Free Solar Panels? Why this Arizona Utility Wants to Give them Away.

by Henry Kaplan | Jul 30, 2014 |

Though many utility companies are struggling to accommodate rooftop solar panels, Arizona’s largest electric utility is diving in headfirst. Arizona Public Service wants regulators to approve its plan to buy rooftop solar panels and install them on 3,000 homes for free. The homeowners wouldn’t own the solar panels and wouldn’t own the electricity they put out, but the utility would give them a monthly credit of $30 for 20 years, adding up to $7,200 over time.

We’ve seen rooftop solar panels cause plenty of trouble for utilities in Hawaii and other places. Rooftop solar panels don’t just power the house they sit on – they pump energy back into the wider power grid, and can their energy can power the homes and buildings around them. That setup is called net-metering, in which customers only pay for their net energy consumption, offsetting their energy costs by generating their own power with solar panels and pumping it back into the grid.

Many electric utilities aren’t thrilled about this idea. They want more control over their systems – they may not want to see a sudden spike in energy production on sunny afternoons, when they can’t easily and quickly lower energy production from other energy sources to compensate. And they don’t want to buy power from their customers at retail prices, which this setup forces them to do.

So why is this APS so eager to install more rooftop solar panels, when their Hawaiian counterpart has put a moratorium on rooftop solar?

Well, for one, APS seems to have found a way around net-metering, and the problems it poses for utilities. Under their new plan, the utility controls the solar panels, not the homeowner. The utility gets to choose where they are installed and how. (While a homeowner who buys solar panels would likely want to maximize each panel’s total energy production by angling it to get the most sun, a utility might want to angle some of those panels so that the system as a whole collects solar power more evenly throughout the day, avoiding unhelpful spikes in energy output during times of low demand.)

Perhaps most importantly, this proposed system works out in the utility’s favor financially. Unlike a net-metering setup, they won’t have to buy power back from their customers at retail prices. Instead, they pay a flat rate of $30/month. In essence, they want to strike a deal with homeowners that’s not all that different from the deals they make with large-scale energy producers – the utility locks in a cheap rate for energy and promises a stable, long-term arrangement in exchange.

So will homeowners go for it? Homeowners could likely do better financially by buying their own solar panels and taking advantage of net-metering. But the APS proposal has its advantages for homeowners as well. It takes away the up-front costs of buying and installing solar panels, which usually run in the five figures. And this proposed program offers stability, telling homeowners in advance exactly how much they’ll save each month. Homeowners who install their own solar panels take a gamble – their savings can quickly be cut down regulatory or legislative changes. Our energy system is still very much unsettled when it comes to handling rooftop solar. In Arizona alone, a recent court decision raised taxes unexpectedly on homeowners who lease, rather than buy, solar panels.

The program faces pushback from solar panel leasing companies. But it shows forward thinking from the utility – rather than struggling to deal with the impact of leased or homeowner-owned solar panels on their power grid, they want to get in the game themselves.

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