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The State of Solar in Iowa

Despite recent legislative decisions and policy approval, the citizens and politicians of Iowa must recognize that the issue of renewable energy is not a political party issue. Iowans must remain steadfast in their adamancy for leadership, funding, and appropriate legislation of renewable energy efforts.

Based on net-metering legislation passed in late July, the state of solar energy in Iowa should be scrutinized. For years, Iowa has led the nation in embracing renewable energies, like wind and solar power, with progressive policy making that made clean energy more accessible to more people.

So what happened?

Three events occurred over the summer that bring into question Iowa’s solar state of affairs:

  1. The Iowa Utilities Board passed new net-metering policies that may end up undermining much of the solar progress Iowa has made in the last 10 years.
  2. The State of Iowa rejected a $1 million grant for the Iowa Energy Center, and subsequently,
  3. Mark Petri resigned from his position as Director of the Iowa Energy Center.

New Net-Metering Policies

Earlier this year, two major utility companies, Alliant Energy and MidAmerican Energy, were asked to submit pilot projects that explored ways to expand rooftop solar. Utility companies across the country are re-envisioning their business model to better account for distributed generation. Companies like Green Mountain Power in Vermont are leaders of this new kind of utility company — one that customizes power offerings similar to a home energy management company.

Alliant and MidAmerican had plenty of innovative, clean energy focused business models to choose from. Instead, their pilot projects did mostly the opposite. Alliant suggested paying their solar customers less, while MidAmerican rallied behind imposing a new demand charge. The good news is that the Iowa Utilities Board rejected much of what the original pilot projects contained. The bad news?

The new policy may seem mostly unchanged. Josh Mandelbaum, an attorney with the Environmental Law and Policy Center said, “They’ve left the structure of net metering in place, and focused on how to expand that in a very narrow way that is on the whole positive.” Supporters of solar must pay attention to Mandelbaum’s last few words: “on the whole positive.”

The new net-metering policy includes three major changes:

  1. Increases net-metering cap from 500kW to 1mW
  2. When customers take energy back from the grid, they’ll be subject to service fees (administration and infrastructure costs)
  3. Energy credits must be cashed out at the end of the year

Let’s focus on the last change: energy credits must be cashed out. In the old net-metering policy, customers generating their own electricity could save those excess credits, which rolled over from year to year, and could be applied to future bills. This credit rollover is one of the biggest benefits of producing your own energy and what makes residential solar a financially viable option for so many families and business owners.

In the new policy, those credits essentially expire at the end of the year. Credits are cashed in to the utility company, who will compensate customers “at the avoided cost rate and the proceeds divided in two: half will go to a utility fund to aid low-income customers, and half will return to the customer.” Barry Shear, president of Eagle Point Solar in Dubuque, IA, says this new cash out of energy credits will “have an adverse effect on the solar development in the state.”

If you produce less than 20,000kWh of energy a month (the average solar customer), the ‘avoided cost’ “falls between one and three cents per kilowatt-hour.”  With the new mandatory cash-out clause, if you have one kWh left over at the end of the year, you’ll receive between one and three cents, divided by two.

This aspect of the new net-metering policy, though benefitting lower-income households, nearly defeats the financial purpose of residential solar. The silver lining is that current solar customers can choose to remain with the old net-metering arrangement. If a solar customer opts for the new net-metering tariff, they cannot switch back to the old. All new solar customers will be automatically enrolled in the new tariff. The policy will be re-evaluated after three years.

Alliant and MidAmerican may not have successfully implemented their pilot projects, but the Iowa Utilities Board’s decision did begin the process of reversing much of the growth and success residential solar has had in the state of Iowa.

With the State’s rejection of a $1 million grant and resignation of the Iowa Energy Center’s Director, there are still questions to be answered. But one thing remains certain: solar advocates in Iowa and across the country must remain diligent in their efforts to ensure fair access to clean energy opportunities, and we must seek to hold the public authorities, officials, and organizations – whom we elect and support to act in our best interests – accountable.

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