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Rate Case Rundown

There’s a lot going on for solar in Arizona. With the end of net metering, our southern Arizona utilities have each proposed different policies, rate structures, and fees. Here’s a summary of the current status and what to expect in the future:

Tucson Electric Power

 

Can I still install solar with net metering?

Yes, until the Arizona Corporation Commission decides TEP’s rate case, customers can use net metering, and will be grandfathered for twenty years.

What are TEP’s current rates for rooftop solar customers?

Customers with solar electric systems can choose the Residential Basic Plan. This plan includes a monthly service charge of $13.00. Energy charges range between 9.9-12.3¢ per kilowatt-hour, depending on your monthly usage, and the time of year. You’ll also pay some taxes and fees, plus a fee for the bidirectional meter needed for net metering. That meter fee is $2.05/month or a one-time cost of $142.95 for residential customers, or less for commercial customers.

Although TEP has been advertising various rate choices, including time-of-use rates and demand rates, these rates don’t pair well with rooftop solar.

What is TEP proposing for rooftop solar customers once their rate case is complete?

TEP is proposing increased fixed fees, steep “grid access charges,” a decrease in the amount paid for any extra solar energy sent back to their grid, and an even larger solar meter fee. For more detail on these proposals, see our blog post.

For a typical customer, these proposed changes would mean it would take well over a dozen year to recoup their investment in solar. Want to see how it would affect you? Try out our calculator.

What happens next?

The administrative law judge in this case heard public comment on this case, on June 26th. Hearings on the case will resume on October 23rd, 2017. After hearings are done, the law judge will write a recommended order and opinion (ROO). That ROO will be submitted to our elected Arizona Corporation Commissioners for a vote, likely in late 2017 or early 2018.

You can still make comments to the docket, online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket 01933A-15-0322. You can also mail a comment referencing the same docket number to:

Arizona Corporation Commission
Docket Control Center
1200 West Washington
Phoenix, AZ 85007

A solar electric system in Tucson, Arizona

Trico Electric Cooperative

 

Can I still install solar with net metering?

No. On February 24th, 2017 the Arizona Corporation Commission voted to end net metering for Trico members.

What are Trico’s current residential rates for rooftop solar?

Trico’s customers currently pay $20 in fixed monthly charges under the standard residential rate. Energy charges are between 11.8-12.8¢ per kilowatt-hour.

Rooftop solar customers will be compensated at a 7.7¢ per kilowatt-hour “export rate” for any solar energy that’s not used immediately as it’s produced. They would also pay a $3.38 monthly fee for a “monthly data cost.”

What happens now?

Trico customers can still choose to go solar under these new rates. Because of the large difference between retail energy rates and export energy rates, it will be important for your installer to understand your specific energy use patterns. If at all possible, you should obtain interval data from Trico and your installer should carefully model the relationship between solar production and your energy use.

Sulphur Springs Valley Electric Cooperative

 
Can I still install solar with net metering?

Yes. SSVEC’s rate case is in process, but members can still use net metering until the rate case is resolved.

What are SSVEC’s current rates?

SSVEC’s residential members currently pay monthly service charge of $15.00, but this charge will rise to $18.00, $22.00, and $25.00 over the next three years. All members also pay various taxes and fees. Members who own rooftop solar electric systems also pay a monthly $2.70 net meter fee.

What is SSVEC proposing for the future for rooftop solar customers?

SSVEC has proposed an increased monthly fee of $35.00 for customers with solar, $10.00 more than other residential customers. They have also proposed a drop energy charges to 10.3¢/kWh. The biggest hit would come from the proposed drop in compensation for energy export, to 7.1¢/kWh, with this rate dropping about 10% each year. Rather surprisingly, they are also proposing there be no ten-year “lock-in” of the export rate, even the ACC directed utilities to implement this lock-in.

The bottom line for new customers is that it would take over fifteen years to recoup their investment in solar, if SSVEC’s proposals are approved by the ACC. For more information on the possible effects, see our blog post.

What happens next?

The hearing for this case was on July 20th. Interested parties will file two rounds of “briefs” by August 31st, and September 15th. When this is complete, the law judge in the case will write her recommended order and opinion, before sending the case to our elected commissioners. We expect that the Commission could consider the case as early as October.

