Indiana Solar Industry Growth Screeched To A Halt After Subsidies Declined

Jason Hopkins | Energy Investigator

Growth in Indiana’s once-blossoming solar industry slowed to a near standstill after lawmakers voted to reduce the amount of subsidies given to solar panel owners.

Net metering — a process where renewable installations owners are able to get paid for any excess power they generate and send back to the grid — is considered tantamount to spurring growth in the renewable energy industry and reducing carbon emissions. However, the system is not without controversy.

Utility companies usually must purchase this power whether they need it or not, and typically must compensate solar panel owners at costly retail rates. This process of paying solar panel owners more for their power than it’s worth ultimately shifts higher costs onto electricity consumers who do not participate in the program.

During the 2017 legislative session, the Indiana General Assembly chose to reform the way owners of solar panels are compensated for the energy they send to the grid. Senate Bill 309 was passed by state lawmakers and later signed by Republican Gov. Eric Holcomb. The bill provides that residents who install wind or solar installations during the next five years will be compensated the full retail rate for up to 15 years. After 2022, however, small-scale producers will be compensated at a lower wholesale rate.

While the law will take years until it goes into full effect, notable changes have already taken place in Indiana’s solar industry.

A total of 2,775 jobs were tied to the Indiana solar industry in 2017 — only 75 more jobs than last year’s total, according to data provided by The Solar Foundation. This was a far cry from the type of growth seen in the 2015-16 year, where 1,133 new jobs arrived into the industry.

While the correlation between SB 309’s passage and the rapid slow down in solar jobs growth is hard to ignore, Ed Gilliland, a senior director at The Solar Foundation, points to other contributing factors. Namely, President Donald Trump’s decision to place 30 percent tariffs on imported solar panels, uncertainty over solar policies, and unusual growth in 2016 due to installation completions that required workers.

In fact, the solar industry across the country experienced a decline.

While supporters of net metering refer to legislation like SB 309 as archaic and regressive, others argue that the inherent unfairness in net metering needs to be addressed. Northern Indiana Public Service Co., an energy company in the state, welcomed the reforms.

“NIPSCO supported the Senate Bill to develop a legal framework around the size and price of net-metering and to develop certainty around the future of net-metering policy.  The bill also worked to balance the interests of non-participating customers who subsidize the cost of those who do participate,” said NIPSCO spokesman Nick Meyer in a Wednesday statement to The Daily Caller News Foundation.

Meyer went on to add that NIPSCO is supportive of renewable energy and has adopted programs to support green initiatives.

“In addition to the net-metering program, which provides a bill credit for the amount of energy produced by customers, we offer a Feed-in Tariff (FIT) program that buys back the amount of energy in the form a check to customers. Today, we have about 270 customers participating in those two programs (150 Net Metering, 120 FIT) out of nearly 460,000 total electric customers,” he explained. “There has been a decrease in the number of applications as compared to the fourth quarter of 2017; however, there have been more applications received in the last three months than in the first quarter of 2015, 2016 or 2017.”

Indiana is joined by a growing number of states that are re-examing net metering.

A study in Montana revealed that its largest utility company was paying net metering customers around three times the rate of the power they were sending back. The Michigan Public Service Commission, in a ruling on April 18, decided to replace the state’s current net metering system with a new model that compensates solar and wind installation owners less for the energy they put into the grid, reducing costs for customers not involved in the system. Lawmakers in Arizona took very similar measures during their 2016 legislative session.

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