Rates may not shine so bright on solar-powered homes in Kansas and Missouri

Ray Ortiz (left), president of Solar Rich Power, and Bob Solger of Solar Design Studio checked on a recently installed array of solar panels on the roof of Unity Temple on the Plaza in Kansas City.
Ray Ortiz (left), president of Solar Rich Power, and Bob Solger of Solar Design Studio checked on a recently installed array of solar panels on the roof of Unity Temple on the Plaza in Kansas City.

A decade ago, customers who paid Cromwell Solar to put power harvesting panels atop their homes typically came with a lot of disposable income and at least a little environmental sensibility.

“Suzy Granola might have really wanted it, but she couldn’t afford it on her home. … We were doing neurosurgeon homes,” said Aron Cromwell, CEO of the Lawrence-based company. “Now we have people who install 100 percent for economic reasons.”

The fast-dropping price of solar panels and new methods for cheaper installation make watts from sunshine the stuff of the middle class. Some financing plans let you lease the solar panels perched on your roof. In fact, your new loan payments combined with a shrunken utility payment could end up less than your old monthly light bill.

All that makes utilities nervous.

Some want regulators to set steeper rates for consumers who come to the power grid with their own solar-generated electricity — clouding the economics of home-brewed voltage.

Power companies argue that a solar house doesn’t pick up enough of the cost of all it takes to make energy available around the clock. If those solar homes don’t pay for upkeep, they contend, other customers eventually get stuck with higher bills.

As part of a larger request to boost rates, Westar Energy earlier this year asked the Kansas Corporation Commission to make customers with solar panels pay a $50 fixed fee every month — compared with $14.50 for conventional customers. While they would pay slightly less per kilowatt than other customers, the aim was to make their bills go up.

State regulators ultimately set aside that pricing, along with a more complicated formula also intended to raise the cost for solar users, in approving a rate hike. But they’ll pick it up as a standalone issue in December. A study is likely to follow, with possible higher charges for solar customers to follow.

Westar still insists that solar customers should pay a higher flat fee.

“A rate structure that has a higher customer charge … makes sense,” said Gina Penzig, a Westar spokeswoman.

Kansas City Power & Light has no pending proposals for a similar charge, but spokesman Chuck Caisley said the utility will probably press the issue in the next few years.

“We don’t want customers who are not solar customers significantly subsidizing those who are,” he said.

Missouri and Kansas both trail much of the country in the adoption of solar energy. While the sun doesn’t shine as regularly on the country’s midsection as it does in the Southwest, experts say the region could still make wide use of the technology.

In ways that wind energy can’t — Kansas turbines rank the state third in electricity from wind, while Missouri is near the bottom — solar power can be collected near where it’s used. That means less energy lost as it moves from the source to the user. The electrons travel only to a nearby home.

Game changers

Two factors reshaped the landscape for rooftop solar power in recent years. First, prices dropped dramatically.

The cost of buying and installing rooftop panels on a home ran between $7 and $10 per watt in 2010. Today, that price is typically below $4.

73percent drop in solar installation costs between 2006 and 2014

The cost of buying electricity from utilities nationally grew roughly 20 percent over those five years. Now it can take fewer than 15 years for a $25,000 solar panel array to pay for itself.

That has meant people without six-figure incomes could reasonably contemplate solar installation. But a significant obstacle stood in the way.

Part of making solar systems economical is the ability to sell electricity back to a power company at market rates.

A rooftop can often generate more power than a house uses on a sunny day. Consumers want to sell that surplus to their utility. Those credits to their monthly light bill can sometimes fully offset charges for tapping into the grid for electricity during hours when the sun isn’t shining.

Utilities typically resisted the obligation to buy at top rates. After all, it wasn’t power that the company could necessarily rely on. And the electrical rates come with a lot of overhead baked in — the cost of building and maintaining power lines, of keeping large-scale coal-fired or other plants running or of having natural gas generators at the ready for times of high demand.

Yet 40-plus states, most taking action in the last decade, now require some version of “net metering” that credits homeowners for electricity they add to the grid.

400percent by which California exceeds any other state in solar power, most of it operated by utilities

New fight

Missouri voters passed Proposition C in 2008, requiring net metering and ordering utilities to subsidize the installation of home solar panels. The money for that, subsidized by all ratepayers, will run out soon. But it’s why Missouri has almost 20 times as many homes with solar panels as Kansas.

The Kansas Legislature has approved net metering. But it said the Kansas Corporation Commission could decide whether that should be paired with a higher fixed cost. Adopting those charges would guarantee that solar customers pay something to tap into the grid, even if they put more power into the system than they draw out.