Until the case is decided, SSVEC customers can still use net metering, and will be grandfathered for twenty years from the date of interconnection. Note that SSVEC is proposing increased monthly charges and decreased energy charges even for customers with grandfathering.

You can still make comments to the docket, online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket E-01575A-15-0312. You can also mail a comment referencing the same docket number to:

Arizona Corporation Commission
Docket Control Center
1200 West Washington
Phoenix, AZ 85007

Arizona Public Service

 

Can I still install solar with net metering?

Barely! On August 15th, the Arizona Corporation Commission voted 4-1 to approve a settlement in the APS rate case. Customers who want to use net metering will need to have an application in to APS by August 31st, 2017.

What are APS current rates?

APS’s new rates are effective August 19th, 2017. Most solar customers will want to choose the Saver Choice rate. This rate has a monthly charge of about $13.00, and energy charges that vary by time of year, and time of day. Those energy charges range from 3.2-24.3¢/kWh. Rooftop solar customers will also pay a monthly “grid access charge” based on their solar electric system size, of $0.93 per kW-DC.

What will APS rates be when net metering is gone?

Effective September 1st, new solar customers will still be on the rates mentioned above, but will receive 12.9¢/kWh for any energy exported to APS, with that rate locked in for ten years. That export rate will be adjusted downward each year.

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How Does Net Metering Work With My Electric Bill?

Here is how net metering works with your electric bill. We’ll be sharing more about how billing will work for systems without net metering in the future. TEP and SSVEC customers can still choose net metering. APS customers will not be able to use net metering starting the end of this month, and Trico customers are already on an export rate system.

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Where Does Your Energy Flow with Solar?

Want to better understand where energy comes and goes in a home with a grid-tie solar electric system? Check out the infographic below! We’d also love to hear your thoughts and questions in comments section.

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What Do SSVEC’s Proposals Mean for Solar?

Welcome to the solar coaster

Members of Sulphur Springs Valley Electric Cooperative (SSVEC) have a pretty good feeling of what the “solar coaster” is. Since April of 2015, when SSVEC abruptly proposed elimination of net metering, they’ve felt the tug of war between utility interests, the solar industry, and other stakeholders. We’re now in the home stretch of this long, involved process. Over the next 2-3 months, the Arizona Corporation Commission (ACC) will decide if they want there to be a minimally viable solar market within SSVEC’s service area, or if the current solar slowdown will come to a complete halt.

So how’d we get here? Since this post isn’t intended as a sleep aid, I won’t dig too deep. As noted above, SSVEC proposed gutting net metering over two years ago, and tried to make those changes effective about 30 days after submitting their proposal, before any review by the ACC occurred. This effectively stopped the solar market in their territory—in the next four months, we had only one customer choose to install solar with the possibility of the new rate structures hanging over their head.

Since that time, SSVEC has proposed increased basic monthly charges for all customers, and even greater solar-specific monthly charges. In October of 2016, the ACC approved an enormous increase in monthly charges for all customers from $10/month to $25/month, phased in over four years, but deferred decisions on solar until after the Value of Solar docket was completed. Unlike other Arizona utilities, SSVEC has not proposed residential demand charges, because they don’t currently have the metering technology to support that type of rate.

With the ACC’s December 2016 decision on the Value of Solar, net metering is indeed now riding into the sunset. But the question is now what solar-specific fees (if any), the ACC will approve for SSVEC, and how much co-op members who install solar will be compensated for solar energy they send to SSVEC’s grid.

How will this affect those who install solar after the ACC’s decision?

In this “Phase II” of SSVEC’s rate case, they’ve proposed the following for new solar customers:

An increased monthly fee of $35, $10 more than other residential customers.
A retail rate of $0.102996 for energy purchased from SSVEC.
A first-year export rate of $0.071165/kWh for solar energy sent to SSVEC, with this rate dropping by 10% in years 2-5, and by 11.5% in year six.
No ten-year “lock-in” of the export rate, even though utilities were directed to do so by the Commission.

