The sun still shines on Louisiana’s solar industry, although perhaps not as brightly after a recent state Public Service Commission decision to change its contentious “net metering” rule.
Despite objections from solar advocacy groups and environmentalists, the changes went into effect Jan. 1, effectively lowering the ROI for residential and commercial owners of new rooftop solar panel systems by reducing the credit they can receive for selling surplus power back to their energy provider.
While the latest rule allows existing solar customers to continue receiving the “retail rate” for excess electricity until 2034, new solar customers can only be credited at the lower “avoided cost” rate. Energy providers say paying the avoided cost is only fair, as it accounts strictly for those expenses directly related to the production of the energy they provide.
Nevertheless, these squabbles over small-scale solar power are missing the point, says David Dismukes, executive director of LSU’s Center for Energy Studies. “If Louisiana is serious about making big environmental improvements and reducing air emissions, the introduction of large-scale solar fields at the power generation level is the way to go,” Dismukes adds. “You get a far bigger bang for your buck that way, as it’s a huge cost difference on a per unit basis. Those are the things you need to focus on, not all these subsidies for smaller residential applications.”
“If Louisiana is serious about making big environmental improvements and reducing air emissions, the introduction of large-scale solar fields at the power generation level is the way to go.”
DAVID DISMUKES, executive director, LSU’s Center for Energy Studies
That’s because electrical power companies are among the biggest users of fossil fuels in the U.S. “It’s only logical that they would take the lead in the promotion of alternative energy sources,” he adds. “The most efficient applications are at the transmission level.”
Some providers are heeding the call, albeit at a smaller scale relative to their overall energy production. In August, Entergy Louisiana began construction of its first solar complex in Port Allen—Capital Region Solar—a 50-megawatt solar plant being built by DEPCOM Power of Scottsdale, Arizona. Entergy is purchasing the output from the solar farm under a 20-year agreement.
Located on a 560-acre plot, the facility will consist of about 197,000 solar panels and generate approximately 350 jobs during construction. Once complete in second quarter 2020, the new field will offset the equivalent of nearly 19,000 passenger vehicles’ emissions in one year.
The Port Allen facility is being pursued in tandem with a $42 million solar power plant in New Orleans East by Entergy New Orleans. By combining the plant with a plan to buy power from solar plants in St. James and Washington parishes, Entergy New Orleans hopes to add 90 megawatts of renewable energy to the city’s electricity grid. When that happens, renewables will then account for nearly 10% of the provider’s total power generation, 20 times more than today.
It will also bring New Orleans closer to its goal of receiving 100 megawatts of its electricity from renewable sources within two years.
‘Green tariffs’ coming
Energy providers say the economics of solar have improved significantly in the past 10 years. “That’s why Entergy Louisiana is now looking at adding solar resources to its generating portfolio,” says Paul Girard, director of resource planning and market operations for Entergy Louisiana. “With technology maturing and the cost of the technology coming down, it begins to create a better economic fit.
“Solar also brings a diversity to our fuel mix, which is particularly attractive to our customers with sustainability goals,” Girard adds.
The power from the Port Allen project will add to Entergy Louisiana’s approximately 190 megawatts of renewable resources, which also includes run-of-river hydro, biomass and waste heat recovery. The portfolio includes the state’s two largest sources of carbon-free energy—Waterford 3 and River Bend nuclear units. Together, the units produce about 16% of the state’s energy and account for 92% of the state’s carbon-free energy.
In another progressive move, Louisiana’s electrical providers could soon begin offering “green tariffs,” an optional program that allows larger commercial and industrial customers to buy bundled renewable electricity through a special utility tariff rate. This provides customers an option to meet their varying sustainability and renewable energy goals, reduce long-term energy risks and demonstrate commitment to the development of new renewable energy projects.
“Other states have established those (green tariffs) and Louisiana is moving in that direction,” Girard says.
Despite the progress, there are some formidable stumbling blocks that could prevent solar from playing an even larger role. For one, solar power and other renewables face some stiff competition from natural gas, which remains cheap and in abundant supply.
And there is another, more obvious, problem that might not have an immediate solution. “Solar power is an intermittent resource because the sun doesn’t always shine,” Girard says. “You can’t have too much of your portfolio made up of a resource that isn’t always there for you.”
Solar group sets plan
In Louisiana, more than 20,000 individual solar customers are currently connected to the public utility power grid. Many of these systems were installed by consumers cashing in on a now-defunct state tax credit program, as well as a 30% credit offered by the federal government.
“Solar power is an intermittent resource because the sun doesn’t always shine. You can’t have too much of your portfolio made up of a resource that isn’t always there for you.”
PAUL GIRARD, director of resource planning and market operations, Entergy Louisiana
The change to the state’s net metering policy, along with the elimination of the state credit in 2016, has significantly dampened the residential solar market and prompted solar industry groups to rethink their priorities.
Jeff Cantin, who currently serves on the board of the Gulf States Renewable Energy Industries Association in New Orleans, says his organization is repurposing itself to reflect the dramatically changing solar landscape. “While they’re (electrical providers) throwing up barriers, you also see them dabbling in solar to figure out how to make money on it,” Cantin says. “It’s certainly becoming more competitive and challenging.”
Stephen Wright recently joined GSREIA as association manager to revamp the organization and diversify its member base. “We’re trying to create a broader coalition, so we’re bringing in some of our consumer-driven groups, from developers and vendors to manufacturers with solar,” Wright says. “The whole point is to truly represent the entire industry as a whole instead of just a subsection. And we’ve done that.”
While the group will continue to focus on net metering and other issues, “we’re shifting our focus from a policy solution to a political one,” he adds. “We’ll be looking at future political races with an eye out for people who understand and embrace a more economical and rational net-metering policy.”
It can be a delicate balancing act, as GSREIA’s members frequently contract with Entergy and other power companies for work, while going toe-to-toe with them over policy issues. In fact, some members assisted Entergy New Orleans with the first phase of its commercial rooftop solar program, currently nearing completion.
Entergy New Orleans piloted the program—which leases commercial building rooftops to install utility-owned solar—nearly two years ago to help meet a commitment to install up to 100 megawatts of renewable resources for the city. The company ultimately achieved its program goal of 5 megawatts through partnerships with the Regional Transit Authority, the University of New Orleans, Transportation Consultants Inc., and local small businesses.