Value of Solar analysis and the Value of Solar Tariff adopted in Austin, Texas and Minnesota are promising developments in solar utility rates. These ideas can break the cycle of attacks on rooftop solar and deserve the support of the solar industry, utilities, and others who want to see a future with more solar electric generation.
For more than 20 years, utility and industry experts have been studying the often-overlooked value of solar electric generation. The city of Austin, Texas, was one of the first to conduct a comprehensive analysis of the full value of the solar, in 2006, and while I was Vice President with the City’s municipal utility, we used that analysis as a foundation for new rate design, now commonly called a Value of Solar Tariff. The VOST also became statewide law in Minnesota, where a methodology for calculating the Value of Solar was developed by the Minnesota Department of Commerce and approved by the Public Utilities Commission this year.
The Value of Solar approach improves on the already successful idea of net metering, which has been around for 30 years. Like net metering, the Value of Solar Tariff requires that the utility provide a credit to solar customers for their solar generation. Net metering sets the solar credit value as equal to the customer’s retail rate for generation that offsets use, but treats excess generation differently depending on where you live. Of course, retail rates are never set with a solar credit in mind, and vary among customers.
The VOST sets the credit amount at the full value of premium quality solar electricity for all solar generation–a number higher than the retail rate–making solar a more affordable investment for many more customers. The VOST approach takes an additional step in also ensuring fairness to the utility and non-solar customers, eliminating arguments about death spirals and cross-subsidies.
As with net metering in its early days, solar supporters have committed to strong efforts to making sure the Value of Solar idea gets off to a good start. I have worked with solar industry and clean energy experts in more than a dozen states to advance the Value of Solar ideas. A few issues merit special attention.
With net metering, Value of Solar, or any solar rate, it is important to design and implement the rate in order to preserve state and federal tax benefits. Thanks to The Alliance for Solar Choice, we have some guidance from a national law firm on how to do that, and it squares exactly with the design features in both the Austin and Minnesota Value of Solar Tariffs. A major part of smart Value of Solar Tariff design is preserving the status of a solar customer as a self-generator and not as a seller of their solar electricity.
In addition, since utility costs and rates constantly change, the Value of Solar rate offers an exciting opportunity to ensure solar customers receive fair value every year of the 30 year (or more) useful life of the electric generation they finance and install on their homes and businesses. After all, these private “customer-generators” are helping us all avoid costly and polluting utility power plant and construction expenses. And today’s solar customers are helping create a more affordable solar future for everyone. Mechanisms to adjust the Value of Solar rate to keep credits current are therefore essential and fair.
The Value of Solar Tariff concept also requires honest engagement by and oversight of electric utilities and others. Utilities hold and must openly share important cost information used in calculating solar value. Utility regulators must do their job in ensuring that this analysis is open, honest, and complete. Solar industry experts have a role to play in educating and advocating for pro-market rules and regulations. Well-run, open stakeholder processes, like those used in Austin and Minnesota, were vital to generating results that worked for all participants. All participants have the solemn responsibility to help shape positive outcomes and resist the temptation to criticize and polarize this vital conversation. Nothing less than the future of clean solar energy is on the table.
In my 25-plus years in utility regulation, as a PUC commissioner, a utility executive, and a solar advocate, I have learned that the only way to correctly predict the future is to make it. We can use Value of Solar analysis and the Value of Solar Tariff concept to make a future that supports and drives solar market growth, treats solar and non-solar customers fairly, and engages utilities and their regulators in those efforts as well. At a time when well-funded forces have launched a nationwide attack on rooftop solar and net metering, the choice is clear for those who want a clean energy future with much more solar electricity generation.
If we all step up behind exciting Value of Solar innovations in solar electric rates, we can help wave the green flag to start an exciting new chapter of growth in our nation’s reliance on clean, valuable solar electricity.
Read more stories on VOSTs here on CleanTechnica.
Image: solar panels & money via Shutterstock