Once upon a time, Louisiana had some of the best support for rooftop solar in the nation. The combination of a 50% state tax rebate and the federal Investment Tax Credit (ITC) on top of the foundation of retail-rate net metering made for some of the best economics for rooftop solar in the nation.
But Louisiana is also a state that is not known for its thriving democracy, with the oil, gas and utility sectors firmly in control of politics. Thus it is not surprising that the form of energy democracy that rooftop solar represents was on shaky ground. After the 50% tax credit was capped in 2015 and fully subscribed in 2016, installations fell sharply.
But what is far more important is that as a result of yesterday’s decision at the Louisiana Public Service Commission (LPSC), as of January 1, 2020, utility customers who are foolhardy enough to install solar will be paid a 12-month calculation of wholesale rates for the power they generate and export to the grid on an instantaneous basis, while buying power from the utility at retail.
This is a big departure from the monthly “netting” of import and export under retail-rate net metering and will greatly undermine the economics of rooftop solar for many customers.
The final vote at the LPSC yesterday to implement this policy was 3-2, with Commissioner Skrmetta (R) joined by two relatively recent additions to the LPSC: Craig Greene (R) and Mike Francis (R). The commission’s two Democrats, Lambert Boissiere III and Foster Campbell, both voted against the move.
The Alliance for Affordable Energy, which has advocated for renewable energy in the state for more than a decade, blasted the decision, with Executive Director Logan Atkinson putting this in the context of larger political problems in the state.
It is always stunning to see how hard communities and workers have to fight for what is right, while corporations are handed golden tickets in Louisiana. The unsupported canard of “subsidies” from net metering in Louisiana doesn’t remotely compare to the real subsidies ratepayers are paying to prop up uneconomic gas, coal, and nuclear plants owned by utilities.
As explored in a previous article, Skrmetta has been in conflict with the solar industry for many years, and may have pushed to remove net metering at this time to help to derail the solar industry from funding an opponent in 2020.
Solar installers roundly condemned the ruling, which they say could lead to layoffs in the state’s 3,000-strong solar workforce. Per Tom Neyhart, the CEO of PosiGen:
Today’s vote was a job killer and an insult to the people of our state, Instead of moving Louisiana forward, the Public Service Commission – fueled by the utility companies – moved Louisiana backwards.
Jeffrey Cantin, the president and owner of Solar Alternatives and a board member of the Gulf States Renewable Energy Industries Association (GSREIA), notes that while the new move puts Louisiana behind even neighboring Mississippi in terms of its compensation to owners of PV systems, that it will not end the state’s market.
Cantin says that this will hit the most energy-efficient homes the hardest, but that solar will still be viable for those that use the most power mid-day, including retirees and those with inefficient homes where the air conditioning is running 24/7. He notes that this move actually incentivizes those adding solar to use more power mid-day, when demand is already intense.
“This is going to make things worse for the grid,” Cantin told pv magazine.
There are still opportunities for home and business owners to get in under the old system of retail-rate net metering, but in order to do so they must have a fully installed system and have filed an interconnection application by the end of the year.
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battery!!! Lets STOP giving the utility our electricity and see how they like them apples!!!!
Although the oil and gas companies think they have won against solar, they are wrong. By gutting the net metering they have just made the case for behind the meter storage. There may even be a few people that will install storage and cut the cord to the grid completely. The utilities, gas and oil companies are still going to lose against solar it’s economics. As a solar owner, and booster I like to look on the bright side of things.
“January 1, 2020, utility customers who are foolhardy enough to install solar will be paid a 12-month calculation of wholesale rates for the power they generate and export to the grid on an instantaneous basis, while buying power from the utility at retail.”
So it begins, the train is connecting up across the land, the electric utilities are getting their “net billing” in one form or another and the solar PV adopters are getting screwed once again. Time for the solar PV community to step up and put in those firmware changes that will allow the “former” grid tied system to become a “metered” self consumption system. Sonnen, LG Chem or TESLA are starting to look real good right now.
“will be paid a 12-month calculation of wholesale rates for the power they generate and export to the grid on an instantaneous basis, while buying power from the utility at retail.” is not incentivising people to store the power in a battery and give the power when it is most expensive. Net metering on retail rates was never going to work in the long run. I think, when someone becomes a “supplier” they ought to get a smart meter that allows them to be smart about their energy use. If they will be paid very little for excess power in the afternoon, that is when they run their laundry etc. If they can be paid more for sending their power to the grid at 7pm, then using a battery can help them a lot. At this point, the cost should be totally on wholesale demand rates. Perhaps they pay 5% above wholesale for using energy and get 5% below wholesale for giving. Since, peak rates are many times higher, this can be lucrative, and it’s good for everyone including the utility.
Per my reading of the proposal that was voted on, this isn’t TOU rates – which would make sense and would incentivize intelligent production and consumption. This is flattened, averaged wholesale power rates being paid to rooftop solar.
Also, saying that PV system owners should be compensated totally at wholesale ignores the additional values (including deferred transmission investments, fewer line losses, local resiliency, etc.) that DG provides. Of course, if like this ruling they aren’t based on real-time power prices, then you are also missing peak shaving + deferred capacity as well in your valuation.
Thanks for the informative article. One clarification question: As bad as this decision is, isn’t Orleans Parish exempt from it, since electric utilities’ regulation is overseen by the New Orleans City Council?
Yes, that is accurate regarding New Orleans.
I think everyone is missing a very important point. Solar is great and everyone should do it; however, when there’s no sunlight, you’ll rely on the power grid and distribution network. Electricity infrastructure takes a lot of money to maintain. Tree trimming, line maintenance, crews, massive overhauls to 500kv transmission lines, computer systems to make sure that stuff is up and running optimally, call center support, etc… the list goes on.
Traditionally, the massive cost of maintaining and improving this infrastructure has been evened-out to everyone.
How do we compromise?
I think this bears some technical context. Yes, rooftop PV does rely on the distribution system – including for solar on homes most of the time when it is generating, as those who work 9-5 typically aren’t consuming the power their systems generate (instead the nearest business is).
However, rooftop PV is also much closer to the source of generation than distant power plants, and typically does not use the bulk transmission system. And by meeting needs without using that system, it can avoid the need for transmission infrastructure.
This is not theory, by the way – efficiency, rooftop solar and other behind-the-meter solutions have avoided billions in transmission spending in California.
Any real compromise has to take these cost savings into account. Meaning that the solution of compensating rooftop solar at avoided cost or another wholesale methodology that leaves that out is simply not fair or reasonable.
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