New data from Arkansas's investor-owned utilities and electrical cooperatives offers evidence that the number of private solar and wind electricity generators is surging. Whether that's fair market forces or a looming, potentially gloomy regulatory decision on rates is up for debate.
Solar power generators, also known as "net metering customers," jumped 56 percent in 2017, from 632 to 988. That's a fraction of the 1.4 million customers in the state who's rates are set by an agency called the Public Service Commission.
"The cost of a kilowatt-hour is so much cheaper now than it used to be," says Terry Tremwel, a renewable energy advocate and chairman of Picasolar in Fayetteville, "and it’s much cheaper than the alternatives ... [which] is natural gas right now, but coal-fired plants and nuclear plants are the other sources of energy in our region."
Very soon, the commission is expected to decide a matter critical to renewable energy system investment — whether to substantially lower the credits earned from utilities by those who install wind or, more likely, solar power systems when they feed excess electricity back to the electrical grid.
For more than a year Entergy, SWEPCo and other utilities, along with the Arkansas Attorney General's office and the full-time staff of the Public Service Commission, have argued that the current 1:1 rate structure is unfair: that is, for every kilowatt-hour supplied a kilowatt-hour is taken off customers bills. For one, utilities themselves don't pay that retail rate; they pay a wholesale rate and should only be forced to "buy" a wholesale rate of electricity back from a customer. For another, the electrical grid as well as administrative costs are rolled into the kilowatt-hour usage rates, and customers who generate their own power and maintain a connection to the grid aren't paying their share of costs.
Meanwhile, alternative energy investors, from private residents to million-dollar companies like hospitals and factories, have argued that what's "fair" can't be determined by such a small sample. There are only hundreds of net metering customers to date.
"The overall level of penetration, these [customers] are still very small in terms of the overall load the utility is having to manage," says Katie Niebaum, director of the Arkansas Alternative Energy Association. "We’re not at the tipping point that other states like California have had to manage."
What's more, distributed generation (as it's collectively called) can be a stabilizing influence on the grid and can help shave electrical utilities' peak demand, which occurs during hot summer days, the same conditions optimal for solar power generation.
Months ago, the three-member Public Service Commission voted to lock in the current 1:1 net metering rates for all existing customers for 20 years.
"I anticipate that the fact that the commission has grandfathered customers that have facilities in place, or have an interconnection agreement signed, before it issues its order … may be a factor" in the surge in investment in 2017.
The ranks of net metering customers had been growing each year leading up to 2017, but 56 percent is the greatest surge in any single year by a wide margin, Niebaum said.
Electrical utilities are themselves making huge investments in fields of solar and wind that will produce megawatts, even gigawatts of electricity. If the commission sides with utilities to lower net metering rates, it may have the cumulative effect not so much of discouraging solar investment in toto but simply discouraging it among small and medium players.
"It's exciting to have the utility companies make the decision that renewable energy is now competitive at the wholesale level, ... [and] it’s good when people have choice, so I guess that’s how I would set it up," Tremwel said. "It’s great that utilities are finding value in renewable energy, and it’s good that people have choice, and the fear in changing the net metering ratio is that it will reduce people’s choice."
This story is produced by Arkansas Public Media. What's that? APM is a nonprofit journalism project for all of Arkansas and a collaboration among public media in the state. We're funded in part through a grant from the Corporation for Public Broadcasting, with the support of partner stations KUAR, KUAF, KASU and KTXK. And, we hope, from you! You can learn more and support Arkansas Public Media's reporting at arkansaspublicmedia.org. Arkansas Public Media is Natural State news with context.