If approved by the ACC, the result of these proposals would mean very few (if any) SSVEC customers would choose to install solar. As shown in the table below, it would take a minimum of 15 years for an SSVEC member to recoup their investment in a solar electric system. You can see more in my comments to the ACC.

To continue with a viable solar market, the ACC should adopt the 10-year export rate lock-in, a higher initial export rate, and reject extra monthly fixed fees for solar customers. I’ve found that if the initial export rate was set at $0.10/kWh, this would allow the continuation of a stable (if likely smaller) solar installation market in SSVEC’s territory.

The ACC’s own staff (“Staff”) have also proposed rates in the case. Their proposed rates aren’t as bad as what SSVEC wants, but would make the economics of solar installation very challenging, with simple payback times of about 13-14 years for the next three years, then jumping to over 17 years for systems installed in 2022.

What about current solar customers?

The good news is that the ACC has made clear that customers who already have solar or submit an interconnection application to SSVEC before the decision date will have net metering available for twenty years. They will also remain on a two-part rate, which means they’ll pay a monthly customer charge and a per-kWh energy charge.

But SSVEC is proposing to change the customer charge and energy charge, even for existing customers! This will affect the financial benefits for customers who already have solar installed. After a four-year phase in, solar customers would pay an extra $5 each month in customer charges. Not great.

Much more troubling is their proposal to lower the energy charge from $0.118046 to $0.102995 over the same time. This would mean a drop of 12.8% in the value of energy produced by solar.

It’s time to tell SSVEC to back off on their anti-solar proposals

So there you have it. SSVEC and the ACC need to hear from folks who love their solar, and the ability to choose their energy sources. We also really encourage people who are thinking of installing solar in the future to participate in the process, since your ability to go solar will be greatly reduced if these SSVEC proposals are approved.

Hearings will start with public comment on Thursday, July 20th (see below for specifics) and could continue through the following week. After the hearings are complete, the administrative law judge in the case will complete a recommended order, which will go to the full ACC for their decision. It’s likely this final decision will be made in later in the fall, but the exact schedule may change.

How to take action

Give public comment at the Commission on July 20th, starting at 10:00am. The hearing will be held at the ACC’s offices here in Tucson. The address is 400 West Congress, Room 222, Tucson, Arizona, 85701.

Submit a public comment opposing these anti-solar rates. You can comment online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket E-01575A-15-0312. You can also mail a comment referencing the same docket number to:

Arizona Corporation Commission
Docket Control Center
1200 West Washington
Phoenix, AZ  85007

Spread the word. Let your friends and family know about how these proposed rates could affect them, and how they would hurt local small businesses like Net Zero Solar.

If you have thoughts or questions, we’d love to hear them in the comments!

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What’s a Residential Demand Charge?

Wondering what a residential demand charge is and if you should switch electric rates? Check out our new infographic! If you have comments or questions, please share them below.

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Wait, TEP is Proposing More Anti-Solar Rates!?

Maybe you’re someone who checks every utility bill insert. Or maybe you just can’t get enough of the legal notices in the back of the newspaper. But if you aren’t “that guy” (or gal), you might not know that Tucson Electric Power is yet again proposing changes to rates around solar in the second phase of their rate case.

Forgive us for sharing the same narrative that’s been true for a number of years, but yes—these proposals are bad for Tucsonans who want to install solar on their own homes, but good for TEP’s proposed company-owned solar, and great for TEP’s profits.

First, some good news. The Arizona Corporation Commission (ACC) has made clear that they support “grandfathering” of net metering for existing solar customers, which will apply based on the date of the decision in this second phase of TEP’s rate case. So if you’re thinking about solar, there’s still a little time to get it installed under the current rules.

Net metering rides into the sunset

As we’ve shared before, net metering for new customers will be phased out, as each utility completes their rate cases. For Trico customers, net metering is already gone. TEP, UNS Electric, and SSVEC customers will have net metering available until phase two of each rate case concludes.

