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Solar Owners Rate Michigan’s Net Metering, Utility Pilots

Flexibility, sensible rates, new models top wish lists

Solar | April 16, 2014 | By Jim Dulzo

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Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org.
 

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*This is Part 6 of our ongoing coverage of the MPSC solar work group. See the entire series here.

From left: MPSC's Paul Proudfoot and Julie Baldwin accepted an 1,800-signature petition from Sierra Club's Brad van Guilder and signers Bob Wasserman and John Ford, owner of a solar power system, after the Apr. 8 Solar Work Group session. The petition urges quick action setting strong pro-solar policies. (Photo: Anne Woiwode)
From left: MPSC's Paul Proudfoot and Julie Baldwin accepted an 1,800-signature petition from Sierra Club's Brad van Guilder and signers Bob Wasserman and John Ford, owner of a solar power system, after the Apr. 8 Solar Work Group session. The petition urges quick action setting strong pro-solar policies. (Photo: Anne Woiwode)

John Ford is crystal clear about why he took advantage of DTE Energy’s Solar Currents pilot program and installed a modest solar energy system on his Ann Arbor home last fall.

“I didn’t have a second thought about it,” said the Pfizer retiree about his 3.2-kilowatt project, which will pay for itself in 10 years and then provide 20 years of free electricity. “It is the way we have to go on this planet in order to preserve it.”

And Ford is just as clear about why he signed a Sierra Club petition urging the Michigan Public Service Commission to require more solar development from utilities, and then showed up at a recent MPSC Solar Work Group meeting to help present his and 1,800 other online signatures to the agency’s staff.

“Anything we can do to facilitate the solar industry working well with DTE is worth every effort possible,” he said a few days later. “I think those meetings are a great thing.”

MPSC launched the work group in February to find a way forward for customer-based solar development by DTE and Consumers Energy. Both want to drop their solar pilot programs, which pay more for homegrown solar electricity than Michigan’s net metering law requires.

The push for more solar, which led to the 40-member work group of advocates and state and utility officials, reflects rising concern that Michigan is far behind other similarly un-sunny states in developing sun power. The advocates see the state’s lack of solar policies quashing the thousands of high-skill, long-term jobs that more solar growth would produce while cutting pollution and greenhouse gases.

They add that properly priced, smaller-scale solar can help utilities save fuel costs, avoid new power-line construction, and cut power purchases from pricey “peaker plants” on hot, sunny, heavily air-conditioned days.

“I’m not exactly sure why they are not embracing solar and wind way more than they are. They are scared to death of solar taking over their industry,” Ford said. “But it should be a symbiotic relationship that fulfills future energy needs.”

He said DTE’s Solar Currents program works smoothly for him—from installation to grid connection to billing—and mostly covers his $70 monthly electric bills.

But he wants DTE to pay more than 3 cents for each “extra” kilowatt-hour his panels produce—that is, power that exceeds what he typically uses. Ford also wants more flexibility; five neighbors want to invest in a large system he wants to build on his adjacent lot, but DTE told him it’s illegal to send his power across property lines.

“The MPSC should be looking at allowing people to do something like that,” he said.

In fact, the work group is discussing what Ford’s suggestion amounts to: allowing different kinds of “community solar” projects.

As work group meetings continue, interviews with other solar panel owners confirmed that, like Ford, they are glad they built their systems, but have suggestions for improving the utilities’ solar pilots and the state’s net metering rules.

The state’s net metering rules require utilities to buy electricity from customers’ solar systems at their full retail rate—essentially rolling meters backwards when the panels produce more power than their owner uses. But they cannot sell more power than they typically use, and larger systems, sized for commercial operations, earn significantly less than the retail rate.

Those rules have produced only modest solar growth. MPSC says that, at the end of 2012, Michigan’s 1,330 net-metered systems could produce up to 9,500 kilowatts— 0.1 percent of the power from a medium-sized coal plant.

Better than Wall Street

But net metering works fine for Dave Coveyou, whose family-owned, 140-year-old Coveyou Scenic Farm Market, just south of Petoskey, raises and retails organic vegetables, flowers, fruit, and holiday wreaths and trees.

Coveyou installed his system for a rock bottom price, taking advantage of sharply lower panel prices and his own electrical engineering expertise. He switched on his 16-kilowatt system in early March to power high-efficiency pumps, coolers, and heaters.

“For me, it was economics,” he said. “It requires more upfront money, but it certainly pays for itself over time. I remember in the 1970s you would never want to put in electric heat, but I want to be off propane and gasoline, from a business standpoint.”

