Smart SpendingSmart Spending

Utilities launch campaign against home-based solar

If your house has panels or you are considering having them installed, here's what you need to know.

By MSN Money Partner May 14, 2014 1:39PM

This post comes from Marilyn Lewis at partner site Money Talks News.

Home solar panels, not usually a subject of controversy, have become a hot issue in statehouses around the country.

: Solar panel © Russell Illig/PhotoDisc/Getty ImagesUtilities and advocacy groups have launched a multimillion-dollar campaign to end what they say is an unfair advantage some states give to homeowners with rooftop solar panels.

From the Los Angeles Times:

The Koch brothers, anti-tax activist Grover Norquist and some of the nation's largest power companies have backed efforts in recent months to roll back state policies that favor green energy. The conservative luminaries have pushed campaigns in Kansas, North Carolina and Arizona, with the battle rapidly spreading to other states.

Another group working to repeal solar laws and green energy requirements is the controversial American Legislative Exchange Council (ALEC), which brings conservative state lawmakers together with business and industry representatives to write draft legislation.

ALEC has written model legislation targeting net metering, the LA Times says.

The utilities and allies also are challenging laws in Washington, California and South Carolina.

It's all about net metering

The campaign centers on a practice called net metering. Laws in many states let solar homes send excess electricity back to the utility. Those homeowners are compensated with credit on their bills.

Carrie Hitt, an official with the Solar Energy Industries Association, an industry group, told Money Talks News that 46 states have some form of net metering.

Some states, like Kansas, require utility companies to get a share of their power from renewable sources.

The utilities claim net metering dumps unfair costs on customers who don't have solar panels. It leaves fewer households covering the costs of keeping utility systems running, they say.

The state net metering laws and state and federal tax credits for home solar installations are credited with helping reduce the load on the nation's aging electric system.

The Washington Post wrote about a 2012 report by the American Society of Civil Engineers:

(The report) described the nation's electrical grid as a patchwork system that ultimately will break down unless $673 billion is invested in it by 2020.
If investment isn't increased by at least $11 billion a year, the report said, the electrical service interruptions between now and 2020 will cost $197 billion.

A report from the Edison Electric Institute (.pdf file), an industry advocate, however, calls solar panels "threats to the centralized utility business model."

The score so far

After months of lobbying and debate over the issue in California, the Legislature ordered the state's public utility commission to act by 2017 to create a plan that examines rate structures and ensures non-solar households don't pay extra.

Arizona responded to the campaign by allowing utilities to charge solar customers a $5-a-month fee -- considerably less than the $50 fee the lobbyists wanted.

Utilities and their allies were unsuccessful in their attempt to repeal a Kansas law that says 20 percent of the state’s electricity must come from renewable sources.

You won't get rich off of net metering

Are solar households freeloading by sending electricity back to the grid?

The LA Times says:

The arguments over who benefits from net metering, meanwhile, are hotly disputed. Some studies, including one published recently by regulators in Vermont, conclude that solar customers bring enough benefits to a regional power supply to fully defray the cost of the incentive.
Utilities deny that and are spending large sums to greatly scale back the policy.

You'll never get rich selling your electricity back to the grid. In fact, you can't make money at all, just credit. Utilities put limits on how much electricity they'll accept from customers. The best you could possibly do is to reduce your electric bill to zero.

However, without net metering, the LA Times writes, "solar power would be prohibitively expensive."

Costs and return

The hope of recovering a solar investment eventually with credits is an incentive for many homeowners. It takes 5.6 years on average to break even on the cost of buying and installing a household solar system, according to Boston Solar, an installation and sales company.

Here's a look at how the costs and returns break down.

Powering a home. At least 8,000 kilowatt-hours a year are needed to supply electricity to a 2,000-square-foot house without electric heat or an electric water heater. It takes about 6.5 kilowatts of solar panel capacity (energy produced at any one time) to meet that need, MSN Real Estate says.

The costs. Trinity Solar, a solar design and install company based in New Jersey, explains how to calculate costs of purchasing and installing a home solar system. According to Trinity Solar's website, a 6.9 kilowatt rooftop solar system costs roughly $16,800. That includes:

  • $24,000 purchase and installation cost.
  • $7,200 one-time federal tax credit.

The payback. Trinity Solar says this system would earn roughly a 12.5 percent return:

  • $1,242 in electric bill savings annually.
  • $863 more in savings on your bill from net metering, or returning your excess electricity to the utility.

Or, go solar for free

A household's installation cost can vary enormously from Trinity Solar's example, depending on state laws and incentives. Also, where it's available, an option called third-party financing lets homeowners install home systems for a reduced cost or even free.

In exchange, the third-party operator gets the electricity and sells it back to the household at a contracted rate that's usually lower than the local utility's, says the website of the Solar Energy Industry Association, an industry group.

