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Getting Solar Value After October Switch

3 min read

Arkansas’ net-metering credits to utility customers for solar energy they add to the grid will change drastically for systems connected after Sept. 31.

The credit will drop from the rate utilities charge for retail power — about 10 cents per megawatt-hour across the state — to about half as much.

The change won’t affect existing systems or those that sign interconnection agreements before the deadline. But the new policy, favored by power companies like Entergy Arkansas and the Arkansas’ electric cooperatives, could crimp solar power adoption by homeowners, businesses, counties, schools and nonprofits.

That’s because the return on investment will fall. Systems may take twice as long to pay for themselves.

Electric utilities argue that retail net-metering rates let solar customers shift grid infrastructure costs onto the bills of customers who lack solar facilities.

Justin Martino, managing editor of ConsumerAffairs.com, argues that rooftop solar isn’t for everyone. The net-metering change complicates the decision to go solar, he says, but the policy shift isn’t unique to Arkansas.

“What Arkansas is looking at now is kind of similar to California,” Martino said in an interview this month. “California slashed net metering, with the change going into effect April 15, 2023. It’s part of a plan to encourage people to buy solar energy storage rather than sending power onto the grid during non-peak hours like 3 in the afternoon.”

Martino said utilities would prefer customers to store their day’s extra electricity for use at night, instead of buying nighttime power from them.

“You know, that makes a lot of sense on paper,” said Martino. “The catch for consumers considering solar plus storage is that storage is, at least for now, pretty expensive.

“Batteries are not cheap, right?” he said. “In an ideal world, everyone would love the solar battery. But if a customer is spending something like $20,000 for panels and is being told that storage is going to be another $7,000 on top of that, you can see why people would prefer to have a robust net-metering system.”

But the trend is going the opposite way, Martino said.

“With California cutting back, Arizona is also reconsidering [its robust net-metering system],” Martino said. “Nevada did a tiered system where it’s like, ‘Hey, if you’re one of the first people, you get this number.” Later net-metering customers would get less. “I think that’s kind of the overall trend you’ll be seeing across the country. As more people are going solar, it means utility companies will be willing to pay less for the solar they get from customers.”

That doesn’t mean power companies are anti-solar. Entergy Arkansas has three large-scale solar facilities (Stuttgart, Chicot and Searcy) in operation and expects to add three more this year (Driver near Osceola, West Memphis Solar and Walnut Bend in Lee County). The cooperatives are also building sun projects. “They [utilities] want if for themselves,” Martino said.

Douglas Hutchings, president of Delta Solar of Little Rock, says Arkansans will face a “divided future regarding solar energy adoption,” specifically referring to the Oct. 1 policy change. “The switch … and the current calculations enshrined in policy are poised to overwhelmingly benefit corporate utilities and electric cooperative executives more than average citizens.”

Hutchings is lobbying for the Arkansas Legislature to revisit net metering in its next regular session. “I believe minor changes can … allow both the utilities and private sectors to share in the value created by solar,” he said.

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