But Coveyou dislikes the 20-kilowatt system limit for earning the higher, retail rate. He believes farmers could build much larger systems to power their entire operations and sell excess power onto the grid at a price good both for growers and utilities—particularly during summer’s pricey peak-power demand.

“There really is a solid case for designing a program that will actually pay people for their electricity,” he said. “That could really help small farmers all across the state.”

“I can invest in the stock market or invest in something [like solar] that is good for the country,” he added. “Let’s try to implement something that’s working in other states. I got to believe that the commission would say those things make sense.”

A Tale of Two Systems

Ross Draper hopes that’s true, based on the unique view of customer-owned solar power he’s gained. His employer, FPE-Sunsource in Kalamazoo, has two solar systems, uses net metering for one and Consumers’ pilot Experimental Advanced Renewables Program for the other.

FPE entered a 2010 EARP lottery, won, and installed a 20.7-kilowatt system that earns 42.5 cents per kilowatt-hour from Consumers for 15 years, and turns a small profit for the company. Pleased, FPE built another, 27-kilowatt system the following year—meaning solar would provide 20 percent of FPE’s electricity—and began applying for subsequent EARP drawings.

But the company has not won again, even as Draper watched EARP lower its rates for new, non-residential contracts to 19.9 cents.

“There’s just no way people will go for that and grow the solar industry,” he said. Draper added that, even if he wins in a drawing, FPE might stick with net metering for the second system because it could soon offer a better deal as rates continue to rise. He estimates that, at current rates, the system will pay for itself in about 20 years.

Draper said he would like to see a “menu-driven program where you can pick and choose different payback periods with different amounts per kWh, rather than a ‘one size fits all’ approach.”

He plainly dislikes the current situation.

“The power companies met their renewables mandates, so now they say, ‘We don’t have to go any further,’” he said. “But they have no competition and there is something wrong with them not trying to help from their side of things. They are an impediment to this, and it kind of bugs me that they do that.” 

Wanted: New Game Plan

Like John Ford, Robert Stegmier is a Sierra Club member and installed his solar system because he wanted to cut his carbon footprint, not necessarily his utility bill. He’s something of a solar pioneer; when he installed his modest, 2-kilowatt system eight years ago, solar was very cutting edge in Michigan.

At that time the 30-percent solar federal tax credit only covered the project’s first $2,000, and only about a dozen people, including him, were using Michigan’s original, very weak net metering law. Solar power was clearly for hobbyists.

He was also one of the first solar owners to gain acceptance to Consumers’ EARP program. He likes his arrangement.

“They buy all of my electricity, so I know what they are purchasing from me in kilowatt-hours,” he said, “and they charge me for everything I use from them, so I can easily figure out what I’m getting out of my solar panels.”

Today, net metering is a somewhat better deal in Michigan, solar panels are much cheaper, and some utilities are starting to see that properly priced and distributed, smaller-scale solar systems can benefit panel owners and power companies. But Stegmier also believes Michigan’s utilities are lagging behind what is actually occurring in the energy industry, especially given solar’s potential to produce significant amounts of power here.

“I would like to see the utilities in Michigan, because they are a monopolistic system within our free enterprise system, making those kinds of investments,” he said. “They should have bought the system on my roof, and paid me accordingly. Or community solar systems: the utilities could do that, too.”

Stegmier said he understands big companies’ reluctance to jump into small-scale solar.

“It would be a whole different ballgame. If they owned a bunch of panels on a bunch of roofs, they would have a whole bunch of individuals to deal with in a different way,” he said. “Today they have the product—energy—and you buy it or you don’t buy it.

“But they have a game plan, they have plants licensed for 30, 50 years. If the auto companies didn’t have a federal mandate, would they be where they are at now with mileage? The government stepped in and said, ‘OK, you got to do this.’

“I don’t really like that, but sometimes that is what you have to do. If they have a monopoly, then I have limited options.”

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org. This is Part 6 of a continuing series about the Solar Work Group process occurring in Lansing.

2 Comments

893 days ago, 11:05am | by Elaine Dierwa | Report Comment

I hope LBWL will offer a program in the near future.

827 days ago, 5:22am | by taylor | Report Comment

I want a solar system. I want them to give me market rate in energy give back. But asking them to buy the system is crazy. I see where he's coming from. Maybe after a year they can give credits for ownership, but straight out the gate. They don't know what types of owners we will be.

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