Solar energy sector facing challenges in Iowa

Utilities want owners to pay more of fixed costs

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WASHINGTON COUNTY — How big is solar in Iowa? Can solar energy become the next wind power?

Drive through Washington County, and it seems virtually every hog and turkey barn boasts solar panels on the roof.

Washington County, where virtually every hog and turkey barn has solar panels on the roof, leads the state in commercial solar installations, according to SEIA. Winneshiek County has more residential solar than any other county in Iowa.

In fact, Washington County had 88 solar energy projects with over $700,000 in state tax credits between 2012 and 2014, according to the Iowa Department of Revenue. Linn County had 34 projects during the same period with more than $150,000 in state tax credits.

Across the state, as the price of photovoltaic cells and related equipment continues to decline and technology continues to improve, more businesses and homeowners are installing solar energy systems to cut their utility bills.

The latest figures from the Washington, D.C.-based Solar Energy Industries Association (SEIA) show roughly 27 megawatts of solar energy have been installed in Iowa. That ranks the state 29th in the country in installed solar capacity.

Contrast that with wind-generated energy, in which Iowa ranks No. 1 in the nation with more than 31.3 percent of its electricity generated by wind turbines, according to the U.S. Energy Information Administration.

“We are probably where the wind industry was 10 or 12 years ago,” said Barry Shear, president and CEO of Eagle Point Solar of Dubuque. “We will certainly not get to the place where wind is because of the nature of solar.

“Solar can be a wonderful energy source that complements wind, which typically produces better at night than in the daytime. Solar obviously does not produce electricity at night.”

Installed solar photovoltaic system prices in the Iowa have dropped steadily — by 6 percent from 2014 and 48 percent from 2010, according to SEIA. Last year, $16 million was invested on solar panels and related equipment in Iowa to install 6 megawatts of solar electric capacity.

Meanwhile, there are roughly 50 companies in the state employing more than 300 people in the solar energy supply chain, according to SEIA.

That includes 30 contractor/installers, eight manufacturers, four product developers, two distributors and three companies engaged in other solar activities such as financing, engineering or legal support.

Moxie Solar of North Liberty is an example of a relatively young but growing renewable energy contractor specializing in solar power. The company, with 18 employees, has experienced three-year revenue growth of 536 percent.

“We have seen demand grow progressively year over year for the last three years,” said Jason Hall, Moxie Solar founder and CEO. “It has become more acceptable commercially to talk about solar energy.

“I think we will continue to see the industry growing in Iowa as long as the costs continue to go down. The tax credits will be in effect through 2022.

“If we can drop off 5 percent of our costs per year, I think we will be ready when the tax credits expire.”

‘Strong demand’

Livestock farmers are credited with the early growth of solar energy investment in Iowa. Many have installed solar panels on the roofs of their hog or turkey barns, while others have added ground-mounted systems.

“There still is a strong demand for solar in Eastern Iowa,” said Bill Haman, renewable energy program manager with the Iowa Energy Center in Ames. But compared to wind?

“I don’t see near the interest in solar in northwestern Iowa, where there are strong resources for wind-generated energy.”

Alliant Energy and MidAmerican Energy allow owners of solar- and wind-energy-generating equipment to get full retail credit on a kilowatt-per-kilowatt basis for excess electricity that they send to the utilities on their grid. Haman said solar and wind energy have been popular with farmers and rural Iowa residents because of the net metering rate or tariff allowed by the utilities.

“Without the net-metering tariff, the cash flow does not look nearly as attractive — even with the state and federal tax credits,” Haman said.

Alliant Energy and MidAmerican Energy have submitted “notices of inquiry” or pilot proposals to the Iowa Utilities Board to address their concerns about shifting fixed costs from solar energy generators to non-solar customers.

“The full retail credit is higher than what it costs us to generate that power and deliver it to them,” said Michael Fehr, vice president of resource development at MidAmerican Energy. “Under the current net metering arrangement, solar energy adopters are not paying their fair share of the fixed costs of the poles, transmission lines and substations. That cost is being paid by nonsolar users.”

Fehr said MidAmerican Energy is not opposed to expansion of private solar in Iowa.

“We want to make sure that any pricing is beneficial to all of our customers,” he said.

“Iowa law does not allow regulated utilities to discriminate between their customers," Haman said. "A residential customer with solar energy cannot be treated any different from a residential customer without solar energy.”

Alliant and MidAmerican have proposed that any residential customer with distributed energy — solar or wind — will be in a class of their own, Haman said.

“Once you are in a class of your own, they can treat you anyway they want and not be discriminating against you,” he said. “I think that came about largely because of the attempt by the Pella REC (rural electric cooperative) to arbitrarily tack a $50 surcharge per month on its customers who had solar energy on their property. That was quickly challenged by the Iowa Consumer Advocate, who contended it was discriminatory and the number was arbitrary.

“There was no way the utility had sharpened its pencil to be able to show a solar customer actually cost it $50 more per month than a non-solar customer. The REC ultimately withdrew the surcharge.”

Amazing space

At the same time it is working to create an equitable pricing structure for solar energy, Alliant Energy has committed to install a 155-kilowatt solar power system at the Indian Creek Nature Center’s $6.9 million Amazing Space learning facility.

Doug Kopp, president of Alliant Energy Interstate Power and Light, said the facility — due to open later this year — will provide a test site for the utility to learn more about how solar energy affects its electrical grid as well as what solar panels provide the best results.

Kopp said the company will treat the Indian Creek solar array as a generating unit, much the same as a wind turbine farm. It will be the company’s first utility-owned solar generation site.

John Myers, executive director of Indian Creek Nature Center, said Alliant Energy’s partnership made a solar energy system financially feasible for the Cedar Rapids not-for-profit.

“Because we do not pay taxes, we were not eligible for any of the tax credits,” Myers said. “We essentially would have had to pay full price for the system.

“That led me down the road to partner with Alliant Energy and the opportunity to take solar energy research to the next level.”

Representatives of The Eastern Iowa Airport earlier this month visited Alliant Energy’s solar energy learning laboratory at the company’s corporate headquarters in Madison, Wis. Airport Director Marty Lenss said the third phase of a $50 million passenger terminal renovation project will involve replacing the roof on the B and C concourses.

“We are completing the preliminary design of what a roof-mounted solar system would look like, including a shadow study of roof-mounted air-conditioning units,” Lenss said. “We’re going to continue our dialogue with Alliant Energy and sharpen our pencil to see if it makes financial sense.”

The airport would not qualify for tax state and federal tax credits. Lenss said one of the questions that needs to be answered is whether it would better to have a third party own the system and share the output with the airport.

“A third party would qualify for the tax credits,” Lenss said. “Right now, it’s very early. I am unable to tell you for certain if we’re going to do it, but I’m optimistic we will have a solar system on top of the terminal.”

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