In these arrangements, a homeowner's costs are determined by type of agreement. The association's website says:

Third-party financing of solar energy primarily occurs through two models. A customer can sign a traditional lease and pay for the use of a solar system or the customer can sign a power purchase agreements (PPA) to pay a specific rate for the electricity that is generated each month.

It's unclear how much the loss of revenue due to third-party providers is spurring the utilities' campaign. But the association says that, in California and Colorado, third parties have become the dominant way for households to go solar. Forbes describes the third-party industry's rapid growth.

What's your experience with home solar panels? What do you think of the arguments that net metering costs non-solar households more?

More from Money Talks News

May 14, 2014 3:58PM

Back in the late 70's I lived in the boondocks of Northern Nevada, electric rates were 3X the price of Reno or Carson City, I had to have propane delivered for heating and hot water and that was also expensive even though a major natural gas company had a pipeline less than 300 meters away they wouldn't hook up locals because that gas was for California and Arizona. I bought a used windmill at a flea market and several automotive alternators along with a bank of deep-cycle batteries and an invertor I built I supplied enough power for my well pump, electric fence and outdoor lighting. I built a solar collector on my roof that not only supplemented my heating in winter but by cycling the air through a heat exchange pit my cooling costs in the summer were greatly reduced. I also had a closed hot water solar exchange system that reduced my propane costs for hot water by 90%.

People open your eyes and turn off Rush/Sean/Fox news, alternative power sources are not only good for the air your children breath but your pocketbook and piece of mind.

May 14, 2014 3:18PM

Heaven forbit the utility company can't make a profit - boo hoo!

These utitity companiies need to have their monopolies ended.  Like everyting else in this country, the mighty companies have all the power and the poor consumer gets the shaft. 

May 14, 2014 3:33PM
According to the latest (2012) figures from the U.S. Energy Information Administration, electricity generated directly from solar energy accounts for 0.11% of all electricity generated in the US.  If you subtract out large scale commercial solar cell (PV) users and commercial PV and solar thermal power plants, you'd be lucky to say that solar cells on home rooftops account for .05% of all electrical generation in the US . . . yep, just five-hundredths of one percent.

Yet, according to the article:  "The utilities claim net metering dumps unfair costs on customers who don't have solar panels. It leaves fewer households covering the costs of keeping utility systems running, they say."  Poor, poor utility companies . . . they just can't stand loosing that .05% of sales.


May 14, 2014 3:40PM
In California the utilities are having a nutty because by 2020 the building code will require all new residential and by 2030 all commercial construction to be designed "net zero". This requires your project to produce as much energy as it uses. I think this is great considering in 2002 we had regular rolling blackouts because there wasn't enough power being produced. I think what will come about is a "connect fee for all home to cover the infrastructure and a separate rate for the power used much like a water meter. If the power company were to properly compensate solar suppliers they would actually need to produce less power than they use due to "time of use" rates. Commentor Jefferey Haub mentions issues with fire fighters and that really isn't an issue the real issue is the concrete tile roofs in much of new construction. 
May 14, 2014 3:26PM
All energy and environmental concerns are corrected by market pricing systems which change behavior.

If clean air and water become valuable, you will see innovation getting it done and competition setting in later to make it affordable.

If you knee jerk like an adult with a protected child complex, succumb to political dogma and root for the government control freak daddies to "protect" everyone, you will get government capital cronyism, mal-investment, economic dislocation, corruption and more loss of liberty.
 ---- You know --- like we have already seen.

May 14, 2014 3:29PM
It is no surprise that ALEC, the Koch Bros, and conservative groups oppose efforts by consumers to generate their own electrical power through their own rooftop solar panels.   They have vested interests in all forms of non-green fossil fuels and shale oil.   Anything that favors the consumers is obviously an affront to these greedy bastards.   Yet the Koch Boys still want their tax breaks for their oil company which the taxpayers (consumers) are forced to concede.   Now someone tell me why the Kochs don't concede that this gives themselves an unfair advantage.

Quite obviously, the political conservative does not relate to conservation.   Anything to impede the progress of mankind. 

