Northern Michigan Solar Companies Navigate a Changing Industry
Is solar energy the future of electricity generation? Or is it an expensive fad that is unlikely to generate a real return on investment for consumers?
The answer, it turns out, is harder to find than most think. On the one hand, most measurements show that solar energy is on the rise. According to Department of Energy statistics, the United States generated 96.1 million megawatt hours of solar power in 2018 alone, a figure that has more than tripled since 2014. As of June of this year, the United States had already generated 53.6 million megawatt hours of solar electricity, indicating a possible record year in 2019.
The statistics also look promising at the state level. Michigan ranks lower than most other states in the country for solar irradiance (or solar exposure), a measure of the amount of radiant energy that passes from the sun to the Earth. Yet, according to the Solar Energy Industries Association (SEIA), Michigan had more than 5,300 solar installations in the second quarter of 2019, with a total capacity of 160.31 megawatts – enough to power more than 26,500 homes. Michigan is thriving in solar too: While SEIA currently ranks the state 32nd in solar generation, it also plans to expand solar capacity by 921 megawatts over the next five years, which is enough to ensure a 23rd ranking.
SEIA also has nearly 4,200 Michigan solar jobs, covering 240 companies. Several of these players are local. In 2016, Traverse Town Commissioners approved a resolution to power all of the town’s operations – including municipal buildings, street lights, sewage treatment facilities and other municipal services – with energies renewable by 2020. And in August 2018, board members of Traverse City Light & Power (TCL & P) went further in approving the commitment to generate 100% of power generation at scale. community using renewable resources by 2040. TCL & P’s resolution made Traverse City the first city in Michigan to commit to 100% renewable energy, and one of the top 100 cities in the United States. country.
According to Ken Zebarah, Harvest Solar’s commercial sales manager for Michigan, Indiana and Ohio, Traverse City’s large-scale commitments to solar power have opened up opportunities for homeowners and businesses who might be interested. by installing their own solar systems. Harvest Solar is not local; the company is based in Jackson and serves customers throughout the Midwest. However, Harvest still plays a role in Traverse City’s solar expansion, thanks to the 2.5 megawatt solar field it is building for TCL & P on M-72.
“We build two and a half megawatts there allowing us to build other smaller projects more cost effectively because we can buy better and coordinate logistics better,” Zebarah said. “These larger-scale projects that utilities and cities are starting to implement indirectly make smaller projects more profitable. “
Some solar companies, on the other hand, focus on smaller residential and commercial projects. One example is Traverse Solar, a local startup that offers small-scale solar tracking systems. Solar tracking maximizes the efficiency of configuring solar panels by allowing the panels to follow the arc of the sun across the sky over the course of a day. According to Nathan Bildeaux, CEO of Traverse Solar, the quality of solar panel technology is improving so rapidly that even the solutions offered by the company have evolved considerably in recent years.
“The technology has gotten cheaper and solar panels have gotten better,” Bildeaux said. “Two years ago, we bought 250-watt, 60-cell panels. It’s almost unheard of on a residential scale to buy a panel of this low wattage now. We see 300, 310 panels, up to 400 watts. This allows for great power density, especially at the residential scale where people are space conscious. It makes it much more attractive.
Bildeaux adds that two years ago Traverse Solar’s main products were a two-panel system with a power generation capacity of 500 watts and a four-panel system with 1,000 watts.
“Now we’re going to go to 1,200 watts on a four panel system, and that’s a 20% increase in just two years,” he said.
For Traverse Solar, improvements in price, power density and capacity make residential solar installations a more popular option in northern Michigan. However, Bildeaux also believes that the community’s shift towards renewables – and consumer pressure to take advantage of tax credits before they disappear – are also driving market growth.
“I think we are seeing a greater awareness of renewable energy in general,” Bildeaux said. “A lot of this has to do with the press that Traverse City receives, in particular its goal of becoming 100% renewable with its infrastructure. It puts solar power at the forefront of people’s minds, so they think about it, and then when they hear about the Renewable Adoption Tax Credit, it really sparked a lot of interest over the two years. last few years, I would say. Especially at this time, as people are trying to get in before the end of 2019, when the solar investment tax credit (ITC) starts to withdraw. “
Until the end of 2019, ITC will allow homeowners and businesses to deduct 30% of the cost of installing their solar power system from their federal taxes. The tax credit will increase to 26% for projects that begin construction in 2020 and to 22% in 2021. By 2022, the ITC will be 10% for commercial and large-scale installations and 0% for large-scale installations. residential systems. In 2015, the SEIA successfully advocated for a five-year extension of the ITC, which was approaching a similar phase-out at the time. Now the association is pushing for another five-year extension that would keep ITC at its current 30% value. Bipartite efforts are currently underway in the House of Representatives and the Senate to enable such an extension.
The potential loss of ITC is not the only factor that could affect the affordability of solar power in the future. Tom Gallery, owner of Leelanau Solar, says the demise of net metering is the biggest challenge facing the industry today. In the past, net metering was the standard protocol that allowed solar customers to sell electricity they were not using back to the grid. In a net metering situation, a homeowner’s electric meter would count up when the customer is using electricity from the grid, but would run backwards if and when the customer’s solar system produced more energy than the home. didn’t need it. In true net metering, the customer is “paid” at the same rate for the electricity he sends to the grid as he would spend to get that same energy from the grid. The customer only pays for their net energy consumption, which means that excess electricity production during daylight hours can effectively count as a credit for nighttime electricity needs.
In April of last year, however, the Michigan Public Service Commission (MPSC) approved a new distributed generation tariff to replace net metering statewide. Where net meters paid solar customers’ retail tariffs for their excess electricity, the new system measures – and prices – incoming and outgoing electricity flows differently. Different state utilities must obtain MPSC approval for the tariffs they pay customers for excess solar power. The heart of the matter, however, is that most utilities will now pay below retail rates. The DTE, for example, obtained approval from the MPSC to charge customers the full retail price for the electricity they buy from the grid, but only pay the average monthly wholesale price for energy for the excess electricity that the customer returns to the grid. Other utilities have taken similar action.
“Next year is a pivotal time for solar power in Michigan,” Gallery said. “DTE and Wolverine / Cherryland have ended true net metering for commercial and residential solar. Consumers file for pricing in January to do the same. These policies push the return on investment for small solar from seven to eight years to 14-20 years. Homeowners and small businesses will not invest in solar energy under these policies. Michigan, under the leadership of the MPSC, will soon become one of the most regressive states in the country when it comes to renewables. The only good news is that TCL & P has resisted political pressure. They will soon be the only public service in the state to have real net metering.
Despite ITC’s uncertain future and the demise of net metering, Zebarah is still optimistic about the next chapter in solar power both in Michigan and nationally. On the one hand, he says the top priority for homeowners, businesses and communities that engage in renewables is not necessarily profitability or return on investment, but environmental sustainability. On the other hand, he believes the rapid evolution of technology in the solar industry will soon make factors like tax credits and net metering policies relatively questionable.
“Some incentives are going down a bit, but that won’t slow down solar at all,” he said. “It’s a small variable. The costs of technology continue to fall. Battery storage improves dramatically. When battery storage becomes profitable, which happens very quickly, utility policies won’t matter. People will store up their own power.