential for solar to contribute to meeting that peak demand at a lower cost is very substantial.
GLBNS: How does it strike you to be involved with solar power all of these years after your science project?
Dr. Jackson: It is kind of funny. My mother recently pulled out some pictures of me with my 12th-grade project. Even doing these other things over the years, it has always been in the back of my mind that there are other resources that we are not fully utilizing.
There’s an analogy I think about, concerning cost. When gas was two bucks, we didn’t think much about fuel-efficient autos. Same with electricity, when we were paying 5 or 6 cents per kilowatt-hour, we were not thinking about that. Now my bill is 13 cents per kWh.
Senior Editor Jim Dulzo covers clean energy and coal issues for the Michigan Land Use Institute. Reach him at firstname.lastname@example.org.