Big utilities try to tilt solar energy market in their favor
Indiana's energy utilities want state lawmakers to pass a law that critics say would muscle out smaller companies from the emerging solar energy market
Solar power provides only about 1 percent of the country's energy, but the industry is growing rapidly, with figures showing it employed 208,859 workers in 2015. That amounts to a 125 percent increase since 2010, according to the U.S. Department of Energy.
But much of the growth has come from homeowners or businesses taking advantage of its bill-lowering potential. That could eventually eat away at the business of the big utilities — in Indiana they are Duke Energy, Vectren and Indiana Michigan Power — which have a powerful voice and donate handsomely to the political campaigns of lawmakers.
On Thursday, Indiana legislators started debate on a proposed law that in five years would eliminate much of the financial benefit Indiana homeowners, businesses and even some churches reap harvesting the sun's rays. It would tilt the market in favor of the utilities, critics said.
Republican state Sen. Brandt Hershman's bill would overhaul a practice called net metering, which allows solar panel owners to feed excess energy into the power grid in exchange for a credit on their bill.
Hershman's bill would lock in a substantially lower rate of reimbursement than what is currently guaranteed — a move that solar advocates say would make it difficult to break even during the useful life of a solar panel.
"I have nothing against solar. I'm simply trying to reset the marketplace," said Hershman, who says solar panel owners are reimbursed at too-generous of a rate. "In hard-dollar terms, there is a significant subsidy going on."
But the measure comes as investor-owned utilities across the U.S. are also looking to take advantage of the plunging costs of solar power and carve out a share of the market for themselves. And critics say the bill amounts to an effort by the utilities to muscle out the small companies, potentially threatening the 1,500 jobs the Solar Foundation estimated in 2015 that the industry had created in Indiana alone.
Utilities are promoting an alternative to installing home solar panels called community solar, a model that involves customers agreeing to buy or lease solar panels from the utilities on large panel farms.
"Utilities like solar if they can control those assets," said Ryan Zaricki, who owns Whole Sun Designs, a solar panel installation company headquartered in Evansville. Zaricki, who employs five workers during busy months, said that if the bill passes "it means that, in the long term, I won't have a business."
Duke Energy Corp., the largest electricity company in the United States, this year plans to launch a "community solar" program in South Carolina and seek regulatory permission to do the same in North Carolina, Florida, Kentucky and Ohio, as well as Indiana, utility vice president Melisa Johns said.
Indiana is not the first state to take up an overhaul of the solar industry. Michigan, Illinois and Iowa have adopted policies that would phase out net metering at a gentler pace, according to advocates. In Maine, Republican Gov. Paul LePage last year vetoed a bill that would have overhauled the state's approach. Montana is also considering a range of bills that would alter its policy, according to the National Conference of State Legislatures.
Utilities say the current Indiana system of compensation is unfair because it requires them to pay solar panel owners for power at retail cost — which is more than it would cost them to produce the same amount of energy. They also stress that they own the infrastructure solar panel owners rely on to feed their excess power onto the grid and should be compensated for it.
"The simple logic for us is if you're using it, you should pay for it," said Mark Maassel, president of the Indiana Energy Association, which represents the state's largest power utilities.
Jeffrey R. S. Brownson, a solar expert and engineering professor at Penn State University, says he has not seen data that suggests the small amount of solar energy generated in the U.S. is unduly taxing on the power grid.
"This is very reactionary," he said of Hershman's bill. "It's definitely going to stymie innovation and slow down job growth."
In Indiana, it's just the latest measure pushed by Republicans, who dominate the Statehouse, which would corner a market, or benefit longtime political allies and campaign donors.
A bill last week that would have effectively blocked electric car maker Tesla from selling in Indiana was overhauled after an outpouring of opposition. And last year lawmakers passed vaping industry regulations that created a monopoly for one security firm that became the sole gatekeeper of who could manufacture the nicotine-laced liquid consumed through vaping. GOP leaders pledged to "fix" the law this year after the FBI launched a probe.
Over the past three years Duke Energy and its affiliated political committees have funneled $76,000 to state Senate members of both parties.
Hershman has collected $9,000 from the company since 2010, according to state campaign finance records.
The utilities also donated more than $1 million to the Indiana Economic Development Corporation, which helped finance trade missions former Gov. Mike Pence led to Canada, Germany, London, Israel and China in 2014 and 2015, according to records obtained through a public records request. The IEDC is a quasi-governmental state that regularly uses private donations to fund trips VIP trips for state officials.