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Watch Out for Solar Credit Policy Changes that Favor Energy Companies (Part 1)

solar credit

Thousands of companies and homeowners across the country have been buying or leasing solar panels in an effort to reduce their energy bills and reliance on fossil fuel-based electricity. Admittedly, it feels pretty good to be pulling raw power straight out of the freely available sunshine. But of course for most people installing solar panels is as much a financial decision as an ecological one. The vast majority of states have a solar credit program, which allows you to keep your building hooked up to the public grid, ensuring that your lights stay on even on cloudy days, but credit your power bill for every kilowatt of solar you produce and share with your local energy grid. This is a pretty good deal. You never have to run out of power, but still get that nice reduction in your power bill every month.

However, storm clouds are on the horizon for many of these happy solar panel owners. The power companies, once happy enough to participate in the solar credit program, are starting to see exactly how much revenue they could lose from miles of solar panels distributed throughout the cities and countryside. Rethinking solar credit system, these utility companies have begun lobbying states for the right to change the economic balance. Unfortunately the sunniest states in the country are starting to give way.

The Energy Grid is a Toll Road

You may be wondering exactly what the power companies have to complain about. After all, you’re generating your own energy and reducing the amount they have to provide to your community. So what exactly are they losing? What we’re all missing is actually the wear and tear on the infrastructure itself. We often forget that wires experience wear and tear just like every other part of an electrical system. And the grid itself requires establishment and maintenance. The utility companies built the grid and maintain it to ensure we all get power whenever we need it. Like a toll road, our power bills are more than just a metered cost of electricity. They are also paying for the grid infrastructure and the work the power companies do to take care of it.

Power companies are therefore arguing that solar panel users are still putting their share of wear and tear on the grid, possibly even more than most buildings, and they should be allowed to charge for that. When someone generates enough solar to reduce their bill to zero, the companies don’t get their grid use ‘toll’ money. And they want to change that.

Charging More for Grid-Provided Energy

The proposed solution, one that is already been enacted in Nevada, is to allow energy companies two ways to take a bite out of private solar panel owners. First, they may be allowed to charge a flat monthly fee to all solar users to use the grid. Second, they plan to reduce the amount credited for each kilowatt of solar from full market value (what they charge for their power) to a third or less. Officially, the energy companies aim merely to ensure that non-solar owners don’t have to pay extra for grid maintenance, while solar owners’ bills are reduced to zero. What’s already happened in Nevada suggests that this power can and will be quickly abused.

The Nevada Solar Credit Bait and Switch

One of the sunniest states in America, Nevada would seem like the perfect place to set up your solar farm. After all, the sun shines constantly, and the heat is considerable. In most of Nevada, there’s very little in the way of other buildings to block your sunlight. Initially, solar owners and leasers were incentivized to invest and build. They were offered full market value on any power they generated and dumped onto the grid. However, in what solar companies are calling an unprecedented bait and switch, last year they changed the policy to allow NV Energy, the state’s only power company, permission to charge higher rates and fees to solar panel owners.

The real problem is how the math shakes out. Their monthly fee, which used to be $12 will be raised to $40 over the next four years. This alone might have been okay, but they are also reducing the solar credit from full market value at 13 cents down to a meager 2.8 cents per kilowatt. For those of you who are familiar with solar credit math, this completely eliminates any financial benefit of having solar power in Nevada and worse, in many cases, it will make it more costly than simply living off the grid. And, of course, they’re still selling the solar-generated power at the original 13 cents and pocketing the difference.

Choosing when to get solar panels installed and which power companies to work with is an important decision to make before investing. Join us next time for the second half of this two-part article. We’ll talk about recent changes in Florida’s solar policies and off-grid options that dodge the power companies entirely. For more information on business energy efficiency, contact us today!

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