That prompted Westar to include a proposal in its latest rate request for special flat costs to solar customers. The proposal would grandfather in existing solar customers — about 300 out of the 700,000 the company lights up in the eastern third of Kansas.

But those who wire their roofs for solar power in the future would see a significant hike in the bill sent to them regardless of the electricity they use.

“Customers with solar panels are using the power grid 24/7,” said Penzig, the Westar spokeswoman.

For starters, their hookups to the utility allow the homeowner to convert direct current electricity from solar panels to alternating current for household use. They also need the grid to sell surplus power. And they count on the system to turn on the TV, crank up the microwave or charge the phone after sunset.

Allowing solar users free access to the grid, utilities argue, is akin to a neighbor asking to tap into your emergency generator after a storm just because you paid a little for the gasoline it runs on. That overlooks the expense of buying it, storing it and keeping it in working order.

By pressing for the fixed charges now, Westar contends, it gives potential solar customers a clearer look at the true cost of outfitting their homes with the technology.

“When somebody buys solar panels, they sit down and do the math on the cost,” Penzig said. “Going forward, this is the pricing structure they need to look at now.”

51percent growth of home solar power in 2014 over the previous year

The solar industry challenges many of those basic assumptions. It contends various studies suggest the power grid is more robust and reliable if it’s peppered with small-scale sources of power generation.

Solar advocates argue nonsolar customers actually benefit when their neighbors plug in rooftop panels. Because the power is distributed locally, for instance, there’s less wear and tear on power lines. Power drawn from rooftops, they say, means less spending on coal or other fuels. And the green source helps utilities inch closer to government mandates that they pull energy from renewable, nonpolluting sources.

“The most efficient way is to just generate on your house,” said Paul Snider, the vice president of policy and government affairs for Brightergy, an energy services company that installs solar systems on commercial buildings.

He said that flat, extra charges on solar customers are premature, coming without evidence that using rooftop panels necessarily shifts overhead costs to conventional consumers.

In fact, a 2013 report from the Rocky Mountain Institute found “broad recognition that some benefits and costs may be difficult or impossible to quantify, and some accrue to different stakeholders.”

23gigawatts from total solar power in the U.S.

4.6 million homes that wattage could power

Caisley, the KCP&L spokesman, said home solar systems hold promise for a more distributed and reliable power system that draws from greener resources.

Yet today, he said, solar customers “absolutely” get subsidized access to the grid. Caisley said the basic cost of keeping a home connected to the electrical system is roughly $60 a month, although the fixed part of any bill is much lower. Utilities recover their overhead in their regulated rates.

The bulk of electricity generated from solar power comes around the lunch hour. But it’s never been enough, he said, that KCP&L “actually ramped down coal or turned off our natural gas or shut off our wind turbines. We still have to keep those plants up and running.”

Many solar advocates say they could live with minimum bills. But they worry steep charges now, while the industry is still trying to catch on, will stymie a valuable resource.

“If you get above a certain threshold, you kill the solar industry,” said Ashok Gupta, a senior energy economist for the Natural Resources Defense Council. “It’s too early in Kansas for a minimum bill.”

When the numbers grow, he suggests a minimum bill to cover grid costs, but one that would be credited toward a consumer’s power use rather than just a flat fee. That way, consumers would still feel incentives to conserve.

For now, though, the solar industry worries that the newfound momentum driven by dropping prices could stall if the rate structures change dramatically.

“The fee, which is unreasonable, would inhibit the business,” said Bob Solger, the founder of Solar Design Studio in Prairie Village. “Solar’s really a financial decision.”

Scott Canon: 816-234-4754, @ScottCanon

No, don’t put the solar panels there

For decades, homeowners in the Northern Hemisphere have been told to put solar panels on south-facing roofs. Indeed, they’ll catch more rays and generate more energy with that positioning — but, it turns out, not when it’s needed most.

Energy demand actually peaks late in the afternoon, when utilities struggle most to deliver power in hot summer months. A 2013 study found it’s better to point panels west at the setting sun, cutting demand from the electrical grid 65 percent, compared to 54 percent for panels looking south. About 9 percent of home solar panels face west.

Google now guides homeowners in the San Franciso Bay area, Fresno, Calif., and Boston how to study the solar power potential of their homes. Project Sunroof uses aerial photo imagery, 3-D modeling of roofs, shadows from trees and buildings, and annual sunshine in a location to calculate a home’s solar energy collection potential. A Google spokesman said it plans to “expand geographic coverage significantly in the near future.”

Scott Canon: 816-234-4754, @ScottCanon