Regulatory infrastructure will be crucial
I was traveling last week and missed “solar’s inevitable dominance.”
I disagree. There is nothing at all inevitable about solar. Sure, the technological potential exists. But the problem is not technology. The technology works great. The problem is policy.
Right now, if solar panels were free — handed out on street corners — you still would not see market uptake anywhere near the technical potential. Why? Because we do not yet have the right regulatory infrastructure.
Let me give you an example. Last year, the Arizona Corporation Commission passed a huge increase in the state’s renewable energy standard. It will require upwards of 2,000 MW of solar, and there’s somewhere around a billion dollars worth of funding to help.
So what happens?
Tucson Electric Power, one of the state’s larger utilities, unilaterally decided that any grid-connected solar system in its service territory must have a data monitoring system capable of collecting …
… plane of array solar insolation in watts/M2, ambient temperature in degrees F., wind speed in miles/hour and actual AC power output in watts … on an average time interval not to exceed five (5) minutes for each data point throughout the day.
Why is measuring wind speed relevant? It’s not — but purchasing and installing this system will increase costs by up to $8,000. One almost suspects … oh, no, couldn’t be.
Many states have interconnection standards to prevent these kind of monkeyshines. And in Arizona, we are working with the Arizona Corporation Commission to develop them. The point is, without laws that govern the process of interconnection, utilities can and do implement barriers to developing a robust solar industry.
Now let’s take Arizona Public Service, the state’s largest utility. The state has no net metering standards, so APS, in their latest rate case, filed for a net metering tariff that would be devastating to solar in their service territory.
To begin with, APS’s net metering proposal caps installations at 10 kW. Fine for the residential market, but that pretty much eliminates commercial systems — and larger systems are, on average, cheaper to install. Ever fly into Phoenix? There’s a lot of big, flat roofs in the state. All going to waste.
But more insidiously, APS claims that customers installing solar systems deprives it, the utility, of “lost revenues” for which it deserves compensation. And to make up for it, it wants to be paid about 6.7 cents for every kWh a customer-sited solar system generates.
That’s right. If you buy electricity from them, it’ll cost you 11 cents a kWh. If you install solar and don’t buy electricity from them, they still get paid 6.7 cents. We’ve gotten together with some colleagues and hired a lawyer to fight it, but if APS gets their way, solar is going to be a lot less inevitable in the state.
If you want a robust solar industry, you need a robust net metering standard. We recommend IREC’s model rule (PDF).
The challenge is not just to reduce costs and improve technology. If solar is going to come to scale, we need to do more than reduce costs. We need to free markets. And that means a rethinking of the regulatory infrastructure. It’s brutal, state-by-state work, and there is nothing at all inevitable about success.