Officials see ‘steady progress’ with Michigan’s net metering program

Michigan’s net metering program grew by 20 percent in 2015 due to growing interest in small-scale, on-site solar generation, according to new data from state regulators.

A staffer with the Michigan Public Service Commission also said growth may have been “tempered” last year due to uncertainty with how the program would be structured. As part of ongoing energy policy discussions at the Republican-led state legislature, lawmakers have proposed changing the financing structure of net metering in a way that has come under attack by clean-energy advocates.

“I characterize the increase as steady progress, and I think it may have been tempered a little by the fact that the legislature is looking at making some changes to the net metering program,” said Julie Baldwin, renewable energy manager for the MPSC. “It threw in some uncertainty, maybe making it a little difficult for solar installers to do a project.”

However, the extension of a federal tax credit for solar projects was a “wonderful thing,” Baldwin added.

Participation grew from 1,840 customers and 1,947 installations in 2014 to 2,155 customers and 2,289 in 2015, according to MPSC figures. Net metering installations comprise just over 17 megawatts of generation, which grew nearly 3 megawatts from the previous year.

While most of the program involves solar projects smaller than 20 kilowatts, the MPSC report shows significant growth in “category 2” installations between 20 kW and 150 kW.

“I think some solar installers are actively marketing to the farming community where there is more land and room to do ground-mounted projects,” Baldwin said.

In a statement, Michigan Energy Innovation Business Council President Liesl Eichler Clark said: “Yet again, we are seeing that Michigan ratepayers are turning to solar power and on-site renewables. As more and more homeowners and businesses make the switch, the solar contagion effect becomes increasingly apparent.”

Still, the MPSC notes that net metering generation makes up less than .02 percent of Michigan’s total retail sales. Baldwin declined to forecast future growth considering potential changes under consideration at the legislature.

The state’s net metering program started in 2009 following the passage of Michigan’s renewable energy law mandating 10 percent of electric generation come from renewables by 2015.

Customers receive a bill credit at retail rates for excess generation sent back to the grid. Programs are capped at 1 percent of a regulated utility’s peak demand, which is further broken down into categories for small and larger-scale installations.

Some advocates say the program cap size should be expanded as ratepayers face limited availability in some parts of the state. The Upper Peninsula Power Co. was the first utility in the state to reach its cap for small installations in July, while major utilities DTE Energy and Consumers Energy still have 83 percent and 94 percent of program space available, respectively.

Larry Ward, executive director of the Michigan Conservative Energy Forum, said he’s not surprised by the 20 percent growth figure and particular interest from the U.P., where in some areas electric rates are double what they are downstate.

“Where lawmakers are starting to steer net metering laws will preclude future growth,” he said.

DTE and Consumers have been supportive of proposals that reimburse net metering customers at wholesale rates rather than retail as part of what’s known as a “buy-all, sell-all model.” Under such a proposal, net metering customers would purchase all of their electricity needs from their utility at retail rates and sell back generation at wholesale rates.

“This whole buy-all, sell-all model will absolutely decimate the solar industry if it goes through,” Ward said.

The MCEF supports expanding the .5 percent cap on the program’s size, finding the true cost of solar on all ratepayers and figuring out a fixed cost to be interconnected to the grid whether you net meter or not, he said.

“There is a lot of potential upside if legislators get it right. Is the status quo good enough? I hear some solar advocates saying ‘leave it where it is.’ But that’s not going to expand it,” Ward said.

A Consumers official said the utility continues to see “steady growth” in the number of net metering customers and it anticipates “modest growth levels going forward.” The utility has maintained that restructuring net metering is a matter of fairness among all ratepayers.

“It’s important that all customers pay their fair share of essential electric infrastructure costs and therefore it’s encouraging that state policymakers have identified fair cost allocation as an important principle here,” spokesperson Dan Bishop said.

The MPSC has not taken a formal position on the cross-subsidization debate.

“Without a study similar to what some other states have done, it’s hard to know if there is a subsidy or which way it goes,” Baldwin said.

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