So what will replace net metering? A “DG export rate.” This rate, which is expected to be somewhere between 7-12 cents per kWh for TEP, will apply to any energy that a solar homeowner sends to TEP. For any solar electricity energy that you use as it is generated, you’ll save money at the retail rate. This means that TEP customers who install solar after net metering is gone could lose 30% or more of the value of a solar electric system compared to current rates. The amount of lost savings is highly dependent on a homeowner’s specific energy use patterns.

Proposed rates are more complex

TEP is proposing that new  “distributed generation” or “DG” customers—those who produce their own energy at their homes—must be on one of two specific rates.

The first proposed is a time-of-use rate. In addition to a monthly service charge of $13, you’d pay more for electricity during certain hours. For example, in the summer, the peak is from 3:00pm-7:00pm, and you would pay about fourteen cents per kWh under the proposal, while you’d pay just under ten cents per kWh during off-peak.

TEP's proposed summer time-of-use rate for new solar customers.
TEP’s proposed summer time-of-use rate for new solar customers.

In the winter, the proposed difference between peak and off-peak pricing is less, with off-peak a little under ten cents per kWh, and peak pricing a little more than ten cents per kWh. In winter, the peak period would be from 6:00am-9:00am and from 6:00pm-9:00pm.

TEP's proposed winter time-of-use rates for new solar customers.
TEP’s proposed winter time-of-use rates for new solar customers.

Time-of-use rates are generally designed to incentivize energy use in the off-peak time, when it’s cheaper for TEP to generate or purchase energy. For example, you might want to wait until after seven to start the washing machine, dryer, or other large loads during the summer.

Of course, some loads just can’t wait. You’ll probably need to run your air conditioner when you get home, whether it’s a bit expensive to do so or not. Similarly, it’s not usually practical to wait to cook dinner.

To add insult to injury, TEP is also proposing a new “Grid Access Charge” for those on this rate option. This charge would be based on the size of the installed solar electric system, and would apply to each month’s bill.  TEP says this is because solar customers “avoid paying their share” of the cost of the grid (though this conclusion is dubious).  This charge is proposed to be a whopping $3.50 per month per kW of solar electric system size. So for a fairly typical 8 kW solar electric system, you’d be paying an additional monthly charge of $28.00!

The second proposed rate option for solar customers also has a time-of-use component for your energy costs, and maintains the basic service charge of $13. But it adds another wrinkle: a demand charge. A demand charge is a charge based on the maximum amount of energy you use over a short period of time. In TEP’s proposal, they would measure your energy use over each hour during the month, and would bill you based on the maximum energy use over a one-hour period during peak time. For example, in my modest 1,100 square foot home with a relatively small 3.55 kW solar electric system, my maximum 1-hour peak use was 7.21 kW last August. If I were on that proposed rate, I’d pay $84.34 just in demand charges for that month, not to mention all the other charges!

Energy production and use for my home on August 11th, 2016. My highest 1-hour usage was between 7:00-8:00pm, and was caused by running my air conditioner (about 5kW) and my oven/stove (about 3kW).
Energy production and use for my home on August 11th, 2016. My highest 1-hour usage was between 7:00-8:00pm, and was caused by running my air conditioner (about 5kW) and my oven/stove (about 3kW).

Both of these rates increase the complexity of the decision to install solar on your home. It’s not too tough to understand and react to time-of-use rates. But demand rates are much more challenging for consumers to react to, and it’s more difficult to model estimated savings from solar, energy efficiency, or other technologies.

More meter fees

TEP has also proposed a new meter charge for solar customers. Back in February, the Arizona Corporation Commission approved a new $2.05/month charge for solar customers, due to the greater cost of the specialized meter needed to record energy flowing both to and from the grid. Although we aren’t exactly happy about this solar-specific surcharge, it does seem to be a reasonable amount to cover the costs incurred by TEP. And customers have the option of just buying the meter up-front, for $142.95.

Now, TEP is adding another wrinkle: They want to raise the meter charge to $4.32 each month! They claim this is due to the fact that TEP chooses to install a solar production meter, plus they say that billing costs increase significantly for solar customers. But the thing is, the solar production meter actually doesn’t provide any benefit to solar customer. Each solar electric system we install includes Enphase Energy’s monitoring solution, which accurately records both the energy output from your system and the amount of energy you use in your home, and makes this data available to you on a user-friendly portal in near real-time. The solar production meter does benefit TEP though, since they can use that meter to keep track of system performance, and can use the data to confirm compliance with ACC policy.

