Community Solar Programs Can Deliver Cheap Renewable Energy to All Income Groups

Posted April 6, 2016

MP3 Interview with Tyson Slocum, director of Public Citizen's Energy Program, conducted by Melinda Tuhus

solar

Solar power is booming across the United States, in part because the cost of solar panels has plummeted in recent years. The solar industry forecasts that roughly 20,000 mega-watts of solar capacity will come online over the next two years, doubling the country's existing solar capacity, which today only provides a tiny fraction of the nation's overall energy mix.

Residential rooftop solar panels that produce electricity are one of the fastest growing sectors of the solar boom, but more than three-quarters of America’s homes are not suitable for solar installation, for a variety of reasons. However these homes can benefit from what's called community solar, in which solar arrays are built in a separate location – and residents can buy into the system to receive electricity. But community solar is not available in every state, mostly due to opposition from the electric utility industry.

Between The Lines' Melinda Tuhus spoke with Tyson Slocum, director of the Energy Program at Public Citizen. Here he explains how solar installations work, why utilities often oppose these systems, and how community solar programs that target the participation of low income groups can establish a business model that will allow the greatest number of people to benefit from solar energy.

TYSON SLOCUM: There is no question that when you’ve got more and more customers generating their own electricity – either from their own solar panels that they own, or generating power through a community solar program – that is in opposition to the financial interest of the incumbent distributional utility, because a utility earns money based on the sale of electrons to its customers, and if a larger proportion of its customers are not buying those electrons from the utility anymore, or, in some cases, actually requiring the utility to buy electrons from them, in the case of a successful rooftop solar facility that is producing electrons in excess of what the household uses in electric power. So there’s no question that the nature of the electric utility business model that’s existed since the 1880s when Thomas Edison invented the first centralized power plant in New York City, we have to recognize that technology, in the form of cost-effective rooftop solar requires dramatic changes in the corporate and business structure of electric utilities.

BETWEEN THE LINES: Tyson Slocum, how are solar systems funded, and who benefits?

TYSON SLOCUM: The primary way that rooftop solar owners can get compensated for their costs associatedwith buying and installing and operating these systems is through various tax subsidies. At the federal level, there’s an investment tax credit that is set to phase out and expire over the next five years. And that simply allows you to take a tax credit based on the value of the cost of the solar system that you’re installing on your rooftop. There’s also, depending upon the state or municipality, a number of different state and local tax incentives.

But the biggest incentive, this is featured in more than 30 states, is something called net metering, which says that if I am producing more electrons from my rooftop solar system than I am using in my household, then every month I can get credit on my electric bill for the excess electricity that my solar panels sold into the grid. But the amount of the payment that is provided to the solar owner is based upon the retail price of electricity. Now, if you’ve got one percent of households in a utility service area that are getting paid by other, non-solar customers, that’s not a big deal. But if 5 percent, or 10 percent or 20 percent of all of a utility’s customers are producing their own electricity from rooftop solar, and are getting paid by customers that don’t have rooftop solar, it does create an equity issue, where those that have the financial or technical capability to generate their own power from rooftop solar, they are going to see dramatically lower electric bills, and those customers that cannot afford access to rooftop solar or don’t live in a building where it’s possible – because they live in a multi-family building, they don’t own their building because they rent, or if the building is just not in a suitable sunny place because of trees or whatever, they’re going to see higher rates.

So the problem has been that the utilities are saying, There’s this cost shifting, and that’s why we shouldn’t do rooftop solar at all. That’s not an excuse. The fact of the matter is that all we need to do is to design programs that maximize not only the deployment of rooftop solar, but the equitable access to rooftop solar. And I think the community solar concept is one of those ways that we can ensure that we get penetration of rooftop solar into low-income and other communities that otherwise might not be able to get it, because you can design a community solar program with specific targeted goals for low income participation and you can do that by pooling resources together. So that’s why we like what’s known as a Value of Solar Tariff, that tries to more accurately pinpoint the benefits of solar production to the environment, to the climate, to the utility system and for the household.

For more information, visit Energy Program at Public Citizen.

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