Inside Clean Energy: Solar Industry Wins Big in Kentucky Ruling

The people of Kentucky’s little rooftop solar industry are used to battling utilities for a living, but they’re not used to winning.

A decision by the Kentucky Public Service Commission last week came as a surprise and a relief.

The commission rejected a proposal from energy company Kentucky Power that would have gutted net metering. This policy states that owners of solar roofs can sell their excess electricity back to the grid.

Kentucky Power’s solar roof customers have long been able to get full retail price for excess electricity. The utility company had proposed lowering this rate to 4 cents per kilowatt hour. The commission decided that the rate will be 10 cents per kilowatt hour, much more than the desired utility and just a little less than current levels.

“My first reaction to this decision was a relief,” said Matt Partymiller, general manager of Solar Energy Solutions, a Lexington solar installer and president of the Kentucky Solar Energy Industries Association, a trading group. But, he added, “That sense of relief was quickly followed by the realization that this was part of a long, ongoing effort that we must fight.”

Kentucky’s utility company and many of its elected officials have worked to prevent solar from gaining a foothold on the roof, arguing that solar customers are not paying a fair share of the cost of maintaining the electricity grid, even though the state has very little solar on the roof . According to the Energy Information Administration, Kentucky ranked 40th in the country for power generation from small solar systems in 2020, just behind Arkansas and ahead of Kansas.

A 2019 law signed by the then government. Republican Matt Bevin said new solar customers would no longer get full retail price for excess electricity. The utilities would have to submit proposals for the new tariffs to the Commission.

Kentucky Power, an Ohio-based subsidiary of American Electric Power, was the first major utility company to propose new tariffs. This was the first occasion for the Commission to show how it would interpret the law.

In its decision, the commission contradicted Kentucky Power’s arguments and found that the utility underestimated the financial benefits of rooftop solar for the power grid.

The commission also drew attention to how small the problem Kentucky Power was trying to solve, noting that in 2020 there were only 46 households that benefited from the net metering in the utility area.

The utility said these households received an unfair net metering subsidy that totaled approximately $ 40,000 a year. The commission responded by saying that this “alleged subsidy” for each non-solar customer of the utility is only 24 cents a year and is only a small fraction of the other subsidies that are included in Kentucky Power’s tariffs.

“It was Kentucky Power’s intent to provide a fair and balanced approach to all customers, not just net metering customers,” said Cindy Wiseman, a Kentucky Power spokeswoman, in an email when asked about the decision Commission. “Our supervisory team is still reviewing the assignment and discussing it in order to better understand the way forward.”

The three-person commission consists of one member appointed by Governor Andy Beshear, a Democrat, and two members appointed by Bevin.

Partymiller, whose company employs around 35 people and is possibly the largest solar installer in the country, has been careful not to overestimate the importance of the decision as it only covers one supplier and the commission continues to have to decide on other suppliers’ plans.

He said the rooftop solar industry is facing some major challenges in Kentucky despite this decision. One of the biggest is a law that puts an upper limit on how much customer-owned electricity can go online before the net metering rates are drastically reduced. This law, which was enacted before the 2019 Net Metering Act, will come into effect when solar roofs and other customer-owned resources account for 1 percent of peak electricity needs in each utility company.

Kentucky Power is likely years away from hitting the 1 percent cap, but the very existence of the cap is an issue as it limits the growth of solar companies, Partymiller said.

He said he would like to see lawmakers and the governor raise or remove the cap, but he also knows that a long battle is ahead to make it happen.

I’ve read many government regulators’ decisions about net metering, and the Kentucky ruling stands out for the methodical way in which it dismantles some common arguments against solar roofs, such as how non-solar customers heavily subsidize customers with solar. I wouldn’t be surprised if the Kentucky Commission’s findings were cited in other states to argue for the benefits of rooftop solar, which I wasn’t expecting, but there it is.

More stories about the energy transition that should be noted this week:

Biden takes the all-electric F-150 for a spin: Ford hosted an event Wednesday night to reveal the looks and specifications of the all-electric F-150 Lightning, a highly anticipated electric version of the country’s best-selling vehicle. But before the official unveiling, President Joe Biden took a test drive outside the Michigan plant where the truck is built on Tuesday, Motor Trend reports. The television took pictures of Biden on the test track, and later the president said the vehicle went from zero to 60 mph in about “4.3” seconds. That was funny for the assembled automotive media because Ford was closely monitoring the technical details only to let Biden spill some of them. The biggest question about the F-150 Lightning is how many of Ford’s existing truck buyers want it, and we won’t get an answer to that until next year when it hits dealerships.

IEA calls for the end of the new oil and gas financing: The International Energy Agency released a report on how the world can achieve net zero emissions by 2050, including a recommendation that investors stop funding new oil and gas projects. The world would have to get almost 90 percent of its electricity generation from renewable sources by 2050, with most of it coming from nuclear power, as Nina Chestney reports for Reuters. “This is an incredibly exciting study that shows a direction of hope,” said Francesco Starace, managing director of Enel in Rome, the world’s largest private renewable energy company. The IEA reports carry weight for countries in their policy planning, but it is difficult to imagine that many countries will be able to move away from fossil fuels so quickly.

California asks what happens after its last nuclear power plant closes: As the owner of the Diablo Canyon nuclear power plant in California prepares for the plant to be shut down, environmentalists have concerns that California has no plan to replace electricity with electricity from clean sources. “But if Diablo Canyon is the devil the Californians know, the devil they don’t know is what happens when it closes,” writes Sammy Roth for the Los Angeles Times. Lots of people are happy to have the facility running, but there are also strong efforts being made to subsidize the facility so that it can continue to produce carbon-free electricity.

Inside Clean Energy is ICN’s weekly bulletin with news and analysis on the energy transition. Send tips and questions on messages to [email protected]

And Gearino

Clean Energy Reporter, Midwest, National Environmental Reporting Network

Dan Gearino covers the American Midwest and is part of ICN’s National Environment Reporting Network. His coverage is on the business side of the clean energy transition and he is a contributor to ICN’s Inside Clean Energy newsletter. He joined ICN in 2018 after nine years at The Columbus Dispatch, where he worked in energy. Before that, he reported on politics and economics in Iowa and New Hampshire. He grew up in Warren County, Iowa, south of Des Moines and lives in Columbus, Ohio.

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