Help keep solar an option for everyone, like this Tucson family who installed a solar electric system on their mid-town home
Help keep solar an option for everyone, like this Tucson family who installed a solar electric system on their mid-town home!

It’s time to tell TEP to back off on their anti-solar proposals

So there you have it. Net metering on the way out. Complicated demand charges or punitive solar-specific rates. Fees for metering infrastructure that solar customers don’t need. And it all seems to be calibrated to make it harder for TEP customers to choose to produce some of their own energy on their homes. This flood of poorly-considered anti-solar policies needs to be stopped. The ACC and TEP need to hear from folks who love their solar, and the ability to choose their energy sources. We also really encourage people who are thinking of installing solar in the future to participate in the process, since your ability to go solar will be greatly reduced under these proposals.

Hearings will start with public comment on Monday, June 26th (see below for specifics) and could continue through mid-July. After the hearings are complete, the administrative law judge in the case will complete a recommended order, which will go to the full ACC for their decision. It’s likely this final decision will be made in early fall, but the exact schedule may change.

How to take action:

Give public comment at the Commission on June 26th, starting at 10:00am. The hearing will be held at the ACC’s offices here in Tucson. The address is 400 West Congress, Room 222, Tucson, Arizona, 85701. Over the coming weeks, we’ll share more specifics about the proposals, if you’d like help with some possible points to bring up in your public comments. Or feel free to contact us with questions.

Submit a public comment opposing these anti-solar rates. You can comment online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket 01933A-15-0322. You can also mail a comment referencing the same docket number to:

Arizona Corporation Commission
Docket Control Center
1200 West Washington
Phoenix, AZ  85007

Spread the word. Let your friends and family know about how these proposed rates could affect them, and how they would hurt local small businesses like Net Zero Solar.

If you have thoughts or questions, we’d love to hear them in the comments!

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Introducing the Enphase AC Battery

It’s been about six weeks since Net Zero Solar installed our first Enphase Energy AC Battery at our office/warehouse. Although this is a small test system, this exciting new product allows for a lot of flexibility in how energy is generated, stored, and consumed in your home. And although it’s not necessarily justified in pure economic terms at this point, the Enphase AC Battery can be a great addition to a solar electric system. Read More “Introducing the Enphase AC Battery”

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Hate solar telemarketers? We do too!

I arrived home after a busy workday, and sat down for dinner. My phone rang. It wasn’t a number I recognized, but it was in my home area code. When I answered, a telemarketer we’ll call “Sam” introduced himself.

Red Flag #1: Promises of “free” solar energy

Sam launched into his script: “Do you know that right now, you can receive up to $10,000 in incentives and grants in Arizona to make your home more energy efficient, for zero down?” The game was on. The object? To act ill-informed enough that he wouldn’t hang up on me, and would share more about his questionable business practices.

Lead generation and telemarketing companies often promise “free” solar electric systems that will “save hundreds each month.” Solar can be a great investment, but it isn’t free. Solar leases may save you a few bucks a month, but they usually contain surprises in the small print, and make poor assumptions about future energy rates. Solar loans are better, but still have a cost of capital embedded somewhere. If it sounds too good to be true, it probably is.

A Tucson rooftop solar electric installation. It wasn’t free.

Red Flag #2: Promise of many “incentives and grants”

After telling Sam that my highest electric bill was $120 last year, he proceeded to admit that these “grants” were payments from local utilities. “Incentives” were state and federal tax credits. He offered to set up an appointment for an energy consultant come to my home, and have a 30-minute discussion about my options for a more “energy efficient home.”

In the past, Arizona utilities paid “up-front incentives.” These were a cash payment to a customer after solar was installed. As the solar market has matured, these programs have gone away. There haven’t been active incentives for several years in most utility territories, so the claim of available utility incentives is just plain wrong.

A federal tax credit of 30% does exist. In Arizona, we also have a 25% state tax credit with a maximum of $1,000. Both tax credits require that a homeowner have sufficient tax liability to be able to take advantage of them.

