Some states, however, are attempting to turn back the clock on individual solar units.
The most cost-effective mode of electricity generation is one found when individuals take matters into their own hands, according to a new report that shows independent solar power units offer more return on investments than most S&P stocks.
The Geostellar Quarterly Index, which takes into account a combination of factors to determine the viability of solar energy, released its latest findings, indicating a prime market for investors looking to save on electricity costs in the long run.
“In much of the country, the Geostellar Solar Index shows that homeowners can actually generate more wealth with solar panels than stocks, bonds, CDs or other investments,” Geostellar CEO David Levine told Solar Reviews. “The index’s findings show residential solar power is not only viable, it’s a wise investment.”
Unlike wind power, which generates electricity sold on the grid without direct economic consumer benefit, solar panel units designed for homes are giving customers direct benefits — and the cost to get things up and running is declining by the year.
The Geostellar Solar Index analysis takes into account regulatory, economic and physical factors to determine the Internal Rate of Return (IRR), which for consumers equates to the amount of money saved — or earned — through the commitment to solar panels.
“While we understand that there can be many motivations for installing solar energy, most people will not undertake such a project unless it is justified by the bottom line,” the analysis states.
That justification is growing more applicable by the year, as a combination of tax incentives and solar panel installation prices drop.
Yet even as those in favor of solar power are celebrating victories along the way, there are new roadblocks appearing. Armed with support from the American Legislative Exchange Commission (ALEC), Arizona’s state utility company is proposing to cut back savings on solar power users by implementing fees that could raise utility costs by as much as 20 percent.
Comparing the states
When it comes to returns on solar panel investments, Hawaii is king. Over a 25-year period, returns on investments for solar energy sat around 24 percent, according to the Geostellar Solar Index.
While that tops the charts, residents on the mainland also have opportunities to cash in on investments. Washington D.C. offers a 20 percent return, while North York will provide 17 percent.
Some states that fared well in the 2012 index, including Arizona, didn’t make the top list this year, while other states that have since implemented tax credits have seen a rise to toward the top. According to Goestellar, this indicates the role incentives play in the consumer market.
“Tax credits and other incentives in New York and Connecticut have helped propel these states toward the top of the Geostellar Solar Index,” he said.
In New York, the tax credit system for residential units allows homeowners who own or rent solar panel systems to claim a tax credit of up to 25 percent of the initial cost, capping out at $5,000.
Yet while some states are implementing new incentives, states like Arizona are turning back the clock.
The Arizona Public Service electricity utility is looking at two measures that would weaken incentives for solar users. The argument on the side of the Commission is that those who have solar panel units on their home must be economically responsible for being part of the grid.
One of the new proposals would require residents with home solar panel units to pay a fee for power sent back to the grid, another would offer a blanket cut to savings solar power users now enjoy.
“As more customers install solar on their homes, it become even more important that everyone who uses the grid shares in the cost of keeping it operating reliably for the future,” Arizona Public Serve CEO Don Brandt told Sustainable Business News.
With similar measures backed by ALEC, a pro-business lobby notorious for model legislation and pushing pro-industry policies, Arizona likely won’t be the last state to mull what equates to a new tax on solar-powered homes.
Arizona’s proposed move back
Arizona’s proposed policy, currently being considered by the Arizona Corporate Commission, would rollback a metering system common among states acting progressively in the promotion of alternative energy, solar in particular.
Under the current metered system, homes with solar panels that generate more electricity than is used see a rollback on their meter — leftover energy is sent back to the grid, and utility companies incur costs associated with the purchase. In essence, the utility company is paying homeowners that generate energy that contributes to the grid — and they no longer want to keep those costs up.
While the APS isn’t planning to cut those costs completely, one of its two proposals would roll it back considerably. Currently, return on energy sent to the grid is around $0.15 per kilowatt-hour. That would roll back considerably with the fee APS proposes to implement. At this point, the exact cost of that fee is not determined, as APS claims it will be measured by market rates.
According to APR, the average solar panel user sees cuts to utility bills of around 70 percent. The proposed plans would each cut those back to around 50 percent. The second proposal would implement a blanket cut to the saving solar power residential units have, rather than implementing a fee.
While solar power saves customers tremendously on their energy bill, it doesn’t eliminate all costs. It does cut out costs related to fuel, distribution, power plants, government fees and power plants, but it still carries a service charge.
This is why those in favor of solar panels are having a hard time accepting a policy that would increase service charges beyond those seen by regular customers, especially during a period when concern regarding greenhouse gas emissions is on the rise.
ALEC might have something to do with it
According to Sustainable Business News, four members of the Arizona Corporate Commission have ties to ALEC, which has emerged as an opponent to the solar power industry.
The Solar Energy Industries Association (SEIA) joined ALEC in 2011, but cut ties to the organization in 2012, stating publicly that it was clear ALEC wasn’t willing to work to promote the benefits of the solar industry.
In an email to supporters, the SEIA stated that ALEC “adopted a stance that intends to take us backward. The fact is, Americans overwhelmingly support the growth of the solar energy industry and ALEC is clearly out of touch with the way Americans feel. We have not renewed our membership to ALEC and we will work with state legislators to push back on these efforts.”
Those efforts include rollbacks in tax incentive programs and implementation of laws, seen in Arizona.
With ALEC’s base of supporters consisting of the biggest fossil fuel players in the nation, ALEC has taken an aggressive approach to rollback initiatives aimed at increasing utility’s mandated green energy source growth. The Electricity Freedom Act is the most notorious form of model legislation that sought to scrap state’s green energy mandates.
In 2011, one year before the model bill was rolled out, 23 fossil-fuel related businesses, including ExxonMobil, were part of ALEC’s Energy Task force, the body responsible for penning the model legislation.
The argument by utility companies now with regard to initiatives that give individual homeowners incentives to purchase solar power units is similar to the one touted by ALEC and its member legislators in 2012.
In favor of the Electricity Freedom Act, legislators claimed mandating utility companies to purchase or generate electricity through large-scale wind and solar projects would only lead to higher rate charges for customers. In Arizona, the argument now by APS is that solar customers’ low bills are only increasing the costs for everyone else.
Yet even if APS’s solar power rollback proposal is turned down, consumers investing in solar panels will still come out on top, in comparison to regular customers. And with more and more jumping on the bandwagon, utility companies relying on cheap energy from coal and power plants will find themselves in a new, challenging business climate.
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