Proposed Bill Will Kill Iowa’s Solar Industry, Trample Iowan’s Energy Freedom
Iowa House Republicans have introduced a long-awaited bill to kill net metering as we know it in Iowa. The bill was apparently drafted by MidAmerican Energy and will likely be supported by Alliant Energy, as both have aggressively attempted to overturn net metering in the past.
Read the details below, and ask your Iowa Representative and Senator for a clear statement in opposition to HSB 185. Attend their weekend listening sessions, and bring along your friends and neighbors. Farm and business voices and groups will be especially important in this effort to protect our solar energy freedom, create solar energy prosperity throughout Iowa, and prevent utilities from monopolizing the sun.
Here is a preview of three important parts of the current Iowa net metering and solar freedom debate. Read on for more detail following this preview.
- Net Metering is currently a fair deal for all Iowans. The utilities claim that net metering is unfair because solar owners buy less energy, don’t pay their share of infrastructure costs, and are thus “cross-subsidized” by non-solar owners. We say hogwash – and suspect the hundreds of Iowa pork producers with solar would agree.Solar owners also contribute significant value to the grid, utility, and other customers through the timing, location, and other aspects of their generation. States that have researched this true “value of solar” find that it more than compensates for minimal lost infrastructure revenue.
- Locally owned and installed solar represents a “solar energy prosperity” opportunity for every Iowa county and community. Solar creates local jobs and local wealth, and HSB 185 is a job-killing and wealth-killing bill. Solar supports over 850 good Iowa jobs, and easily half could be lost within a year. For a rural county like Winneshiek, meeting just 20% of power needs through solar could represent a $100 million investment and keep over $170 million in local pocketbooks and balance sheets over a generation.
- Do not let utilities monopolize the sun, or Iowan’s “right to generate”. There are clear policy steps that could be taken to enable solar energy prosperity throughout Iowa:
- A “renewable energy bill of rights” would guarantee the “first monopoly” to Iowa customers and communities, including grid access on fair terms (Nevada passed one in 2017, read on for details).
- The legislature could task the Office of Consumer Advocate with commissioning an independent “value of solar” study to define the real balance of costs and benefits associated with customer-owned solar, and related distributed energy resources.
- A community solar bill modeled after Minnesota’s would further enable Iowan’s to own their (bright) energy futures.
Net Metering Is A Fair Deal For All Iowans
Net metering, as all solar owners know, is critical to making solar economics work. It has been established Iowa policy for decades, despite repeated utility attempts to kill it.
Net metering allows solar owners to feed surplus power production into the grid, and withdraw the same amount of power when needed: a kWh for a kWh, at the same value both ways.
Without net metering, solar becomes economically non-viable for many customers, because the utility wants to pay 3-4 cents for each kWh the customer feeds into the grid, then turn around and charge the same customer 10-15 cents for each kWh they use. Not exactly a fair shake for the customer, but a great deal for the shareholder/investors of the utilities.
Fairness, though, is also the argument used by utilities around the country when attempting to do away with net metering. Electricity prices include a bundle of costs, including energy but also infrastructure such as poles, wires, and transformers. So if a solar owner doesn’t buy as much electricity, the argument goes, they’re also not covering their fair share of the infrastructure costs. This theoretically requires non-solar owners to “subsidize” solar owners.
There are a number of problems with this argument. One is that grid benefits and values don’t flow only one way. Yes, the utility provides multiple benefits, but the solar owner also provides a bundle of benefits when feeding power to the grid, including energy time-of-production, capacity, avoided transmission cost, and voltage and frequency regulation.
The proposed legislation allows the investor-owned utilities to recover more infrastructure costs from solar owners, without also requiring the utilities to compensate the solar owners for the many values they’re providing to the grid and the utility.
The simplest example of this is time-of-production. MidAmerican already charges residential customers on a time-of-use tariff 21 cents/kwh during peak summers hours (because energy is expensive on the grid on hot summer afternoons, even to utilities). This is way higher than the net metering credit for solar owners, yet where is MidAm’s proposal to fairly compensate those solar owners for the extra value they’re “giving” to the utility, and their non-solar neighbors?
States like MN have analyzed this trade[1] through “value of solar studies” and have found that, on average, the total value of the solar energy provided by solar owners is equal to or greater than the utility’s retail electricity rate. This means net metering is more often than not a good deal for the grid and for other customers. It also suggests the real objection from investor-owned utilities might come more from lost profits on lower overall sales than from “fairness” issues between customers.
Another problem with the “cross-subsidization” argument is that utilities, like most infrastructure, already operate to a large degree on shared costs and benefits. Rural customers of a given utility pay the same rates as urban customers, for example, yet require much more distribution infrastructure. Nobody is complaining about cross-subsidization there.
Roads are a similar example familiar to local leadership and especially the farming community throughout the state. We pay the gas tax and registration fees, but also realize nobody pays exactly their share. Someone is always “subsidizing” someone else, but in a shared system, we all recognize the importance of infrastructure for shared prosperity.
