Michigan’s solar industry is one of the fastest growing industries in the state accounting for over 10,000 jobs. This could double in the next two years if we just get out of the way. Michigan’s inconsistent solar policies are keeping solar installers from investing in new employees, trucks, buildings, leases, advertising, equipment and more.
The solar industry has been fighting the utility company lobbing efforts for the last several years. Initially, it had been to keep a fair net metering policy. Now they have to fight the utilities against the .5% cap on residential net metering. This .5% cap allows the utility companies to limit their residential customer to only enough solar to offset ½ of 1% off the utility company’s load.
Photo Credit Rolling Stone
One Upper Peninsula utility company hit the .5% cap last year and immediately stopped all future net metering. One may ask, ‘if all the utility companies have to allow is ½ of 1% why would they spend millions to overturn Michigan’s net metering law?’.
The utility companies know solar power not only works in Michigan but according to Deusche Bank and Bloomberg Michigan is 15th best in the country for return on investment for dollars invested in solar power. The utilities are fighting customer owned solar on every front. When a customer installs solar on their home or business they will reduce or eliminate their purchases of electricity from the utility company for forty years.
While Michigan is 15th best for solar return on investment, we are 38th in solar adoption. This means there are 23 states that don’t have our potential but have more solar installs per capita. We are 15th best not because we produce more but because it’s worth more than the power produced from a panel in 35 other states. Our power simply costs more than most states therefore increasing the value of its output.
Michigan’s cold climate is excellent for solar power production. In fact, solar panels produce about .45% more power for every degree ‘C’ the temperature goes down.
The utility companies have stated it is not cost effective for you to install solar on your home. It is only cost effective when they build large solar farms and achieve economies of scale. While they are able to install solar cheaper and make more money off of the investment than a residential homeowner, the homeowner will still make between 7% and 9% a year on their money. Since this truly isn’t an investment, the homeowner does not owe taxes on the return, increasing the effective return.
Another argument we hear is…‘it isn’t fair for you to pay more money for your electric because your neighbor installs solar. When they install solar they no longer contribute to the maintenance of the grid, requiring you to pay a higher percentage’.
This of course would not be fair but it isn’t the whole truth. The true is much more detailed. The vast majority of the solar power is produced when the grid is at peak demand. Those who are on peak/off-peak rate plans with the utility company see that peak power can be 300% more expensive than off-peak power. One utility company has on their website that peak power can cost as much as $1 a kWh (average kWh cost in Michigan is about 9 cents).
So basically solar power producers put power worth 300% more on the grid. Then at night when the sun goes down they pull power worth 1/3 of peak off the grid. If the MPSC mandated the difference between the value of what is sent to the grid and the value of the power that is pulled from the grid is designated towards maintenance on the grid, then net metering customers would pay more for maintenance on the grid than any other rate payer. There are additional benefits to those whose neighbors invest in solar.
Approximately 50% of our production capacity is used for about 80 hours a year. When our electricity needs increase during peak periods the utility companies build new generation facilities. They are guaranteed a return on their investment from building new facilities.
The publicaly traded utility companies have a fiduciary responsibility to build shareholder equity so their motivation is to build more facilities. Since solar power produces its power mostly during peak times your neighbor’s solar system saves you the cost of paying for a new power plant.
Years ago computer network designers realized a distributed network was much more secure than a centralized network. It is more secure against both manmade and natural disasters. The same situation exists for our power grid. A centralized grid can be targeted by terrorists or hit by a tsunami like Fukishima.
Solar net metering can transition us to a distributed grid without spending billions of tax payer or rate payer dollars. It will accomplish this by allowing your neighbors to invest their money in solar and enjoy the 7% to 9% tax free return on that investment.
The above article, posted by Art Myatt, was written by Mark Hagerty, the owner of Michigan Solar Solutions and a speaker at the SEMG May 4, 2017 public meeting at which he said, “The single most important thing we could do for solar power in Michigan is remove the cap on net metering.”