APS, Solar Industry at Odds on Value of Power From Rooftop Units
By Ryan Randazzo The Republic | azcentral.com Wed May 15, 2013 - Arizona Public Service Co. and the solar industry have published conflicting studies estimating the value of rooftop solar panels, foreshadowing a debate that will determine the future of the budding solar industry in Arizona.
The APS report says that people with rooftop solar are being overpaid for the excess electricity they generate, which is directed to the power grid when they are not using it. The solar-industry report said those customers are being underpaid and that their solar panels provide value to the utility by helping APS avoid expenses like new power plants.
The two sides are making their arguments as APS prepares to ask regulators in July for a reduction in its credits. The five Arizona Corporation Commissioners will decide whether to keep or alter the payments.
The utility, like many others, gives customers a one-to-one credit for each kilowatt-hour of electricity their solar panels generate that gets sent back to the power grid. The policy is called net metering because customers are billed for their net usage.
If their solar panels generate excess electricity in the daytime, their meters run backward. Then at sunset, when their panels stop making electricity and they are using electricity from APS, the meters run forward again, effectively spending the credits they accumulated during the day. No money actually exchanges hands unless a customer has excess credits at the end of the year.
Most customers with solar panels accumulate credit for the electricity they generate during the day, then they start to redeem those credits in the evening when they get home, turning on lights, air-conditioners and other appliances. The average price for electricity in those evening hours is higher than usual, 15.5 cents per kilowatt hour, according to APS.
Those prices include everything from the cost to build power plants to maintaining power lines. The electricity the customers redeem with their credits is much more valuable than the electricity their panels provide, officials said.
APS estimates the electricity those customers generate from solar panels is really worth only 3.6 cents per kilowatt-hour today, the cost APS avoids in power-plant fuel, according to a report APS commissioned.
“They get a credit today based on their rate structure that allows them to take more credit for their solar production than what the value really is,” said Jim Wilde, APS director of resource planning.
But the panels do not help much, if at all, when it comes to staving off costs associated with the construction of power lines, power plants and other infrastructure, and thus is not worth the full retail value of electricity on the APS grid, Wilde said.
Wilde said the value of electricity from rooftop solar could be about 8 cents per kilowatt-hour by 2025.