Editorial: SnoPUD seeking balance for its solar incentive

By The Herald Editorial Board

While our attention — but not our unprotected eyes — are focused on the sun for Monday’s eclipse, let’s consider another solar issue.

Solar power, while currently providing a little less than 1 percent of total U.S. electrical needs, is growing in the number of homes, businesses and industries that generate at least some of their own electricity with solar panel installations. And that includes Washington state and even Snohomish County and Camano Island, so much so that the energy generated by Snohomish PUD customers with home solar installations has reached a milestone.

Combined, the PUD’s 1,323 residential and 96 commercial customers with solar installations are generating about 9 megawatts of energy, most of which goes for their own use, but some of which is sold to the PUD when more is produced than is used. Particularly during Western Washington’s sunnier, warmer months, those home meters spin backward and put the electricity out on the grid for all to use.

That milestone was reached with the help of financial incentives — federal, state and local — that make installation of solar panels more affordable. Residential solar panel installations, depending on the size and complexity, can cost between $15,000 and $40,000, but the incentives help those who have the panels installed pay off that investment in eight to 10 years.

Among the perks is a state benefit, extended and amended by the Legislature this year, that offers a production incentive up to $5,000 for individual installations. There’s also a state sales tax exemption and a federal income tax credit. The state also offers an additional incentive for solar installations that use components made in this state. And local utilities, including the Snohomish PUD, offer their own incentives.

The growth in home and commercial solar installations is also helping to drive down the cost of solar panel installations, so the incentives are working as they were intended. More people are adopting solar, which is helping to make the option more affordable for others.

But that growth means that some governments and utilities are beginning to ramp down or even end certain incentives. The federal tax credit, for example, continues at the current rate until 2019, but then begins to decrease in 2020. Likewise the state production incentive, now extended until 2029, also will begin to diminish in 2019.

And having reached that generation milestone, Snohomish PUD is no longer required by the state to offer its incentive, a practice called net metering.

Under net metering, those with home and commercial installations use the electricity they produce, purchasing more from the PUD as they need it. But when the sun is out, and the solar panels are generating more power than used in the home, the excess goes on the grid and is sold to the PUD. Currently, the PUD buys that at its retail rate of 10.25 cents a kilowatt-hour.

The problem, says Jim West, the PUD’s assistant general manager for customer service, is that it’s paying for that energy at a mark-up. The electricity it generates itself or buys from the BPA and other sources costs it only 3 to 4 cents a kilowatt-hour.

“We’re forgoing that additional revenue that would normally support the utility’s costs,” West said in a phone interview last week.

The PUD, which is a nonprofit public utility, is now having to weigh the benefit of encouraging solar installation against its need to maintain its substations, power lines and other facilities and pay its employees as well as consider the equity to its other ratepayers who haven’t installed solar panels and are paying market rates for their power.

Among the possible changes would be requiring owners of solar panels to sell what they produce at a certain rate, but then buy it back at a higher rate. The PUD also might consider charging customers a base rate, which would basically pay for access to the grid the PUD maintains.

Regardless, West said, under current plans those who have already had solar panels installed will continue under their current arrangement. They would be grandfathered and see no change to net metering.

The PUD’s elected board of commissioners met in late July to begin discussions about potential changes to net metering. More meetings are expected to follow, possibly later this month or September.

Among those opposing an end to net metering are the companies that install the panels and environmental groups that still see the incentives as necessary to encourage further growth in their use.

Joan Tilton, the owner of Arlington Electric and Solar, recently told public radio station KNKX (88.5 FM), that the PUD’s “buy all-sell all” proposal will discourage new customers.

Installers already have seen a drop off in installations in the state. After a record year of more than 3,400 installations in 2015, the number dropped to about 2,700 in 2016.

Part of the draw of solar, Tilton said, is that customers like using the power produced by their own systems.

“When people put in these expensive systems, they pay for the privilege of collecting their own power from the sun. And the reason that they want to put it in is so that they can use their own power,” she said. “And turning net metering customers into wholesale power producers — people just wouldn’t want to do it,” she told KNKX.

Snohomish PUD is just beginning the discussion regarding the utility’s incentive program, West said. No decisions have been made.

The PUD is justified in considering a change to the incentive it provides. It’s been effective and has helped many make a considerable investment that has advanced a renewable and clean energy technology.

The incentives have also supported a number of jobs in the production of the photovoltaic cells and those who install the panels.

But the PUD has its own investment to protect in its grid and needs to charge a fair rate for all who use it.

Those who are considering installation of solar panels might want to make their decision soon, before the sun sets on the incentives.