Got Solar? If Not, Learn How That Could Change.November 7, 2016
Executive Perspective by Scott Vogt
Chances are, if you live in Illinois, the answer is no.
Illinois is currently an unimpressive 35th in the nation in installed private solar capacity, according to the U.S. Energy Information Administration. In all of northern Illinois, there are less than 1,000 individual customers with solar panels installed at their homes or businesses.
Experts point to a host of factors driving this situation, all surrounding the economics of solar in Illinois. This is partially due to low energy prices, against which solar power must compete, in the Land of Lincoln; in fact, residential rates in Chicago are 20% below the average of the 10 largest cities in America. Another important factor has been state policy, with the financial incentives needed to power solar development not flowing as intended through the state’s Renewable Portfolio Standard (RPS).
In short, the economics of solar simply don’t work for customers in Illinois. Yet.
The desire to change that has been a driving force behind the Future Energy Jobs Bill – legislation taking shape now for consideration by the Illinois General Assembly this fall.
ComEd will be a proud supporter of the pending Future Energy Jobs Bill (FEJB). We recognize that our customers increasingly want clean energy options – and like our customers, we believe solar energy is a critical part of our clean energy future. The FEJB is how we can change the math to help bring about the cleaner future we all want.
There are three important ways the FEJB will change the math of solar for consumers who want it.
First, it will strengthen and expand the state’s RPS, ensuring consistent, predictable funding for solar and other renewable development. Environmental advocates and solar developers have been strong advocates for these changes, helping shape these important provisions of the FEJB, which include: longer term contracts for solar and wind developers, more frequent procurement of renewable credits, and incentives for the procurement and development of in-state renewables. Together, these changes will strengthen the economics of solar in Illinois, creating more than $180 million per year – rising to $240 million per year – for the development of solar and wind energy. These development incentives can ultimately benefit consumers, changing the math for those desiring to install private solar panels.
Second, the FEJB will provide for solar rebates to help reduce the up-front costs of installing solar. Both businesses and residents are eligible for these rebates, which change the calculus on how long it takes a consumer to see savings from the private solar panels they install. It is also a groundbreaking, innovative way to recognize the value of solar on the smart grid – something some utilities have been loath to do but which ComEd sees as an important part of its commitment to the solar choices many customers want.
Third, the FEJB will shift pricing to make the math of solar sustainable for all of us. Current policy prices private solar power above market rates through a policy called net-metering, via which customers are compensated via private solar credits for both supply and delivery for the solar power they produce on their rooftops. This policy – designed decades ago in the early advent of solar technology – created a then-small cost shift, with private solar customers avoiding their share of costs to maintain the grid. As solar grows, however – and certainly as it is jumpstarted in Illinois by the pro-solar provisions of the FEJB – this will become unsustainable, causing massive costs shifts to those who don’t have or can’t afford solar. Indeed, in California this cost shift is predicted to top $1.1 billion by 2020.
The FEJB fixes this through a change to demand rates for the energy delivery portion of residential customers’ bills. The move to demand rates is part of a broader pricing shift which reduces fixed charges and better aligns the impact customers have on the grid with the grid maintenance or delivery costs they pay. Together, these pricing changes make for fairer rates and more customer control – and they also have the effect of adjusting net-metering to eliminate the unsustainable cost shift of solar. Importantly, they’ve been carefully designed to be supportive of solar power, grandfathering existing solar customers and transitioning compensation for new customers to be based on their solar installation’s actual value to the grid.
I’m proud to have helped lead the policy team that has designed these pricing changes. We’ve employed actual customer data and sophisticated modeling as we’ve worked with environmental and consumer stakeholders to arrive at these important FEJB provisions. These provisions change the math for investing in solar in Illinois while providing sustainability for all of us.
Got solar? The entire policy team at ComEd is excited at the prospect of changing the answer through the FEJB: “Yes, I’ve wanted it a long time – and it finally makes financial sense.”