Red Flag #3: Awkward company names

As any curious customer would do, I asked him the name of his organization, and for his website address. He gave me his company name, which we’ll call “Energy Information Savings Area.”

If your company name is some random combination of “free,” “energy,” “expert,” “information,” “solar,” and “Arizona,” I’m going to guess that you haven’t been in business for long, and you might not be as much of an expert as you claim. Some lead generation companies even change names frequently to try to outrun unpaid employees or other liabilities.

Red Flag #4: Representatives are unable to tell you where they are located or tell you who will be coming to your home to talk about solar

I asked Sam where he was based. He said “Tempe.” When I noted that the area code he’d called from wasn’t correct for Tempe, he then said his company was located in “Tempe and Yuma.” Odd, since the area code he called from doesn’t cover Yuma either. At this point, I think he was tired of my questions, and transferred me to his boss to “verify my qualification for this offer.”

Lead generation companies may operate from elsewhere in the U.S., or even overseas. Does the person calling know about your town or city? Do they mispronounce local names? If they don’t even know the basics of your local area, how are they going to be able to serve your specific solar needs?

You also might not want to invite just anyone who shows up on your doorstep into your home. Any company should be able to tell you the name of the person who will be visiting your home, and what installation company they represent.

Red Flag #4: Websites with generic information and with no real people shown

While waiting for the transfer to Sam’s boss, I opened my computer. The “Energy Savings Information Area” website was real, but they weren’t located in Arizona. They claimed to have been in solar since the 1980s, but there was a conspicuous absence of any names of company founders, officers, or even employees.

The second representative introduced herself. But when I started asking a question, the line went quiet. After a couple of minutes of silence, the call was ended from the other end. With a little Internet sleuthing, I found a LinkedIn profile for her name. She apparently works as a manager for a  third-party lead generation company. They have a trail of customer complaints, unpaid workers, and similar bad press across the internet.

Solar installation is inherently local. Whether you choose a truly local company, like Net Zero Solar, or a multi-state installer, someone is going to need to come out to talk to you about your solar options, and technicians will install solar components on your home. You should be able to find at least some of those people on your solar installer’s website. At a minimum, the leadership team and sales staff should be represented. Ideally, everyone at the company should be shown on the website.

Similarly, if the information on the website is generic and doesn’t reflect information on your local market, steer clear. Another sign that a company may be “churning and burning” is the use of stock photos on their website or photos stolen from other sources (you can check using TinEye, or Google reverse image search).

Be wise when buying solar, so you end up as happy as these great Net Zero Solar customers!

Red Flag #5: Lead generators are calling you at all

Companies that are established, local, quality solar installers usually get their customers through a mix of referrals and local advertising. If a company needs to knock on your door, incessantly call, or fill your mailbox with fliers, it’s a good bet that they are focused on finding poorly informed consumers who will buy their products without careful consideration, not providing solid solar energy solutions for their clients.

Some decent companies resort to these lead generation methods because they want to grow very quickly. But this quick growth is not likely to lead to informed salespeople, quality installation, or great post-installation service.

Buying Solar Shouldn’t Make You Feel Dirty

As a long-time solar professional, this whole interaction was pretty unpleasant. Solar is a wonderful technology and investment. But in the span of five minutes, just about everything I heard from these telemarketers was either misinformation or plainly untrue.

These business practices are bound to give the solar industry a black eye. In fact, we sometimes hear from people who’ve been continually hounded by these companies, but want a second opinion. We’re happy that they’ve called us, so we can sit down, and have a low-pressure, informative conversation about solar. But some consumers might not think to contact a local business before signing a contract that will lead to sorrow down the road. This is one of the most important reasons why we are passionate about educating consumers about solar—whether here, on social media, or in person.

You now know some red flags to avoid when considering solar installation. But what are some things you should do?

Tip #1: Call potential solar installers

Instead of waiting for shady telemarketers to call you, call reputable local solar companies. Make sure you can actually talk to someone who is knowledgeable about solar, and cares to discuss your needs. How to find good solar installers? Check out the next tip.

