Solar

Iowa Supreme Court rules in favor of third party solar

Original post credit: www.midwestenergynews.com Posted on 07/11/2014 by 

Rooftop solar panels, photo via Creative Commons.

The Iowa Supreme Court ruled July 11 that a solar installation atop a municipal services center in Dubuque does not violate Iowa law, a decision experts called potentially ground-breaking for the spread of rooftop solar power.

“This is a great win for Iowa,” said Brad Klein, a senior attorney with the Environmental Law and Policy Center (ELPC) who represented a collective of renewable energy advocates from Iowa and across the country. Given the thoroughness of court’s decision, and the lack of any other high court rulings in this arena, Klein said he expects the Iowa court’s ruling to be “very influential” in future legal decisions nationwide, as well as “a great guidepost for conversation across the country.”

Joe Bolkcom, an Iowa state senator who has worked hard to advance renewable energy, called the ruling “a very positive decision for the advancement of solar in Iowa. I hope it provides a rationale for the Iowa Utilities Board to make some good decisions about distributed generation.”

The board early this year solicited feedback about the future of rooftop solar and other forms of distributed renewable energy. It recently requested additional comments, and now is mulling over its next move.

Policy implications

Bolkcom predicted that today’s ruling could encourage Iowa legislators to take a more supportive position towards renewable energy.

“If there’s more deployment of solar in Iowa, [legislators] are going to be more inclined to make policy that advances distributed generation,” he said.

Eagle Point Solar, based in Dubuque, installed a 175-kilowatt system on top of the Dubuque city building in 2011. Alliant Energy, the electric utility that serves the city, appealed to Dubuque’s city council, then to the state’s utility regulator, claiming that the project would violate the law. Alliant argued that Eagle Point would be functioning as a utility, and thus impinging on the utility’s legal monopoly over electrical service in Dubuque.

The Iowa Utilities Board ruled that Eagle Point was, in fact, functioning as an illegal utility. The ELPC  and other renewables advocates appealed to the Polk County District Court, which in 2013 reversed the regulator’s ruling. The Iowa Supreme Court then opted to review the case.

Eagle Point’s president and CEO, Barry Shear, was busy hosting out-of-town visitors on Friday. He found just enough time to say, “There’s nothing not to like about this ruling unless you’re a coal miner in Virginia or a utility in Iowa.”

Third party financing

The case basically turned on a funding mechanism known as third party financing. It allows a party other than the solar installer or provider to finance, own and operate a solar installation on another entity’s property, providing energy to the property through a power purchase agreement.

Entities without any tax liability – governments, non-profit institutions, some hospitals and schools, for example – cannot collect tax credits for renewable energy. Hence such third party power purchase agreements are often crucial to making the finances of rooftop solar work.

Meanwhile even many people or institutions who can collect tax credits have trouble coming up with capital to install solar panels. Tim Dwight, a solar developer in Iowa, said that the typical residential solar installation now costs in the neighborhood of $16,000. Although almost half of that could be covered by the federal and Iowa state government credits, the remaining funds can be a barrier for homeowners or business owners; and banks are often reluctant to make loans for solar installations. Hence third party financing can be crucial for a wide range of solar and other renewable applications.

Dwight predicted that today’s ruling will help turn small-scale renewable energy projects into an attractive investment opportunity for insurance companies, banks and even individual investors.

Klein predicted that the court ruling “will open up [solar] to a broader set of Iowans. It’s been very successful in opening up solar in other states. I think this is one of those baseline policies that lays the ground for solar growth.”

The big picture

The ruling came on the heels of a recent tripling of the state’s renewables tax credit; and renewable advocates also hope the utility board’s ongoing inquiry into distributed generation will yield positive results.

“All of these things collectively in Iowa are going to give the industry the boost it needs,” said Klein. “We expect great things in Iowa.”

Officials at Alliant Energy, which has lost nearly 600,000 kilowatt hours in sales to the City of Dubuque since the solar panels started producing in 2012, have mixed feelings about today’s ruling, according to spokesman Justin Foss. “It’s been painted that this is a fight between the utility and renewable energy,” he said. “It’s anything but the truth.”