May 15, 2014 11:06AM
Can't wait to go completely offline.  I suspect that Elon Musk is going to build home electric storage units, which will allow grid -tied solar users to go off the grid and avoid the constant screwing by utilities. Keeping my fingers crossed.
May 15, 2014 10:56AM
In Colorado (at least Colorado Springs) individuals do not get true "net metering".  Although excess electricity does go back (as a credit on the monthly bill) the bill can never be "below zero" and, in fact, there is a monthly fee for "being on the grid" even if you produce all your electricity, and more, for that month.  Although "solar gardens" do get to carry forward credits for any excess electricity produced in a given month, individuals do, for example, if in April (no A/C) I were to produce $20 more electricity than I used, my bill would be zero plus the monthly "connection" fee, but I would get no credit in May for my excess production in awfully good deal for the utility company, which needs more production in a growing community but has limited they get to send what might have been my electric usage elsewhere while paying no more than their usual rate for it, still getting to charge me each month even if I use no more electricity than I use, and not having to spend for equipment to produce the electricity I send them.  I figure my "net return" is in the neighborhood of 4-5%, although that is tax-free, of course, as it is money I would not otherwise spend.  Assuming that when/if I sell my house, it is a decent, "feel-good" return, but if the real estate market is poor, I'll lose a significant sum on the deal risk, not the utility's.
May 15, 2014 8:20AM
Just as Big Energy is jacking up Gasoline prices in spite of ample supply and lower demand, why should anyone expect any thing different when it comes to Solar. Big Energy has been gouged Consumers literally for Decades and the moment we start trying to become independent of that they cry Foul. Really?
May 14, 2014 3:43PM
Who controls most of the power that goes to Utilities government. They aren't ready to let you be part of the resolution in this crisis. No government is going to fix it all and tax it all.
May 14, 2014 2:33PM
Simple solution. Change the way electricity is billed. Charge a flat fee for everyone for equipment maintenance and then charge the separate fees for generation and transmission.
May 15, 2014 7:22AM
This is all about the utilities trying to preserve their profits...  Electricity demand has been pretty much flat the last 4 or 5 years, so every bit of new generation added is essentially pushing out an existing generator.  Which generator gets pushed out is normally determined through some form of reverse auction which has the effect of lowering power prices across the whole market.  They are really concerned that distributed solar makes too much sense and will push more and more of their existing generators to the point of unprofitability.  In much the same way, they are threatening to shut down some existing Illinois nuclear reactors due to lower market prices caused mostly by new wind turbines...
May 15, 2014 10:00AM
Everyone subsidizes alternatives.  The check these folks get is from your neighbor.  These income streams created by subsides should be taxed.  A windfall profit tax of say 25% should be made available to the coal generated power plants through the environmental correction fund.  They could apply to the environmental correction fund for grants to bring their plants into compliance with cost prohibitive EPA regulations designed to make coal energy more expensive and alternatives seemingly more competitive.  This tax would level the playing field and protect consumers from higher prices.
May 16, 2014 7:48PM
As most major power utility companies operate in a near monopolistic system, paying taxes to all the governments that authorize their operations and having a built -in profit margin to pay their stockholders (like me) I feel any one that wants to invest in a  power producing system should be allowed to do so. I also feel the costs should be incurred by the user and not be supplemented by my taxes. I am not sure how the connection expense should be incurred or even if the home owner should have an expectation of grid power sales.  Bottom line, if someone wants to produce power for their own consumption I don't want to pay for it. If they don't want to hook up to the grid, great. If they want to sell their excess power back to a utility they deserve the wholesale rates commercial generators get. If you want to play the game, then play the game.
May 15, 2014 11:25AM
avatar's easy to see who's against solar......the Koch Brothers, Karl Rove, Big Business, and the advocates for big business.  Gee....what do they all have in common??  Well, of course, they're the back bone of the REPUKICAN party......always out to get the little guy and his efforts to be self-sufficient.
May 15, 2014 11:14AM
At 1105 hrs they started to accelerate even more, do not be shocked at all if we have a 200+ down day in the Dow, that is what these scumbags are shooting for....Things looking gloom down here today....Cheating mofos in charge of it all....We will never give up though...More later.
May 14, 2014 4:59PM
I would think this boils down to a question of fairness. Net metering allows a solar client to use electrical infrastructure for free. It is the non solar customer that has to pay to maintain the transformers, utility lines, and power poles that supply power to the grid. Adding insult to energy is that solar power does not deliver power 24/7. I don't believe that any individual has the right to use public property for free. Everything costs something be it in taxes, tolls, or fees. Do I support limiting CEO pay, absolutely. Especially when the individuals are running companies that report to a Public Service Commision. I can also say that I have a severe dislike of the Koch brothers...   
May 15, 2014 10:13AM
We call it as we see it folks and we warned yesterday after the close to be cautious today, the word was that these manipulators were going to come out with swords drawn doing their thing early and often and that is exactly what they did this morning as soon as the bell rang....They have complete and absolute control on and off the floor....Apparently, unless a miracle happens, will be a day to forget, the sidelines is the best place to be.....Be very very careful.....Cheating still pays on Wall Street sadly...More later.
May 14, 2014 2:57PM

the koch brothers are simply trying to end the subsidies given to people and green companies.  solyndra anyone?


librals will argue that taxpayers are subsidizing ceo pay and big companies, well now solar panels and green companies are getting those govt subsidies yet this author says its a good thing and the koch brothers are evil for wanting to end the subsidy?


lol typical liberal hypocrites

May 14, 2014 5:10PM
Well, we told you they were going to drop us triple digits, hope you played it accordingly....After these scumbags called to accelerate there wasn't much anyone down here could do,,,Too many of them and they have been in control on and off the floor since the opening bell, oh well, momma said we would have days like these and better believe they will try to continue this aberration tomorrow....You are warned, we shall see.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.