Tip #2: Check reviews, credentials, and licensing

When looking for a solar installer, check their reviews first.  Google and Facebook are a good place to start. The specialty website Solar Reviews is even better. Talk to your neighbors and friends, too!

See if a company has NABCEP certified installation professionals on staff. NABCEP offers certification programs to renewable energy professionals throughout North America, and is known as the “gold standard” for installation certification.

You should also check the Arizona Registrar of Contractors website to make sure that any potential contractor holds the proper licensing for the work you’d like done. Residential electrical work requires a R-11 or CR-11 license. Commercial electrical work requires a C-11 or CR-11 license.

Tip #3: Meet face to face

An in-person meeting will allow you to gauge the expertise of the solar sales professional and of the company they represent. Are they knowledgeable not only about solar technology, but also about financial benefits, environmental benefits, industry trends, and policy trends? Can they answer your questions (or find out if they don’t know)? Do their company values fit with your values?

Tip #4: Don’t be pressured to sign a contract

Although the end of net metering in Arizona is approaching later this year, there’s no need to “sign today.” If a company tries to use high-pressure sales tactics to sell solar, odds are they aren’t your best choice. The cost of solar installation has declined significantly over the past few years, but it is still major purchase. It is entirely reasonable to wait to sign a contract and make a down payment until you’ve thought it over for a couple of days.

Don’t Let Unscrupulous Business Practices Discourage You From Installing Solar!

We know that dealing with shady telemarketers and wading through the solar sales process can sometimes demoralizing. But now is actually a great time to go solar! Technology has improved, prices have dropped, and we see interesting technology trends on the horizon.

When you’re ready to make your move to a clean, independent source of energy, we’d love to sit down with you.  Just remember—we are Net Zero Solar, not Energy Information Savings Area. If you want to talk to those folks, you’ll have to wait for a call. It will probably come at dinner time.

A ground mount solar electric system installed in Tucson.
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What Does the End of Net Metering in Arizona Mean for Small Solar Installers?

(This post is reproduced from https://medium.com/@louiswoof/what-does-the-end-of-net-metering-in-arizona-mean-for-small-solar-installers-699be02141d9#.hhhj7s8es. Originally published January 19th, 2017)

It’s been almost a month since the Arizona Corporation Commission concluded their investigation into the value and cost of distributed generation by voting 4–1 to end net metering as we know it.

The simple policy of one-to-one credit of net metering will be replaced with a scheme that includes no banking of energy credits, and a steadily-dropping compensation for any energy that homeowners send back to the grid.

As you might imagine, at Net Zero Solar, we’ve been keenly discussing what this means for solar in the state, and particularly for small rooftop solar installers like us.

The basics

The decision replaces the current net metering policy implemented by the ACC in 2009. Under the decision, rooftop solar customers will receive full retail rate benefits from energy that they produce and use at the same time, but any distributed generation will be credited at a lower rate. Initially, this lower rate will be based on the price of utility-scale solar plants.

The specific export rate for each utility will be set in each rate case. Some utilities have already completed the first phase of these rate cases. Issues related to rooftop solar will be addressed in the second half of these cases. When a customer installs solar under the new scheme, they will be “locked in” at a specific export rate for ten years.

Consumers who already have solar will be “grandfathered” for twenty years from the date their solar was installed. The Commission also clarified their December decision. A customer who submits an application with their utility to install solar will be grandfathered, as long as they apply before the conclusion of their utility’s rate case.

Solar installers will need to be leaner

The solar industry has a well-documented record of reducing their prices to consumers over the years. Much of this has been driven by aggressive reductions in module and other component costs by manufacturers. But many rooftop solar installers have also worked to lower the “soft costs” of solar, such as customer acquisition, labor, permitting, and so on.

Small installers are going to need to continue this trend, while still providing excellent products and service. Improving process and efficiency will be critical, but improvements can’t be too expensive.

Distributors will need to understand the challenges faced by installers, and provide not only product, but also share insights on industry trends and engage in state-level policy discussions.