Solar Energy Prosperity Is a Huge Opportunity For All Iowans
The grid is a shared infrastructure (like roads, and other utilities), and fair access on fair terms is critically important to shared energy prosperity long into the future. Iowa already has over 850 jobs in the solar industry and is growing. Given that 85% of solar jobs nationwide are related to customer-owned solar (not utility solar), this bill will almost certainly kill the Iowa solar industry. It will outsource our solar energy jobs and our solar energy wealth to out-of-state investors when we could and should be actively in-sourcing and resourcing our locally-owned solar energy prosperity engine.
Want to create a half million energy entrepreneurs in Iowa? Switch direction away from HSB 185 and towards policies outlined in the next section, and watch the investment and ownership grow for a generation or two.
Winneshiek County is a non-metro Iowa county, with a total population around 20,000, including a county seat of around 8,000. Over the past few years, the solar market has grown from one contractor to six or more and seen over $10 million invested in hundreds of customer-owned solar systems. This investment creates between a half and one million dollars of energy value that remains in local pocketbooks every year. This is just the tip of the opportunity iceberg of local solar energy prosperity.
Consider that Iowa has enough capacity on rooftops alone to generate up to 20% of our annual electrical energy needs. With local ownership, this would represent over a billion dollars of reduced electricity purchases remaining in those pocketbooks and communities every year. It also means hundreds of thousands of Iowa homes, farms, businesses and institutions are becoming “energy entrepreneurs” by investing in local contractors, communities, and their own future.
This opportunity for solar energy prosperity is especially strong for Iowa farmers. Farms generally have plenty of siting options, including the roof of livestock facilities or space for ground mount systems. They have a significant demand for power, and as businesses, they have the ability to take advantage of both tax credits and depreciation. (Note that the 2017 federal tax bill increased bonus depreciation to 100%[2] for qualified property through 2022). Every farmer should have the option to become a solar energy entrepreneur.
Getting from here to 20% locally-owned solar would represent major investment over a generation or more, spread through every county and community. For an Iowa county like Winneshiek, this could mean over $100 million of investment, and generate energy worth over $170 million during the 25-year warrantied system lifespan. This is possible and very cost-effective today, with incentives and net metering. With storage technologies advancing rapidly, there is no reason to stop at 20%.
And here’s the real power of solar energy prosperity: it is possible everywhere. Compared to large-scale utility-owned wind (which is important, but very different), distributed solar generation equals distributed ownership, distributed investment, distributed jobs, distributed wealth creation, distributed resilience, distributed stewardship. Those are the investments that will keep ever-growing amounts of energy wealth in the pocketbooks and on the balance sheets of Iowa farms, homes, businesses, institutions, and local government.
Policy Initiatives to Protect Solar Energy Freedom and Prosperity
As opposed to the job-killing and wealth-killing bill written by utilities, Iowa legislatures could take up initiatives that would be truly powerful in their ability to create solar energy prosperity throughout Iowa.
A renewable energy bill of rights would be a great place to start, and Nevada (yes, Nevada!) leads the way. In late 2015, the Nevada Public Utilities Commission overturned net metering, and created an exodus of jobs and firestorm of bipartisan and citizen-led protest and action. In the first year, Nevada lost 2,600 high-paying solar jobs, and the industry ground to a standstill.
In 2017, however, the Nevada legislature passed AB 405, which protects net metering on (mostly) fair terms, and also creates a citizens renewable energy bill of rights. This includes the right to self-generate, and to install technologies such as storage without discrimination from the utility. These are critical rights that essentially establish that the ‘’first monopoly” over energy in our lives belongs to us, the citizens, customers, and communities. This legislation passed the Nevada Assembly (House) 38-2, and the Senate 21-0, and was signed by the Republican governor.
Another important step would be for the legislature to provide funds and charge the Office of Consumer Advocate with overseeing an independent “Value of Solar” study, as has been done in many states, including Minnesota to our north. Such a study must be overseen and conducted by a neutral third party, not the utilities, in order to have validity. It can identify and value the full suite of benefits that solar owners provide to the grid, utility, and society, and provide the fair foundation for potential revisions to net metering tariffs.
Finally, we should remember that many customers, thanks to space, ownership, or other reasons, do not have the ability to install solar. Community solar programs solve this problem, and offer an important (and efficient) alternative even to those that could install. Minnesota has the most effective and successful community solar program in the nation, and would provide an excellent starting point for an Iowa program.
Ask your Iowa Representative and Senator for a clear statement in opposition to HSB 185 (link to https://energydistrict.org/resources/northeast-iowa-elected-officials/) and tell them you want to ensure the right for consumers to generate their own energy and to receive fair compensation when exporting to the grid . Attend their weekend listening sessions, and bring along your friends and neighbors. Farm and business voices and groups will be especially important in this effort to protect our solar energy freedom, create solar energy prosperity throughout Iowa, and prevent utilities from monopolizing the sun.
[1] https://ilsr.org/wp-content/uploads/2014/04/MN-Value-of-Solar-from-ILSR.pdf
[2] https://www.energy.gov/savings/modified-accelerated-cost-recovery-system-macrs