Foss said Alliant maintains “unwavering” support for renewables, and for integrating them into the utility’s distribution system.  There are now about 670 renewable energy generators on Alliant’s system in Iowa, “and more people asking to connect to the grid every day,” Foss said. He added that customers will still be reliant on power provided by Alliant when the sun isn’t shining or the wind isn’t blowing.

“We have a financing model that hasn’t changed,” he said. “If nobody’s buying energy, in the middle of the night, there’s no one to pay for the power plant. We have two sets of generation. The problem is, there are lots of costs involved. What wi

ll be the impact on our customers? And how will this affect their costs?”

Klein acknowledged that the growth of distributed generation raises tough issues for utilities.

“One of the important aspects of the case is that it says that the purpose of utility regulation is to protect the public, not the utility industry,” he said. Generating one’s own power “behind the meter” — meaning it doesn’t move through a utility’s distribution system – is a private transaction and should not be subject to interference by a utility, Klein said.

Even so, he said this ruling clarifies the need for utilities and the renewable energy advocates to collaborate.

“We can’t have policies that single out customer generation and try to kill it,” Klein said.

On the East Coast, he added, “There are conversations beginning on how the electric utility industry transitions to a system that’s more decentralized. We want to see these conversations happen in Iowa and the Midwest. We want to work with Alliant on approaches that are win-win.”

Iowa Farm Solar

Is Iowa prepared for more distributed energy?

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Solar panels help run irrigation equipment on the Spring Valley Farm in northeast Iowa. (Photo via USDA)

As Iowa faces a potential surge in distributed generation, advocates and some legislators are concerned the state isn’t prepared.

In recent comments to state regulators, MidAmerican Energy, one of the state’s two largest investor-owned utilities, says that to date this year inquiries about interconnections for distributed generation are coming in at twice the rate they did in early 2013.

However, the utility forecast that substantial growth in distributed power will cause a raft of problems, at least in the current policy environment.

The Iowa Utility Board, sensing a growing interest in renewables, in January invited feedback about where the potential and the pitfalls might lie. While dozens of people expressed a desire for more distributed energy in the state, they also identified significant issues that stand in the way.

In its comments, MidAmerican voiced concerns common among utilities: that customers who don’t generate their own power may be bearing an unfair proportion of the system-wide costs of transmission and distribution services – on which small generators rely just as much as customers who don’t produce power. Bills need to reflect the cost of services used by customers who generate at least some of their own power, the utility said.

MidAmerican roughly estimated that, should 25 percent of its customers install solar panels, costs for the other 75 percent of its customers might increase by about 8.5 percent.

Those concerns, however, were part of a raft of comments supportive of expanding distributed renewable power.

‘Part of the solution’

Since the board issued its notice of inquiry on Jan. 7, comments have come in from 208 people and organizations — including a man trying to build a net-zero house, a collection of 66 farmers and rural business-owners, the state’s large power utilities and 25 state legislators.

David Osterberg, founder of the Iowa Policy Project and a professor in the occupational and environmental health department at the University of Iowa, said the key is providing utilities with proper incentives.

“Climate change is a reality and the investor-owned utility companies must adjust their business model to contend with it,” he wrote. “The question for the board should be, ‘How does the state of Iowa procure more distributed electric generation installed in a way that gives the utilities a way to be part of the solution?’”

One recurring theme in the comments to the board concerns the need to determine the costs and benefits of distributed energy.

Utilities and advocates agree on the need for an objective assessment that has a chance of putting to rest questions about how distributed energy impacts utilities. Studies have been done in several states, yet the debate rages on about whether distributed energy is a net benefit or a net cost to the companies that move power from one point to another.

“We need to base decisions on actual data, rather than on fears or blanket assertions,” said Josh Mandelbaum, who submitted comments on behalf of seven environmental organizations including the Environmental Law & Policy Center, where he is a staff attorney.

The enthusiasm expressed for distributed energy comes just weeks after the Iowa legislature opted not to move ahead on three bills that would have advanced solar energy in the state. One of them proposed a new renewable energy standard requiring 105 megawatts of solar by 2017. Another would have doubled the amount of state tax credit funds available to subsidize installation of on-site renewables.

