Renewable energy incentives under attack
By Drs. Robert & Sonia Vogl
President and Vice President,
Illinois Renewable Energy Association
Renewable energy sources and energy efficiency programs have benefited from government programs to stimulate their installation. Federal tax credits of 30 percent along with renewable portfolio standards, state rebate programs and net metering have all helped to expand them. In some states new financing programs have made it possible to have a solar system installed on a property with little or no money down and use the savings on the cost of electricity to pay for the system over time.
The continued drop in the cost of solar systems and improvements in panel efficiency and inverter lifetimes have lead to a dramatic growth in global installations. It is estimated that one-third of global solar PV system installations are owned by individuals. These installations are increasingly decentralized as individuals, business owners, communities and cooperatives seek to have control of their own electrical supplies.
The transition to renewable sources has put downward pressure on the earnings of centralized utility companies. The loss of earnings will intensify as formerly high consumers of electricity switch to renewable energy and efficiency. With abundant sunlight, the rapid increase in Nevada rooftop solar installations by individuals and businesses was brought to an abrupt halt when regulatory officials embraced a utility demand to reduce the incentives encouraging decentralized installations. The solar business is now in the hands of the utility which is developing utility scale solar installations. By contrast, Green Mountain Energy in Vermont has encouraged individuals seeking to abandon grid service and produce their own power as they feel only a small percentage of customers will want to leave the convenience of grid-provided electricity.
Several utilities have launched efforts to reduce incentives for customers to install solar systems. Utilities claim the owners of renewable systems that are grid connected are not paying their fair share of the costs of maintaining the electric grid thus transferring the cost to customers without renewable installations. System owners counter the charge by pointing out how their systems provide benefits to the grid and the environment.
Recently Illinois owners of renewable energy systems received a letter from ComEd which appeared to offer system owners an incentive to abandon net metering agreements and accept a pricing system based on demand for electricity. Such a change in how electricity is sold would undermine the economic benefits of individuals generating their own electricity from their renewable energy systems.
Other issues are being debated by legislators regarding Illinois’ energy policy and legislation. Exelon wants subsidies for nuclear plants as low carbon emitters. If the legislation does not pass, Exelon has threatened to close both the Clinton and Quad Cities nuclear plants, which would cause the loss of 2,500 high-paying jobs. They also claim that massive rate increases would accompany the closings.
However, a report issued by four state agencies states that the situation is not that dire, claiming that if the plants were to close, an average ratepayer’s bill would increase 25 cents per month. The Natural Resources Defense Council has advised that rather than open our wallets with a sense of urgency, we should, “think through the right policies for our future.” The Illinois Commerce Commission found that there would be some impact on power generation, but it would be at levels below concern.
Last week, the Illinois Solar Energy Association informed solar advocates in the state that, “We need to let legislators know that the Illinois solar industry is not in favor of the ComEd/Exelon bill.”