The Inflation Reduction Act provides good incentives for folks to invest in rooftop solar – offering homeowners a 30% tax credit on the purchase of the system. That brings the ‘payback’ time way down from 11 years to 7 years at current utility rates (depending on the utility).
When rooftop solar people make more electricity than they need they can either buy a battery to store it or sell it back to the utility at something called a Rate Comparison Proxy rate (for APS ratepayers).
At the moment, APS rooftop people can sell their power back to the grid at $.076 per kWh the year following installation. The Arizona Corporation Commission already allows APS to reduce that buyback rate by 10% per year in accordance with the Value of Solar decision.
Last Wednesday the Commission voted 3-2 to go even further and allow utilities to pay customers drastically less for the electricity they produce, including for customers who already invested in solar based on an expected solar export rate.
There was near unanimity among speakers at the Commission hearing last week to urge them to keep things as-is. Solar groups even provided evidence that APS actually pays solar customers a lower rate for their excess energy than it pays for all forms of energy on the open market.
[APS pays an average of $0.08113 per kilowatt hour on the open market for wholesale energy in 2022 versus APS’ current repayment rate for solar of $0.076 per kilowatt hour – and substantially less for ratepayers who installed solar a few years ago].
Nevertheless, 3 of the 5 Commissioners voted to reopen the policy with the intent of dropping reimbursement for extra solar power by 37% in year one after installation with additional 10% per year reductions in subsequent years.
See Myers’ Proposal to Drastically Cut Buyback Rates
People buy rooftop solar systems for many reasons. Some financial, some just to do the right thing to offset their carbon production and some for a combination of both. While the federal tax credit of 30% in the Inflation Reduction Act is an important factor, energy buyback is also a factor, especially when it comes to customers sizing their systems.
Achieving carbon neutrality to mitigate climate change will require a public policy full court press. Discouraging rooftop solar customers from using their own money to invest in systems that generate more energy than they sometimes need reduces the clean rooftop solar energy that could be generated.
See: Arizona has rooftop solar energy pricing that works. Why fuss with it?
The Docket is now open for resetting reimbursement rates for excess solar energy produced by rooftop solar ratepayers. Whether and how much reimbursement will be cut is still an open question – as is whether the new lower rates would apply to people with existing systems or just new ones.
Editorial Note: Sadly, the remarks by the 3 Commissioners who voted to reopen the Value of Solar all had prepared remarks explaining their vote – suggesting their minds have already been made up to reduce reimbursement, perhaps dramatically and retroactively.
It’s probably just a matter of time before reimbursement drops dramatically – reducing incentives for folks to invest their own money on rooftop solar and be part of the solution. Elections matter. A lot.