In a phone interview, Rep. Charles Isenhart said the utilities board, with the information gleaned from this information-gathering exercise, could add considerable heft to legislation aimed at fostering more distributed generation.

In the general assembly, he said, “It’s easier for us to move legislation that comes from agencies.” Proposals from the IUB that favor distributed energy “are going to get more serious consideration than if they came from a different direction.”

In comments submitted to the regulatory agency, Isenhart and two dozen legislative colleagues proposed:

• Establishing a solar renewable energy standard,
• maintaining the existing net metering law, which allows some utility customers whose systems produce excess power to earn credits against future bills,
• allowing several new financing methods, including third party power purchase agreements,
• and avoiding extra charges on small generators, at least until a cost-benefit analysis has been completed

Other ideas

Those who submitted comments addressed many other issues. Several parties wanted the state to extend existing incentives to industries for the development of combined heat and power, a largely untapped technology with substantial potential in Iowa to reduce industrial power use by generating both heat and electricity with a single fuel source.

Others urged the board to extend net metering, which now is available primarily only to customers of large investor-owned utilities, to customer/owners of rural electric cooperatives and municipal utilities.

Still others pointed to a need to update interconnection standards. Moving ahead with a distributed generation project requires an interconnection agreement with the local utility. And while the state’s large investor-owned utilities must comply with interconnection standards, “The customers of the cooperatives and municipal utilities in Iowa do not have that same level of predictability,” said Steve Guyer, president of GWA International, an Iowa designer and installer of solar systems. “In fact, many of the cooperatives and municipal utilities have policies in place that unduly increase the costs of interconnection.”

James L. Eliason, who identified himself as a retired scientist, expressed a common view that the transition to distributed energy is inevitable.

“I think the future of nearly all technological issues is decentralization,” he wrote. “The internet has decentralized information generation and transmission, and energy generation and transmission will not be far behind.”

Iowa solar installation

Move over wind? Solar energy market ‘exploding’ in Iowa

Move over wind? Solar energy market ‘exploding’ in Iowa

Workers install solar panels on a hog farm near Grinell, Iowa earlier this year. (Photo by Moxie Solar, used with permission)

Workers install solar panels on a hog farm near Grinnell, Iowa earlier this year. (Photo by Moxie Solar, used with permission)

Iowa is well established as a national leader in wind energy and biofuels. And now the state is poised for serious growth in solar as well.

“The market is exploding in Iowa,” says Tim Dwight, a former Iowa Hawkeye and NFL star who has become one of his home state’s most visible solar energy advocates.

Homeowners, farmers, businesses and at least one school district in Iowa are going solar. Also, over the past year, several municipal utilities and rural electric co-ops have put up solar arrays, inviting customers to buy a share of the power generated.

“Solar growth in Iowa is where wind was in the first decade of the 2000s,” says Bill Haman of  the Iowa Energy Center. “We saw an explosion in wind.”

In Frytown, just outside Iowa City, the Farmers Electric Cooperative has been steadily adding on to a community solar project established on its property in 2011. And a few weeks ago, the co-op announced plans to put together a 750-kilowatt solar farm, which would be the largest solar-energy project in the state. It’s projected to meet about 15 percent of the co-op’s demand for power.

In September, the Iowa Association of Municipal Utilities put an 18-kilowatt array on the roofs of several buildings at its headquarters in Ankeny.

And in November, several organizations snagged a $1 million grant from the Department of Energy to streamline local permitting and zoning codes, and improve standards for connecting solar generation to the grid. The aim: to cut the time and costs of adding solar generation. State lawmakers who attended a recent solar tour have pledged to help.

Incentives high, costs low

Iowa’s solar capacity remains a tiny fraction of its overall energy mix — at the end of 2012 the state had only about 1 MW of solar installed compared to more than 5,000 MW of wind.

But the same market forces driving solar growth in other parts of the country are being felt in the heartland, too.

The biggest factor driving all of the fireworks, according to Haman, not surprisingly, is money.

