Should the Price of Solar Power be Dictated by Where the Panels Sit?

by Henry Kaplan | May 19, 2014 |

David Hommrich, president of a solar energy company, is suing electric utility PPL, trying to force the utility to buy electricity from his solar farm at the same price they sell it.

Let’s back up. PPL, an electric utility in Pennsylvania and Kentucky, offers net-metering to “non-utility” “customer-generators.” If a business or resident installs solar panels on their property, they can feed the solar power they generate back into the utility’s grid, and PPL will credit them the money at the same rate they sell it. That seems to make sense – if you buy a certain amount of energy for a dollar, you can put that much back in and get a dollar back. (Net-metering: your electricity meter only reflects the net amount of energy you consume. Get it?)

Many utilities, however, aren’t thrilled about buying electricity for retail prices, since they buy it from energy producers at wholesale prices. That’s why net-metering is restricted to customer-generators. It allows people to offset their energy consumption.

But that idea – offsetting energy consumption – is a bit of an illusion. It’s true that a home with solar panels reduces the demand for energy from other sources. But those panels don’t necessarily power the home they sit on. They’re collecting solar power in the middle of the day, often when people are out, lights are off, and homes are consuming less energy. That’s when the solar power gets sold back into the wider grid. Then, after dark, the homeowners come home, turn on the lights and TV, and start pulling energy from the grid, not from the solar panels on the roof.

But since each megawatt-hour costs the same amount in each direction, the trick works. In the end, the customer-generator pays as if the energy from their panels had gone straight to their building, even if the electricity actually went somewhere else.

Hommrich wants to take advantage of that idea. He wants PPL to treat his solar panel array like other arrays at residences and workplaces. Except that he doesn’t have a resident or workplace connected to his array. It’s just a solar array. And Hommrich wants PPL to pay him the rate PPL pays net-metered customer-generators, not the wholesale rate they pay large-scale energy generators.

Now the Public Utilities Commission needs to decide if net-metering applies to a generator that isn’t offsetting an existing demand. And Hommrich sounds like he has a guess about their decision. The Morning Call quotes him as saying “Given the commission's proclivity for testing the boundaries of legislative intent, it is likely that their proposed rulemaking will need to be resolved in court.” The paper says that he hopes to use his lawsuit to set a precedent.

Net-metering was put in place to encourage people to install solar panels and reduce their demand for fossil fuels. That’s what Hommrich is doing. And technically, Hommrich’s setup isn’t all that different from many other net-metering customers. But a solar panel array in a field tells a far different story than a solar panel array on a family’s roof.

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