Archive for August 2, 2013

TSEA August Newsletter Editorial

TSEA Editorial

Disputes over the use of small-scale solar power are flaring across the nation. At issue in an Iowa lawsuit is whether solar-system marketers can sell electricity in territories where local utilities have exclusive rights to customers.

In TVA territory distributors are forbidden from generating electricity and that extends down to small installations on residential homes. The overall concept of an individual providing some of its own power and selling the rest to the utility company is called net metering.

Net metering or net energy metering (NEM) allows electricity customers who wish to supply their own electricity from on-site generation to pay only for the net energy they obtain from the utility. NEM is primarily used for solar photovoltaic (PV) systems at homes and businesses (other distributed generation (DG) customers may have access as well). Since the output of a PV system may not perfectly match the on-site demand for electricity, a home or business with a PV system will export excess power to the electric grid at some times and import power from the grid at other times. The utilities bill customers only for the net electricity used during each billing period. Alternately, if a customer has produced more electricity than they have consumed, the credit for that net excess generation will be treated according to the NEM policy of the state or utility.

Benefits of distributed solar include:

• PV systems generate the most electricity during the middle of the day when demand is the highest.
• Net metered PV systems reduce the need to expand transmission grid capacity
• Net metering allows for the development of a solar energy market and the jobs that come with it

Currently 44 states plus D.C. have implemented net metering policies. The following map shows the six states that forbid net metering.


Utilities “are proponents of renewable energy,” said Barry Shear, president of Iowa’s Eagle Point Solar LLC, but only “if they own the energy assets and the electrons flow through their grid and they can bill you.”
“The electric utility industry’s preservation of revenues and investor capital will be determined by its success in aligning with the following five consumer mega-trends reshaping the U.S. economy” says Bill Roth President of NCCT, a nationally recognized business coach, economist, ranked as a top-five writer on sustainability and business best practices. To paraphrase his proposed trends as:
1. Consumers are in active pursuit of lower bills,
2. The electric utility industry’s revenues are at risk with a generation that views the industry as missing in action,
3. Today moms manage the household budget. They expect the companies they do business with, including their utility, to provide products and services that align with their values,
4. Electric utilities need to mimic CEOs of major corporations who are adopting sustainability to reduce their operating costs, increase customer alignment and mitigate risks, and
5. Consumer acceptance of cost reducing disruptive technologies that challenge existing utility economic models.

The issue being brought up in this Iowa dispute is the question as to who supplies electric power to residential customers. The dispute can be resolved with changing the economic model of how solar can be integrated into the existing business models of TVA and independently owned utilities. Nobody has to lose. The existing model in our state can be preserved allowing TVA to generate all the electricity selling the power through their distributors who connect the electricity to the residential commercial customers.
The issue now is not who owns the power sources, but how we raise the funds for solar farms and distributed solar needs. The answer maybe to apply the economic model of micro-investments.
The model published in the July/August issue of Solar Today, addresses the existing barriers through the following channels.
• The income will be generated by residential customers who are interested in improving their environment as well as income generation.
• TVA will manage all future solar installations in cooperation with their distributors.
• Income from the sale of solar power will be channeled from TVA and it’s distributors to the residential investor.
• TVA and its distributors will be responsible for the operation and maintenance of all solar generation where the cost for the O&M will come from the profits of solar sales.
• Home owners and businesses that sign up for the program will agree to compensate the distributors for the cost of maintaining and upgrading the distribution system.
• For distributed generation TVA will compensate the owner of the property for renting their roof.

The essence of the model is discussed in the Solar Today article which can be retrieved at the American Solar Energy Society (ASES) website

Property Taxes Could Be the Next Obstacle for PV

Property taxes can be an ongoing cost for PV system owners and a determining factor in whether a solar system gets installed. In Connecticut, for instance, residential systems are exempt, and sometimes assessors choose to include commercial and industrial systems, and sometimes, probably in detriment to the finances of the project, they don’t.

A 3rd party investor was very interested in renting ground locations in Tennessee for solar and offering a good deal for the property owner. Their financial model was okay until they checked on the property tax they would have to pay. It was so high in some places and so confusing in other locations that the investor decided not to invest in Tennessee.

Justin Barnes, a Keyes, Fox & Wiedman Senior Policy Analyst and the lead author of the DOE Solar Outreach Partnership’s report Property Taxes and Solar PV Systems: Policies, Practices, and Issues stated that ” there are three generally accepted property tax valuation methods used by assessors: the comparable sales method widely used in residential real estate, the cost-based method in which a replacement cost is estimated, and the income method.”

According to Barnes, “Property tax issues don’t affect the value proposition of third-party ownership, but they figure in on what the property owner owes on taxes,” Barnes explained. “The assessment will affect what the third party owes to property taxes, and that filters down to what the customer pays in a lease or PPA rate.” He goes on to say “Colorado may have the most exemplary property tax system, and Ohio’s is noteworthy for its simplicity: “Systems below 250 kilowatts are exempt and those above 250 kilowatts pay a set fee. Simple. Easy.”

Original article