Once
dismissed by electric utilities as a boutique energy resource, solar power has
become the go-to renewable resource for a wide variety of electricity
customers. From data centers to department stores, from airports to auto
dealerships, more and more customers around the country are tapping into this
clean and quiet energy source that shines on their rooftops every day.
Nationally,
solar energy’s growth has been nothing short of phenomenal. In the first
quarter of 2013, solar energy accounted for nearly half (49%) of the new
generating capacity built, elbowing out wind and natural gas as the fastest-growing
energy source in the United States. Declining installation costs coupled with
easier access to third-party owned systems account for solar’s rapid
advancement, especially in the residential sector. Even utilities in select
states have begun diversifying their resource mix with large solar arrays.
For-profit
businesses and homeowners in all 50 states can take advantage of the 30%
federal investment tax credit in place through 2016. However, not all 50 states
have flourishing solar markets. This is true even in states where electric
rates are high enough to tempt homeowners and businesses to supply themselves
with energy from the sun. Unfortunately, Wisconsin happens to be one of those
states with a languishing solar market, though it wasn’t always that way.
Five years
ago, Wisconsin was a regional leader in encouraging customer investments in
rooftop solar. Early adopters then could avail themselves of special solar
buyback rates which most electric providers offered on a limited basis. For customers
of utilities that did not offer these higher rates, a fair and transparent net
metering service was available. The state’s Focus on Energy program contributed
significantly to solar’s early success with grants and incentives that
supported start-up installation contractors. In fact, that program instilled
them with confidence that Wisconsin was a solid place to do business.
Fast forward
to today, and you see a very different market environment for solar energy
here. Attractive buyback rates in
Wisconsin have become a distant memory. Some utilities have restructured their
net metering service to make self-generation substantially less appealing to
customers. And while state incentives for solar installations are still
available, the flow of dollars has been reduced to a modest trickle. Solar
contractors, like the rest of Wisconsin’s renewable energy business community,
cope with the hard times by pursuing work opportunities in neighboring states
like Iowa and Minnesota.
The
installed costs of solar today are about half of what they were in 2008, while
the price of utility-supplied electricity continues to move higher. Given the
fact that solar’s return on investment to customers has never been higher, the
attitudinal about-face we’re seeing is as inexplicable as it is
counterproductive.
While
Wisconsin raises the proverbial drawbridge to protect utilities from solar’s
advances, the state of Minnesota, in stark contrast, has rolled out the welcome
mat to this emerging industry. Just one month ago, Minnesota became the first
state in the Upper Midwest to establish a solar electric standard. By 2020, the
state’s largest utilities will need to source 1.5% of the electricity they sell
at retail from solar generation systems.
Through the
same law, Minnesota strengthened its net metering policy, and required Xcel
Energy, the state’s largest utility, to provide a community solar service to
its customers. This innovative provision will enable Xcel customers who can’t
host a solar system on their premises to invest in a nearby installation and
receive a modest return through their monthly bills.
What does
Minnesota hope to achieve by adopting such an aggressive solar energy policy?
The list of
objectives is long:
Ø Promote manufacturing and contracting
opportunities for solar energy and “green” construction firms;
Ø Expand employment opportunities
for the state’s work force;
Ø Enhance the ability of business
and residential customers to manage their electricity costs;
Ø Modernize the state’s electrical
infrastructure and diversify its resource mix;
Ø Attract private investment
capital into its energy sector from both in-state and out-of-state sources;
Ø Minimize exposure to fuel price
volatility, especially during on-peak hours;
Ø Reduce greenhouse gas emissions
associated with electricity generation;
Ø Reduce imports of fossil fuel;
and
Ø Promote the state as a
destination location for clean–tech companies.
Ironically,
the ingredients are now in place for an instructive side-by-side study on the
value of state policy in advancing solar energy, with Minnesota serving as the
test case and Wisconsin serving as the control. In terms of both solar resource
and utility regulatory structure, the two states are very similar to each
other. And, with each state having about
14 megawatts of installed solar capacity, both share the same baseline from
which to measure progress.
Indeed, the
only significant difference going forward is state energy policy. In Minnesota,
solar is subject to a state mandate that is projected to increase current
capacity, in seven short years, by a factor of 30. In adjoining Wisconsin,
solar operates within a policy vacuum.
This raises
the question, what do we gain from participating in an experiment in which
Minnesota reaps all the economic and environmental benefits from its solar
investments while we get to send more dollars out of state for fuel
to feed 40-year-old power plants?
The fact is
that Wisconsin cannot afford to stand idly by while Minnesota plugs itself squarely
into a dynamic industry segment and exerts a gravitational pull on private
investment and start-up companies in the region. It’s no secret that Wisconsin
has struggled to find its economic bearings in the wake of the Great Recession.
In contrast, clean energy has provided a great lift in other states that had
the foresight to sow the marketplace with some well-thought and welcoming
policy seeds.
In a popular
two-part Simpsons episode, the diabolical Montgomery Burns builds a
giant disc to block the sun’s rays from reaching Springfield, forcing city
residents to become even more reliant on the power plant he owns. Though
clearly cartoon satire, those of us who are
watching the ongoing retreat from solar energy know that if Wisconsin
has any chance of capturing at least its proportional share of an industry that
yielded $11.5 billion in new projects in 2012, it has to ditch the Mr. Burns
act and begin designing a policy to let the sunshine in.
