Ruling will strangle Iowa's solar industry
The Iowa Utilities Board recently accepted a proposed rule change from Alliant Energy. This new ruling will drastically change how net metering works in Alliant Energy’s service territory and will reduce the financial viability of new solar installations. The new net metering rules, to be implemented April 1, will strangle Iowa’s solar industry and hurt Iowa’s families and businesses.
Last summer, the utilities board asked Iowa’s utilities to develop net metering pilot projects “for the purpose of expanding renewable distributed generation in Iowa.” According to the board, the aim was to clarify Iowa’s net metering rules and encourage development of more solar and wind projects.
The proposal from Alliant Energy does just the opposite. It makes the choice to go solar harder for homeowners and businesses. Much to the surprise of many in the solar industry, the board accepted Alliant Energy’s proposal.
The new rules from Alliant Energy place an arbitrary cap on net metering, which will reduce the amount that can be net metered in future solar installations. Under the current rules, net metering has a natural cap of a customer’s total annual energy usage — how many kilowatt-hours (kWh) of electricity are used in a year. The current rules are easy to understand and a fair deal for Iowa’s utilities and their customers.
Under the new rules, the net metering cap for residential and small business customers will be based on a percentage of the customer’s annual energy usage. We’ve calculated that the change will reduce available net metering by 62 percent for residential customers and by 68 percent for small business customers. Solar installations larger than the cap won’t make financial sense. This is an extraordinarily complex and opaque system — among the most complicated in the nation.
Here’s an example: Under the current rules a typical Iowa household using about 12,000 kWh of electricity per year could purchase a 10 kW solar installation that would save the family $1,560 in the first year and pay for itself completely within 10-11 years. Under the new rules, only 3.43 kW of the same 10 kW installation would be eligible for net metering, and would save the same family only $979 per year, taking 18-19 years to pay for itself.
It gets worse. If a customer builds a smaller system that matches the new net-metering caps, that customer still has to pay all of the same fixed costs, including the grid interconnection, feasibility study, and more. The smaller the system, the higher the cost per watt. Small solar systems simply hit a point where they are not financially viable. On top of that, Alliant Energy increased the fees for its solar interconnection process from $50 to $425 or more for a typical residential project.
It is our opinion that these new net metering rules are the death knell for residential solar in Alliant Energy’s service territory in Iowa. It will no longer be financially viable for families to choose renewable solar power and lower energy bills, which we believe should be a right available for any Iowan.
This is bad news for Iowans. The board’s decision robs Iowans’ of their choices, hurts Iowa’s economy, and takes money out of the pockets of Iowa families and businesses. A customer of ours, Steffensmeier Welding & Manufacturing of Pilot Grove, Iowa, saves over $90,000 per year with its solar installation. That $90,000 saved can be spent on more tools, more training, and more jobs. Similar economic boosts for rural communities like Pilot Grove are desperately needed throughout Iowa, but now they’re off the table. The Steffensmeier project would not happen under the new rules.
The ruling damages Iowa’s economy and kills jobs. Residential and commercial projects account for the majority of solar installations in the state. With those either reduced or completely eliminated, most of Iowa’s solar companies will be faced with a stark choice: move to another state or go out of business. Iowa’s solar workforce — including trained installers, licensed electricians, engineers, solar designers, and support staff — may follow the work out of state.
In Forbes, Niall McCarthy reports that, “In the United States, more people were employed in solar power last year than in generating electricity through coal, gas and oil energy combined.” The solar industry added almost 74,000 new jobs last year. Iowa’s share of those jobs will shrink. Meanwhile, neighboring states are going in the opposite direction. Illinois streamlined its Renewable Portfolio Standard and Missouri is encouraging more residential solar with its Property Assessed Clean Energy Program.
We urge all Iowans to honor the mission of Lt. Gov. Kim Reynolds’ Iowa Energy Plan to “Support distributed renewable energy generation including wind, solar, and other clean energy resources in Iowa.” Our rights and economy are at stake.
• Former U.S. Navy SEAL Troy Van Beek is the founder and CEO of Ideal Energy, a veteran-owned business located in Fairfield.