Critics: Wisconsin project would give utility solar monopoly

By KARI LYDERSEN of Energy News Network

MILWAUKEE (AP) — The utility company We Energies is proposing a “Solar Now” test project it says would expand the use of solar energy by allowing it to essentially rent roofs where solar installations could be built and then pay the owners of the leased property a monthly fee.

But solar developers and advocates say such third-party ownership could undermine the private market for solar energy, which has been stalled in recent years in part because of uncertainty over how regulators will view these sorts of arrangements.

We Energies is now seeking the Wisconsin Public Service Commission’s permission for a policy that would let it pass on to all ratepayers the cost of building installations under the Solar Now policy. A one-week public comment period on the proposal closed last month. Critics said the period, which was announced abruptly just before the holidays, did not allow for enough time.

We Energies said third-party ownership will help it find the best places for solar generation, increase the use of carbon-free energy and provide a boost to nonprofit groups and government institutions that now can’t take advantage of tax credits the federal government offers in return for the generation of solar energy.

Clean-energy advocates say they see at least some benefit to the proposal. Some have said it could lead to an increased reliance on solar energy in We Energies’ service territory. Many also think third-party ownership — sometimes called a “Rent-a-Roof” arrangement — could help turn unused rooftops into sources of renewable energy.

Some of the same people, though, worry the proposal would grant We Energies too much control over solar generation, furnishing the utility giant with a de facto monopoly that would impede market competition. They also see some hypocrisy. We Energies, they note, has said in the past that customers who install their own solar-generation systems are not paying their fair share for grid upkeep and are unfairly passing costs on to other ratepayers. How can the same company, they ask, now argue that all ratepayers should have to cover the costs of its own solar installations?

“Our chief main concern is the impact leading to higher costs for non-participating customers who are already paying the seventh highest rates among nearly 50 utilities across the Midwest. And that customers paying that much deserve a variety of options to lower their costs,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin, which filed a comment in the proceeding. “It’s telling that We Energies, in the span of four years, has gone from wanting to tax distributed solar to wanting to own rooftop solar projects itself.”

For years there has been uncertainty in Wisconsin over the legality of third-party ownership. Typically in these sorts of arrangements, a private developer will own solar installations on customers’ property and then either sell whatever energy generated to the customers or make a nominal lease payment while take advantage of federal tax credits. Throughout the country, third-party ownership is a common way to help customers get solar energy without paying the steep up-front costs of installation.

We Energies has not always been an advocate of third-party ownership. In 2014, the utility sought to ban the arrangements in its service territory, a request the Public Service Commission eventually shot down.

The company’s opposition to privately owned solar installations has continued, though. We Energies recently denied an interconnection request related to the private company Eagle Point Solar’s plans to own 80 percent of a solar array that was to be placed on six Milwaukee municipal buildings and then use that array to sell power to the city for a fixed monthly fee. In a letter dated Nov. 29 and sent to the attorney representing Milwaukee, We Energies said the arrangement would have allowed a private entity to act illegally as a public utility.

Only a month before, though, We Energies had made a similar proposal to Milwaukee officials, saying the city should take part in its own Solar Now test project, which it suggested would benefit the city more than the proposed contract with Eagle Point.

We Energies spokeswoman Amy Jahns said Milwaukee’s “deal with a third-party solar company was illegal under state law.”

Regarding third-party solar, she said, “We are in favor of customer generation that conforms to state law. If anyone sells power to our customers, they should be viewed as a public utility and should be registered as such. If they do not, they do not conform to state law. Additionally, the Solar Now Pilot promotes an alternative approach for customers to access renewable energy that conforms to state law. Indeed, it will allow our customers more options for renewable generation, not less.”

To be sure, the Solar Now test project in itself doesn’t prevent customers from trying to enter into their own third-party-ownership agreements. But developers and advocates fear that We Energies’ interest in promoting its own installations will make the utility even less likely than now to approve interconnection requests for third-party-owned projects.

“It’s great that a utility that hasn’t publicly recognized in the past the value of solar to the distribution grid is now seeing the light, but it’s not a great deal for customers,” said Amy Heart, senior manager of public policy for Sunrun, a national residential developer seeking to develop third-party-owned installations in Wisconsin.

“What they do get right is customers want solar and there are benefits to the grid. What they get wrong is customers need more choices in Wisconsin,” Heart said.

She added that comparing third-party ownership to the Solar Now test project would be “comparing apples to oranges when you look at what’s the economic value to the customer. Except the oranges aren’t available in Wisconsin — so you’re stuck with apples.”

Critics meanwhile are also concerned by a provision in We Energies’ proposal that would prevent customers from getting paid for energy that they generate but don’t end up using.

“The proposal is (this sort of) power would go directly onto the grid — so there shouldn’t be any limitation based on their demand,” said Rachel Granneman, staff attorney for the Environmental Law & Policy Center, which filed a comment in the case. “There doesn’t seem (to be) any justification for that when what they’re doing is leasing space. Presumably it would lead to undersizing … Warehouses, for example, are great places to put solar because they have these big flat roofs, but they don’t have much electricity demand.”