The federal climate legislation that is embedded in the Inflation Reduction Act of 2022 is one of the most enlightened social policies targeted at mitigating climate change that you could design. It incentivizes solar installations, it incentivizes solar equipment manufacturing, and it portends to shift the needle on the US response to climate stress rather dramatically. The entire length of the supply chain from the cell to the electricity use by the consumer will be transformed by this legislation.
There is tension brewing in the implementation of federal climate legislation at the state level, as can be seen in Laura Sherman’s recent blog post “Rooftop solar fight arrives in Michigan.” Some states are resisting the transition to solar, and in fact, allowing power companies and others to restrict movement to solar by the individual and the commercial client. My state of Indiana, for example, has grandfathered out net metering, so all but the early adopters will not be able to benefit fully by sending excess power to the grid.
We all know that the grid needs to generate power, particularly at peak demand periods, and without relying on fossil fuels to do so. So instead of joining the movement to incentivize solar, some states are impeding the process. Beyond legislating away the prospects of net metering in Indiana, the Indiana Attorney General is trying to ensure that public investments cannot focus on companies that promote ESG, yet another example of trying to restrict corporate efforts to address climate change.
GO DEEPER: Jose Zayas, EVP of Policy and Programs, American Council on Renewable Energy joined the Factor This! podcast to break down the key components of the historic Inflation Reduction Act, which includes $369 billion dedicated to clean energy and climate change.
In fact, 14 of our 50 states have been graded as a D or F in the 2021 Solar Review guide to the state of net metering. So as the federal government tries to push us toward solar manufacturing and power production (and alternative energy sources more generally), nearly 30% of our states are pushing back by restricting the broadest range of the incentive structures available.
I think we all understand that utility companies have invested in the infrastructure to carry power around our communities by bringing it into houses, businesses, and houses of worship. In some instances, they also take excess power from these consumers and put it back into the grid. To the extent that utilities and state governments restrict net metering they either get the power from consumers at a reduced rate or they disincentivize consumers from trying to move toward alternative energy sources in the first place. In most cases, however, the investments that have generated the national grid structure have been under monopolistic conditions, effectively supported by state and local governments.
I am cognizant that the movement from centrally generated to distributed power generation must worry utilities. The solution however is not to ban progress but rather work with it to create systems that continue to advance climate remediation efforts. Utilities would of course like to transition from coal and gas to solar and wind and simply control that centralized model of power generation. That will have its place in our transition from fossil fuels to alternatives, but it cannot remain in a monopolistic position with regard to energy production. That would likely cost us the climate and by extension, the environment in which we live.
Imagine at the limit that utility companies only controlled the power infrastructure and 100% of the power was generated by home and business owners through rooftop or ground mounted systems. Carbon emissions would plummet and so might the fortunes of our public and private utilities, but I think not. If all that the utilities did was transfer power around the system, there could simply be a charge to this service, similar to the service charge we all pay for our grid connections today. What is the value of excess power generated from my house being distributed to a neighbor who cannot yet afford solar? I do not have an answer but it cannot be a difficult calculation. So, to wean ourselves from fossil fuel-generated energy we all pay a service fee to companies that maintain and distribute power. This is not a big deal, we do it with roads, airports, and the like. The question is not one of possibilities but rather one of control of the system. This system must change and, in many states, it is changing to meet the times; in others, there are retrograde efforts that appear to privilege utility companies over the transition to alternatives. This has got to change.
At Crossroads Solar we build solar panels to incentivize men and women transitioning from prison to get their lives back together, we build panels for residential and commercial customers who want to reduce their reliance on fossil fuel-generated electricity, and we build panels to contribute our small bit to easing the burden on the planet that results from excess CO2 emissions. But Crossroads’ missions are degraded to the extent that state governments try to impede the efforts of federal policy to incentivize the movement to alternative energies. I’m sure Crossroads is not alone in confronting the tension between federal policy and state efforts to impede that progress; we must collectively right this ship before it is too late.
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Author: Patrick Regan