Solar Installers Say Their Future Depends On Lifting Energy Cap
Michigan’s solar contractors say they’re about to hit a wall – or rather a cap, created by lawmakers a few years ago. It means that utilities have to accept some, but not much distributed energy, which is power that customers put into the grid.
Laura Sherman is the president of the trade group the Michigan Energy Innovation Business Council, whose members include solar companies. Sherman said when it’s reached – possibly yet this year in some areas – the cap will devastate solar installers.
This is the third story in a three-part series on solar energy. The first story was about homeowner associations blocking solar panels. The second explored what the climate movement can learn from local renewable-energy disputes.
“These companies are already taking a huge hit” because of the pandemic shutdown, Sherman said. “Thinking about not having a market when you get back to work, because there’s an arbitrary level after which you can’t operate, it’s really heartbreaking.”
“It’s not something we’re advocating for because we think it would be nice to have,” she added. “It’s fundamental to the core of all these jobs,” which she said numbered about 5,000 in Michigan.
Laura Sherman: Every utility, they take a look at how much electricity is used on their system in a year, and only one percent of that can be distributed solar or – I’m going to make this complicated. Only one percent of that can be distributed generation. But actually, half of that is for people like you and I who have solar on their roof. So it’s half a percent of how much electricity is used across their whole footprint. DTE looks at how much energy is used in the whole year, and then half a percent of that is allowed to be people generating on their homes and sending it back out. So it’s a really low number.
Cory Connolly: In the case of the Upper Peninsula and UPCO, or the other investor utilities in the state, they’ve already hit their cap once. And that saw a total shutdown of the market up there. And then through a settlement agreement they doubled their cap and they’re about to hit it again.
In the Consumers territory, we are hearing projections that prior to the slowdown that’s happened now – so these projections would probably be a bit off, but we’d been hearing of quarter three or quarter four of this year that they would hit that cap.
Sehvilla Mann: Utilities don’t have to go beyond one percent renewables for the grid. That made me wonder if they did want to go beyond that cap, would they be free to do that?
Laura Sherman: We call it a cap, but it’s not technically – from the utility standpoint, they can raise it if they want. They can allow more people in, which is what UPCO did a few years ago. When they reached one percent, there was a legal case and they agreed as part of the settlement in that case. So they’re allowed to do that, that’s legal under law. But there’s no requirement that they do so.
There’s a lot of confusion too because utilities have said publicly that they’ll keep letting people put solar on their roof, and they’ll just pay them differently. There’s nothing in law that requires them to do so. There’s nothing protecting customers, and our experience from our companies we work with who are in the Upper Peninsula is that as soon as UPCO hit that cap a few years ago, they just started denying applications. So they didn’t have another plan in place to let people into some other program.
That’s really the only experience we have so far, is that applications just started getting denied. And that is likely or could happen in the case of Consumers or DTE as well, and I think why we think it’s really important to fix this issue for the whole state with a legislative fix.
Sehvilla Mann: There is a package of bills that’s been introduced, in fact there’s a package in the House and the Senate, right? It’s the same bills in each. What would those change?
Laura Sherman: There’s three bills in both chambers. They’re bipartisan. We have a really interesting group of Democrats and Republicans, a couple from the UP, a couple with real interest in supporting rooftop solar, a couple who have solar on their roofs and really understand these issues, and there’s sort of a few main things, but the biggest thing is that it eliminates this cap.
The first bill gets rid of the cap and then says, “let’s turn it over to the regulators who know what they’re doing, and if there’s some issue in the future where we’ve got too many people with solar on their rooftops and it’s causing some challenge for the grid and we’re seeing problems” – we don’t want to cause brownouts, obviously, we don’t want to cause serious problems. We’re a long, long way from that the bill lets the regulators who know what they’re doing set a cap. So if we need it, they’ll set it.
But it just takes it away from this arbitrary one-percent number and acknowledges that there’s a lot more room for job creation in this market and for folks to let customers install the solar they want.
Sehvilla Mann: Crain’s Business Detroit reported that the utilities are likely to oppose the bill package. What are you hearing about where that opposition is coming from?
Laura Sherman: I can’t speak for the utilities. I think they expressed concerns about the safety of their system, with more and more distributed generation on it, but honestly they focused largely on the issues around valuation and what can and can’t be included in that valuation in their opinions. And so, I really think there’s room, I’m hopeful there’s room to look at the cap bill and they’re willing to engage on that.
Cory Connolly: We would argue that solar’s undervalued currently and we should value it higher. I think utilities would say that we should value it lower, and if we can come to something that probably both of us dislike, that should be able to be accepted as fair. And if it’s fair, then there’s no reason to have a cap.
Sehvilla Mann: You think that when things do get back to normal business in Lansing, whenever that might be, that there’s hope that these would move along?
Laura Sherman: We think there’s been a lot of good testimony and a lot of good arguments about these bills, and we think that we’re really hopeful that they can get a vote out soon. I know that there are very pressing things that the legislature’s working on. I would argue that for small solar installers, and small businesses of that sort, this is a very free stimulus package to put forward, that doesn’t cost anybody anything and would be a good thing to act on relatively quickly.
Given the timeline we were facing with Consumers, we’re really pressing to try and get this done by the end of the year, through both chambers so our goal, if we could achieve it would be to get this done this year.
In response to a request for comment, Consumers Energy sent the following statement to WMUK:
"Consumers Energy opposes the proposed legislation because all customers should pay their fair share to ensure reliability and affordability of the energy grid. The Legislature and Michigan Public Service Commission set a clear path forward for customers with the enactment of the bipartisan 2016 Energy Law while the proposed legislation would move the state backwards by providing subsidies for private solar.
Through our Company's Clean Energy Plan, Consumers Energy has one of the boldest plans in the nation to invest in renewable energy - with plans to invest in over 6,000 MW of new solar to serve all of our customers in Michigan with affordable, reliable and clean energy in the future. This plan will benefit all customers."