“Incentives are at an all-time high, and costs are at an all-time low,” he said. The cost per watt is between $3 and $3.50 now, compared with a range of about $7 to $10 several years ago.

Systems typically pay for themselves within a decade now, given federal and state tax credits and, in much of central and eastern Iowa, a subsidy available to customers of Alliant Energy. A decade ago, Haman said, recouping the costs of a solar installation could take 30 to 50 years.

Haman says money is not the only factor, though. He said Iowans have been waking up to solar power – an observation shared by Warren McKenna, the general manager of the Farmers Electric Co-op.

Finding himself on sort of a solar-energy lecture circuit of late, McKenna gets to listen to lots of people. And he says they’ve been taking notice of solar panels in other places – Minnesota, Colorado, California — and have been pressing their utilities to get on board.

Traer Municipal Utilities installed a 40-kilowatt community solar project a few months ago, said manager Pat Stief. All 106 panels have been purchased by 42 customers. They paid $530 per panel, rated at 305 watts, and will see a credit on their monthly bill for 20 years.

The Hawkeye Rural Electric Cooperative in northeast Iowa intends to put 25 kilowatts of panels on its property in Cresco, and also will invite members to invest in a share of the power. Ted Kjos, manager of marketing and communications, is looking ahead to a possible second phase.

“We’ve done a survey of our membership. A significant amount of our membership is interested in the co-op providing this,” he said.

Utility incentives coming to an end

Solar in Iowa has gotten probably its greatest single boost from Alliant Energy. In 2008, when Alliant put together its efficiency plan, designed to outline efficiency efforts through 2013, it proposed to subsidize small, on-site renewable energy projects.

For the first few years, there were very few takers. But the story’s changed dramatically in the past year.

Haman, from the Iowa Energy Center, manages a state revolving loan fund that provides interest-free money to help people pay the upfront costs of installing renewable energy systems at their homes or businesses.

He said there’s been “a steep rise” this year in the number of people seeking loans for solar panels.

“They’ve all come in in this past quarter,” he said, and nearly all of them – at least 40 out of 45 solar projects that have been processed – are from within the Alliant territory.

Installer Michele Wei concurs that there’s been a mad dash of late.

Her business with Alliant picked up a little steam in 2012, but this year, she said, “It was like, ‘Oh boy – it’s ending!’”

The Decorah Community School District, interested in putting panels atop several schools, has scurried to get its application in before the program expires. Superintendent Michael Haluska said the district will start small – probably about 24 kilowatts atop three or four schools.

It would be just enough to “max out the Alliant rebate,” he said. “We don’t want to lose the opportunity for that rebate.”

And while there’s nothing like a deadline to organize the mind, several people familiar with solar matters in Iowa said that Alliant Energy could – and should – have made a greater effort to publicize the subsidy for on-site renewables, which it will be terminating as of Dec. 31. The utility claimed that not many people were taking advantage of it.

Haman suggested that might have been because Alliant’s effort to publicize it “wasn’t a very aggressive marketing campaign.”

Wei went a bit further, characterizing the solar rebate as a “best-kept secret. If you don’t go on their web site, you don’t know about it.”

Jennifer Easler, an attorney with the Iowa Office of Consumer Advocate, said that an outside committee convened to review Alliant’s efficiency programs recommended “a stronger outreach effort.”

Justin Foss, a spokesman for Alliant Energy, said that the company routinely informs customers of efficiency benefits, like the on-site solar rebate, through articles in a company newsletter that goes out with monthly bills.

The network of solar dealers working in the state is “the best collection point” for getting such information out, he said.

But when Alliant has changed procedures and moved up deadlines, Wei said, the utility has failed to keep installers up to date.

“There’s a lack of knowledge that the rebate is out there,” said Dwight, who is president of the Iowa Solar Energy Trade Association. “There’s not very strong advocacy of solar from the utilities. They don’t do a good job of educating customers.”

Meanwhile, business remains brisk for installers like Wei.

“We (installed) seven systems in the last month,” she said. “That’s definitely much more than we did last year. Since April or May, we’ve been installing nonstop.”