TWIN FALLS – Installing solar panels is likely to make less sense for farmers and large businesses, according to a recent ruling by the Idaho Public Utilities Commission.
In fact, the December PUC regulation creates uncertainty about the future value of solar power generated by private solar panel owners in the agricultural, industrial and large commercial sectors. At some unknown point in the future – it could be a year or five years from now – Idaho Power will begin to compensate people less for the electricity they generate.
By the time Idaho Power sets this new tariff, and possibly afterwards, fewer people will buy solar panels. The state's solar industry could run into trouble.
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Joey Richardson, project engineer at Gietzen Solar in Buhl, says Idaho Power wants to create this period of ambiguity to prevent new solar purchases.
“I think they're pretty much killing the solar industry until they figure out what the new program is going to be,” said Richardson. “It's been a huge win for Idaho Power and a huge loss for companies like mine.”
How Idaho Solar Works
Idaho Power compensates people for the electricity they produce from solar panels, but don't use them. For example, suppose a farmer has solar panels that supply some of her irrigation pump needs. When she irrigates her fields on a sunny day, her solar panels offset the cost of running power-hungry pumps. That saves you money in the long run.
But solar panels have another advantage.
Suppose it is a sunny day in winter when the farmer does not have to operate heavy equipment. In this scenario, she can send the electricity she doesn't need back to the grid, and Idaho Power will issue her credits for that energy. Sometimes she saves energy bills because Idaho Power cuts her bill.
Right now, the utility company is crediting the farmer for the retail price – the electricity it produces is worth as much as the electricity it buys.
But the public utility wants to change that, they pay less for their electricity because it says that the system is not fair.
According to Idaho Power, consumer tariffs for non-solar panel owners are increasing as more people use solar. More people who produce their own electricity mean fewer electricity buyers. However, the utility company has fixed costs – such as B. Maintenance and infrastructure requirements – that won't go down just because they lose business.
Jordan Rodriguez, a communications specialist for Idaho Power, said the people who don't have solar panels are subsidizing those who do because those fixed costs are shared among fewer people. Those cost shifts increase as more people buy modules, Rodriguez said, so the company has less to compensate solar module owners.
Decreasing solar incentives
In its inquiry to the PUC, Idaho Power requested two changes.
The more important of these two changes has to do with the change in lending rates on solar energy. The following will happen due to the decision of the PUC: Farmers, industrial companies or large commercial enterprises who apply for solar modules after December 1st of this year will no longer be compensated at the retail price at an unknown point in time for their produced but unused electricity.
In other words, solar panels will be worth less and perhaps a lot less, but it is not yet known when Idaho Power will start crediting at the new, lower rate.
Individuals who already have panels or who applied for panels before December 1st will be treated grandfather for the next 25 years and credited at retail price. Idaho Power asked for a 10 year grandfather window, but the PUC called that timeframe unfair and launched another 15 years on the move.
Richardson said the problem isn't so much that Idaho Power will change the rate, although he wants the new rate to be fair. He said he knew compensating people at retail prices was a thing of the past – Idaho Power is simply following other states' example in that regard.
The current uncertainty is the problem. The PUC could have decided that Idaho Power must grandfather new solar panel owners pending a new rate. Instead, the grandfather days have ended and it will remain a time of uncertainty before Idaho Power presents a new number to the PUC.
Richardson noted that it will be nearly impossible to sell a farmer with solar panels until the ambiguity ends and new prices are set.
Farmers need to know the numbers before making a big investment.
“I think 99% of people will probably say, ‘No, I can't invest millions of dollars in four years' time if the value of my exported energy is different,” said Richardson.
The PUC granted Idaho Power permission last year to investigate a similar rate change for owners of residential and small commercial panels. The same ambiguity resulted in fewer people buying panels.
For example, Gietzen Solar sold 35 solar systems for private households in 2019. In 2020, that number fell to 13. Richardson said some of that was due to COVID-19, but the majority was due to the ambiguity that cost him at least two dozen sales.
And a homeowner might be willing to invest in solar panels even if it takes an additional decade or more to pay off. Farmers and other larger farms need to pay much more attention to their short-term results. Electricity bills can sometimes be a full third of a farmer's expenses. According to Richardson, the average solar irrigation system uses 30 times as much electricity as a typical home.
Gietzen Solar relies on Magic Valley farmers and larger farms. They make up about 75% of Gietzen's business, especially recently. Idaho Solar has grown exponentially. At the end of 2019, solar irrigation had an output of 2.47 megawatts. That was up to 16.4 megawatts by the end of May.
Gietzen was able to submit a number of projects before December 1st. Richardson said they might have enough work from these grandfather projects to keep them going for a while. But unless there is a new tariff program when this is done, the company will have to rethink its entire business plan to stay afloat.
Why does Idaho Power want this?
Idaho Power plans to move entirely away from fossil fuels by 2045. To do this, the company needs to invest in cleaner energy, primarily solar and wind power. For example, the utility company will purchase electricity from a 120-megawatt solar farm near Rogerson over the next few years.
If Idaho Power needs to find new, green sources of electricity, it seems beneficial if more people install solar panels. But Rodriguez said the electricity he gets from consumer generators is expensive.
The jackpot solar farm will sell Idaho Power energy well below retail prices – less than 2.2 cents per kilowatt hour – Rodriguez said.
Electricity prices fluctuate, but that's about four to five times cheaper than the retail price.
Pro-Solar groups told Times News that Idaho Power's cost shift claims are either false or exaggerated. But the utility has some electricity consumers on its side.
Lynn Tominaga of the Idaho Irrigation Pumpers Association said his group “isn't that big on solar right now.”
According to Tominaga, irrigation equipment uses about 12% of Idaho Power's electricity and therefore also pays 12% of Idaho Power's fixed costs.
Tominaga says more farmers who use solar are increasing the costs for farmers who don't have solar. At the same time, more solar-powered irrigation will reduce farmers' electricity consumption, so theoretically the value should be reduced by 12%.
If Idaho Power adjusted this fixed cost percentage every year, more farmers using solar would be lowering, not increasing, everyone's fixed cost rates. But the utility hasn't adjusted that fixed tariff in a decade, Tominaga said.
The environmental side
Lisa Young, director of the Idaho Sierra Club, said she wasn't buying Idaho Power's argument that Idahoers without solar panels subsidize those who have them.
“From our point of view, the data shows that this is not true,” she said.
Young also said she disagrees with Idaho Power's claim that customer-generated electricity is not worth the retail price. And she noted that solar irrigation capacity is only 0.7% of Idaho Power's current system load. Even if the electricity weren't worth the retail price, the utility company's response to agricultural solar power appears to be extremely harsh.
Idaho Power needs to conduct a study to guide the demand for a new solar offset rate. The PUC will then make a decision based on the results of this study.
“When the data analysis is complete, we will assume that the value of the energy being fed back into the grid is adequately represented and that there are no additional costs for other customers,” said Young. “Indeed there are advantages. ”
Ben Otto, Energy Associate for the Idaho Conservation League, said the move was simply a huge blow to Gem State's solar power.
“We were thrilled that Idaho farmers and businesses are investing in their own facilities and their own clean energy,” said Otto. “And now it's going to be a lot harder for them to do.”