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States hold the key to solving the solar tariff problem

States hold the key to solving the solar tariff problem
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There is much that states can do to ensure solar business growth and job creation continues in the wake of the solar tariffs imposed by the Trump administration.

These efforts would complement cost-cutting and supply-chain optimization efforts that solar businesses large and small are scrambling to undertake in an effort to minimize business disruptions. 

If states and solar businesses take real action, the domestic solar energy economy could emerge even stronger when the shackles of solar tariffs are finally removed.

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State policymakers and regulators must focus in four key areas:
  • increasing energy efficiency
  • stopping the utility war on customer-owned solar
  • growing opportunities for community and shared solar
  • fundamentally transforming the utility business model

 

The solar business sector is understandably focused on costs and supply chain, but they need to up their policy and regulatory game as well. Solar businesses need to become even stronger political and regulatory champions for efforts in these areas.

Here are the four pillars of a smart, clean energy economy:

First, energy efficiency is the single best way to make solar energy more affordable and allow the market for solar to grow in spite of the price penalties that tariffs will impose. There is abundant opportunity to improve energy efficiency in our homes, businesses, government, military, and industry. 

Sadly, the Trump administration is proposing reversal of decades of efficiency research and supportive policy. So, it is even more vital that states step up their efforts. The results of increased energy efficiency efforts are savings for all customers, as well as a savings on the cost of solar systems needed to meet customer needs.

State and local governments have great leverage to improve energy efficiency through oversight of electric utilities. The results, verified by decades of experience and detailed study, would be more jobs, a stronger economy, and real international trade competitiveness. More affordable solar energy options are fringe benefits making energy efficiency worth pursuing.

Second, our state regulatory commissions should deny, and where necessary, reverse efforts by some utilities to impose extra charges and punitive electricity rates on solar customers and projects.

These anti-solar campaigns seek to eliminate net energy metering, impose grid access charges, and adopt rates that unfairly discriminate against customers who invest in solar for their homes and businesses. If the proposed tariffs on Chinese solar modules raise prices for solar, it is vital that regulators not undercut the consumer value proposition in installing solar. 

Value of solar studies conducted in many states conclusively demonstrate that small-scale solar systems operating within utility distribution systems offer benefits that exceed the retail rates charged by utilities. Rate designs that reflect this value yield infrastructure cost savings that accrue to all electricity customers, both large and small. The attack on customer solar should be rebuffed in state legislative and regulatory forums.

Also on the to-do list, is elimination of unnecessary permitting and technical interconnection burdens that make solar projects more expensive than they need to be. Statewide solar permit processes have been adopted in a few states with great success — this should be the norm across the country.

Third, state utility regulators can expand opportunities for development of community and shared solar. These projects allow multiple customers to band together to participate in a solar project, and to take advantage of the economies of scale that larger projects bring. Freed of the limitations of any particular roof, these strategically placed projects can provide enhanced grid resilience, improve reliability, and save on utility infrastructure costs.

These projects are also critical for creating opportunities for low-income customers (often renters) and neighborhoods to participate in the stable prices and clean operating profile of solar energy.

States should also use their authority under the Public Utility Regulatory Policy Act to establish just and reasonable, non-discriminatory rates for small renewable power generation.

Critical to expanding the community and shared solar segment is careful analysis, required and overseen by regulators, of the true value of solar as an energy resource. Value of Solar analysis is especially important as a component of a microgrid strategy that groups customers, distributed generation, and energy management technologies and services.

Finally, state leaders must adopt and implement an agenda of utility sector transformation. Standing behind utility opposition to efficient use of clean energy, customer-owned solar energy, and community and shared solar is the cost-plus profit-making model that limits utility profits to utility investments and high customer use.

The 100-year old monopoly utility business model was well suited to driving expansion of the grid to electrify our sprawling nation. Times have changed. Now the old model drives utility over-building, waste, and inadequate focus on the best interests of customers and the economy. Paying utilities based on performance against measurable standards, and not just a markup on sales volume, is critical to getting them solidly on the side for affordable, efficient, and cleaner electricity service.

A number of states are starting down the road to examining alternatives to a model based on utility monopoly hegemony, and the benefits of creating competitive market environments in which smart, efficient and clean energy technologies and services can thrive. Solar will do well in those markets — and we all will benefit.

Karl R. Rábago is the executive director of the Pace Energy and Climate Center at the Elisabeth Haub School of Law in White Plains, New York. Rábago is also the former Texas public utility commissioner, served as a deputy assistant secretary at the U.S. Department of Energy and as utility executive.