Utilities push back against growth of rooftop solar panels

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In most states, utilities pay solar customers for power they send back to the grid. But there's a battle over what that sun-fueled energy is worth.

One of the biggest thrills Lynn Krell and her husband felt after they installed solar panels on the roof of their Hattiesburg, Mississippi, home was watching their power meter run backward as their utility credited them for excess power they sold back to the grid.

Those credits also showed up on their electricity bill, helping to cut their average monthly payments by $11 — in addition to the $250 or so they saved during peak summer months by using solar power themselves. 

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But eventually the Krells began to question the value of the credits. The Krells learned that Mississippi regulations allowed utility companies to buy roof-generated solar power at a small fraction of the retail rate they charge to deliver that power back to customers’ homes. The Krells talked to rooftop solar owners in other states where more generous compensation rules allowed them to offset their entire electricity bills. 

It felt unfair.

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“I’m royally ticked,” Krell, 63, said.

Mississippi, which gets a lot of sun, was one of the last states to give subsidies to people who install solar panels on their roofs in 2015, and those subsidies remain among the stingiest in the country. Thirty-seven states reimburse at the full retail rate, but Mississippi offers significantly less. That, experts say, is one of the reasons rooftop solar hasn’t caught on there. Only 586 Mississippi households have the technology. 

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How to fix that is the subject of a fight before the Mississippi Public Service Commission, which is considering rules that would expand subsidies for rooftop solar. The battle is one of several around the country that could determine the future of home solar panels, which advocates say are crucial to weaning the energy system off power sources that emit carbon dioxide, a major cause of global warming.

Rooftop solar has a “huge potential” to cut air pollution, create jobs, protect against outages and shrink utility bills, said Mark Jacobson, a professor of civil and environmental engineering at Stanford University. The technology will be vital for the U.S. to make the transition to all-renewable energy by 2050, he said.

“It’s such a low-hanging fruit, such an easy thing to do, to put panels on people’s roofs,” Jacobson said. “We are really shooting ourselves in the foot by not doing it.”

The question is who pays for it.

Lynn krell at her home in hattiesburg.
Lynn Krell at her home in Hattiesburg. Bryan Tarnowski for NBC News

Almost every state offers some kind of credit to rooftop solar owners who send excess power to the grid. But as solar power has become cheaper and more widespread, utilities in some states have pushed to curb the payments, said Autumn Proudlove, senior policy program director at the NC Clean Energy Technology Center at North Carolina State University. 

In Florida, the state’s largest utility persuaded lawmakers to vote to gut the state’s rooftop solar credits, a measure that Gov. Ron DeSantis, a Republican, vetoed last week, saying it would hurt consumers. In California, state regulators, at utilities’ urging, are considering whether to cut rooftop solar incentives. In North Carolina, utility-backed proposals to change the state’s relatively generous rooftop solar subsidies have split environmentalists, with opponents saying the plan puts solar customers and installers in financial risk. 

In Mississippi, the dispute pits environmentalists and solar companies against the state’s largest utilities, Mississippi Power and Entergy Mississippi, regional monopolies whose business models depend on building power plants and transmission lines that deliver electricity to homes. Most of that power is created by burning fossil fuels, but the utilities are also expanding their own solar offerings. They have resisted competition from rooftop panels, in part by asking regulators to limit the financial incentives for customers to install them, saying they are unfair to low-income customers.

“The utilities are kicking and screaming, crying foul, saying this is horrible,” said Louie Miller, the Mississippi director of the Sierra Club. “They have a protected market. They are a monopoly, for God’s sake. But there are people who want to have clean energy and the right to self-generate.”  

Representatives of Mississippi Power and Entergy Mississippi declined requests for interviews. In recent filings with the Mississippi Public Service Commission, the companies argued that sweetening solar subsidies would lead to higher costs for customers who can’t afford solar panels. 

“Rooftop solar is not economic for the majority of customers, and any efforts of the Commission to artificially enhance these economics will be financially shouldered by the non-participating customers,” Mississippi Power said in a February filing.

That question remains unsettled. Some studies have supported the utilities’ argument, while others haven’t. One, performed by Lawrence Berkeley National Laboratory in 2017, found that rooftop solar’s effect on electricity prices “will likely remain negligible for the foreseeable future” but that the costs could rise in states with “exceptionally high” rates of rooftop solar adoption.

Despite efforts from solar installers and environmentalists, it seems unlikely that reimbursement rates for rooftop panel owners will increase in Mississippi. But the utilities may have to offer other incentives. 

In January, the Mississippi Public Service Commission proposed new rules that would add $3,000 cash rebates for low- and middle-income customers who install rooftop solar systems. Mississippi Power argued against the rebates in a February filing to the commission; Entergy Mississippi, which hasn’t opposed the rebates, said its acceptance depends on what the final rules say. The commission is expected to vote on the change in the coming weeks. 

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