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The end of solar as we know it?

For the past decade SRP’s solar policies were designed to help increase the demand for solar and drive down costs until the solar industry could stand on its own.

Now that the solar industry is standing on its own – SRP is poised to knock it back down.

The SRP Board will decide this week on new fees for its solar electric customers. In three hearings over the past month it has become increasingly clear that SRP views the solar leasing industry as a thorn in its side--so much so that management is blaming its proposed new fees on the solar leasing industry itself, saying out loud in a public hearing: “The issue is solar leasing, not SRP.”

The utility’s public presentations during this process outlined how the solar leasing model has emerged as a formidable competitor they need to control to preserve their existing business model.

This is illustrated by the increased popularity that solar electric has experienced over the past decade. During a five-year span from 2004 to 2009, SRP partnered with 300 solar rooftop electric customers through their incentive program.  In the five years since the introduction of the leasing model and a 30 percent federal tax credit took effect in 2010, 15,000 SRP customers adopted solar electric, including a significant number that entered into agreements minus any utility incentive.

The utility’s new solar price plan is an attempt to address the lost revenue from these 15,000 solar customers that it maintains is being absorbed at a cost of about a dollar a month by its non-solar customers.

However, management’s proposed new price plan for solar doesn’t treat all solar electric customers the same: it treats lease customers more harshly than those that own their solar electric systems. The proposal grandfathers the old rules and price plans for existing homeowners who own their solar rooftop systems for up to 20 years, but for homeowners with leases they are only willing to grandfather their systems for 10 years.

Forgetting for a moment what this means for the future -- if approved, this will negatively impact everyone.

The unintended consequences of SRP’s actions mirror the proverbial throwing the baby out with the bath water approach. In an attempt to mitigate revenue loss resulting from the growth of the leasing industry, SRP will negatively impact not only the leasing companies, their employees and customers, but those businesses that cater to the traditional solar ownership model, as well as those selling other solar products, like solar water heaters.

For the average consumer there is no difference between a solar electric lease and a rooftop solar system that is customer-owned.  What’s more, the average consumer doesn’t differentiate between solar electric and solar hot water.  Solar is solar, and if one part of the industry sustains a black-eye, the whole industry will feel the sting.

By penalizing rooftop solar lease owners in what amounts to a crippling blow to the leasing industry, SRP is inflicting collateral damage to the entire solar industry.  The new rules will turn thousands of Arizona solar lease holders into victims with bad experiences with solar.  The resulting black-eye will taint all solar for years to come.

Am I being over-dramatic?  Let’s hope so.  But, I have seen this play before.

Back in the 1980s solar water heating dominated the solar industry, and was the beneficiary of generous tax credits.  When the tax credits expired at the end of 1986, the solar water heating industry suffered tremendously.  A majority of companies went out of business, leaving a number of orphaned systems and unhappy customers in their wake.

It took years for the black-eye administered as a result of the changes to the tax credit policies to heal. During the 1990s, solar water heating companies were forced to reinvent the industry in an effort to restore consumer confidence in solar.

Today, the solar water heating industry offers a product with a strong return on investment and the same environmental benefits as solar electric. It is a part of the energy landscape in Arizona mainly because a few principled individuals hung on and weathered the storm by addressing consumer concerns head-on.

If the past is any indication of what the future will bring – how the solar industry responds to this decision is as important as the decision itself.

Let’s hope that regardless of outcome, the stakeholders in the solar electric industry will borrow a page from the solar water heating industry rebirth and find a way to make solar work for everyone.

Jim Arwood
Communications Director
Arizona Solar Center

Questions:

Should SRP’s rules treat solar lease customers differently than homeowners that own their solar system?  Why has solar electric received the lion share of attention and incentives – when solar water heating also provides a strong return on investment?

Déjà Vu
Visions of tomorrow . . . take root today

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