Indiana has surfaced as the most recent political battleground aimed at distributed generation (DG) and net metering. House Bill (HB) 1320, despite substantial opposition by environmental groups and industry, will move to the Indiana House of Representatives after clearing the House Utilities, Energy, and Telecommunications Committee last Wednesday. HB 1320 attacks distributed generation by authorizing utility companies to charge DG solar or wind customers fixed costs or fixed charges for access to the grid. Additionally, utility companies can discount or eliminate the dollar amount they credit back to customers for distributing excess generation to the grid. These additional costs will discourage the development of residential solar in the Hoosier state.
Let’s make one thing clear. Even without the new charges, you are unlikely to see Indiana on the list of top solar states. Electricity prices are too low, support of renewable energy is too meager, and incentives are few and far between. But the state, and Indiana Power and Light (IPL) in particular, have shown some serious commitment to solar in recent past. For the first time this May, the famous words “Ladies and Gentlemen, start your engines” will be spoken adjacent to a 9MW (DC) solar array, the Indianapolis Motor Speedway Solar Farm. And, the next time you touch down at IND, you will notice a shining 22.2MW (DC) installation that’s the largest at an airport in the country.
And while that’s all fine and dandy, this bill won’t affect large utility scale projects just discussed, or even decent sized commercial solar projects for that matter. Lucky for existing DG customers that were installed prior to 2015, they wouldn’t endure these fixed charges either. Who this bill will affect most directly are the small business owners of solar and wind companies and their potential customers: “the solar underdogs”.
Residential solar customers in Indiana do have access to some incentives, although none too impressive: the federal tax credit, property tax benefits, and some utility-specific feed-in tariffs or rebates. Sol Systems does have a handful of solar renewable energy credit (SREC) customers in Indiana, but that’s no nod to Hoosier policy. Through Ohio’s mandatory renewable portfolio standard (RPS), compliance entities are permitted to buy SRECs from generators in surrounding states, like Indiana. As you may remember from last summer, the Ohio RPS has its own set of problems. Indiana SRECs are currently sold on the open market at $50/SREC, compared to $487/SREC in Washington, D.C., and $350/SREC in Massachusetts.
In a market that isn’t exactly striving to begin with, this bill makes the solar “sell” even harder. The estimated payback period for a typical residential system in Indiana is nearly three times that of a solar friendly state like Massachusetts. A recent study out of Purdue showed that with Indiana’s existing policies a homeowner only has a 50/50 chance of getting his electricity cheaper from solar than from the grid. This chance of course drops when net metering is taken out of the mix, which is exactly what HB 1320 targets.
Fixed costs and fixed charges on top of the initial investment could completely wipe out the minor cost savings that an Indiana solar homeowner might expect from his monthly utility bill. It’s worth mentioning that the benefits to the supporters of this bill certainly aren’t too impressive. With less than 0.05% percent of households in the state currently taking advantage of net metering, a fixed fee may collect some pocket change of a couple thousand bucks a month for utility companies. It sounds like this bill is picking the wrong fight. But as the battle in Indianapolis continues, let’s hope the solar underdogs, the residential customers and small business owners who will be affected by this legislation, and their supporters can halt this bill. Fortunately, if there is one thing that Hoosiers can believe in, it’s the triumph of the underdog.
Sol Systems will continue to monitor solar policy nationwide. If you’re a solar energy system owner seeking an SREC contract, please visit www.sellmysrecs.com to register with Sol Systems.
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