To keep the simple payback for cash purchasers to ten years or less under the new scheme, I estimate installers will need to reduce residential installed costs by between 4-15% per year, but outcomes of utility rate cases could shift this in either direction. This will particularly put increased pressure on customer acquisition costs, and will make loan and lease products very tough (if not impossible) to justify economically.

Storage won’t save us (yet)

During the hearing, some regulators made ill-informed statements implying that solar installers needed to become competitive, and that the ending of net metering would incentivize storage. (Of course, it’s rather ironic that regulators would hector an industry that has consistently become more efficient over its short lifetime, while protecting the profits of highly-uncompetitive utilities with stagnant business models).

While we have a long history working with energy storage at Net Zero Solar, and are excited for storage for the long term, it is in no way a cost-effective solution for today. With total lifetime costs for various lithium chemistry batteries in the range 20–30¢ per cycled kilowatt-hour, it just doesn’t pencil out.

With a retail cost for electricity of around 10¢, and the initial export rate expected to be in the order of 7¢, it would be foolish to spend 20¢ per kWh to store energy that’s only worth 3¢ per kWh (the difference between retail rates and export rates). As the excess generation rate declines toward the avoided over time, it may make sense for consumer to store their energy. But unless our our generally low energy prices in Arizona increase dramatically, storage costs would need to be 25–50% of their current levels to make economic sense.

Claiming cuts to net metering will incentivize storage in Arizona in the near term makes as much sense as claiming that if you crush my old Toyota pickup, I’m sure to go out and buy a Mercedes sedan. It’s not going to happen.

Over the long term, I expect storage costs will decline. And there is value in designing systems today that will easily incorporate storage, load control, and other advanced energy technologies in the future, such as the Enphase Home Energy Solution.

Some customers will chose to do storage soon anyway — just because they think the technology is cool, or they dislike utilities, or like the independence. But this will be a few early adopters, not a major part of the marketplace.

Installers will need to up their game with modeling, storage, load control, and other building management technologies

It’s reasonably trivial to calculate the financial benefits from a net-metered residential solar electric system with two-part rates, as long as you have monthly energy usage data and can accurately model monthly energy output from the system.

With no banking of energy credits, and a differing rate for imports and exports, things get more difficult. Solar installers will need to obtain detailed energy use data for potential clients, and predict each energy flow on a second-by-second basis to understand financial payback, since maximum self-consumption will produce maximum financial benefit. This will force installers to get more savvy with energy modeling, and become proficient software such as Energy Toolbase.

Load control and other building management strategies will also play a key part. From sales through installation and follow-up, employees at installers will need to be able to offer integrated solutions that are easy for the consumer to understand and implement.

Customers will have to accept more uncertainty

With this decision, consumers will have to accept more uncertainty regarding the financial payback for their systems. First, they will only be assured of a fixed export rate for ten years from the date of interconnection. After that, exported energy may be worth as little as avoided cost. I hope that by that time, costs will decrease enough make storage installation economically feasible.

Second, specific energy use patterns will directly affect how much energy is used from solar as it is produced, and how much is sent back to the grid at a lower compensation level. For example, a consumer who leaves town for a month and turns off all electric loads will receive only the export rate for all energy produced during that time.

Utility Death Spiral? Not So Much

Arizona’s utilities are the clear winners in this decision. They have managed to stave off some of the relatively minor competition posed by the rooftop solar industry, while putting forth the unreal narrative that solar customers are “cost-shifting” to other customers. All from an industry that enjoys monopoly protections, a guaranteed rate of return, and in the case of Arizona Public Service, spends millions electing their preferred regulators.

Utilities will continue to accelerate implementation of utility-scale solar and other renewables that they can monetize, and generally advocate policies that dis-incentivize customer-owned rooftop solar.

What’s our narrative?

As we move into a new energy policy era in Arizona, it will be important to tell a clear and compelling story about our energy future. Consumers need to know that their solar installer is taking all necessary steps to meet the challenges ahead.

Even with this significant setback, I believe rooftop solar will still be an important part of Arizona’s energy mix. Clean energy choices, storage, and new energy management solutions are exciting! Small business and local jobs are critical to keeping our economy strong.

Have thoughts on the future of rooftop solar in Arizona? Please share them below.

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