By Alex Ayers
Recently rooftop solar panels have been promoted to Alabama residents as a way for energy consumers to lower their electrical bills, however there are still many risks involved that oftentimes may outweigh the benefits.
Rooftop solar panels have increased in use in recent years, 18 gigawatts of solar photovoltaics were installed between 2008 and 2014 nationwide. At this growth rate rooftop solar will play a part in supplying American consumers with electricity in the future, and Family Businesses for Affordable Energy promotes diverse energy sources because competition helps to keep energy prices affordable.
However, if growth continues before hidden costs are dealt with, it has the potential to have major impacts on the affordability of electricity for family businesses and households.
The largest growth in rooftop solar panels has come from states that mandate the price that consumers are paid to sell excess solar energy back to the grid through a policy known as net-metering. Alabama solar users currently can sell their excess power to their utility company when they are not using all of the generated power themselves at market rates instead of state mandated rates. The rates at which utilities pay consumers for the electricity vary by state, but those states that mandate retail prices shift the cost burden of maintaining the grid away from solar users to non-solar consumers. This increases the cost of electricity on low-income users and renters who cannot afford or are not allowed to install their own rooftop solar panels.
For non-solar consumers in Nevada this means an increase of $600 per year to subsidize rooftop solar users. In states where net-metering is poorly regulated it creates a regressive income transfer from those who cannot afford solar to those who can. For utilities that transfer the costs from households to commercial customers, the increased overhead cost is passed on to the consumer through increased product prices, either way consumers lose out in poorly regulated net-metering schemes.
Alabama has so far successfully stayed away from these regressive policies, buy could see pressure to change in the future.
As rooftop solar becomes more popular, it opens up the market to bad actors that try and take advantage of consumers interested in lowering their electrical bills. For consumers leasing solar panels there are often hidden costs associated with maintenance and upkeep of the panel that are not easily identifiable in the the leasing agreement.
Some companies require lessees to contract with another company to clean and maintain the panels at costs of up to $700 per year. With long-term leases of 15-20 years these requirements significantly increase the payback period of the solar panels. The leases also make moving more difficult as the leaseholder can put a lien on the entire property claiming it is necessary to protect the solar panels. Additionally, installing solar panels can increase the assessed value of the home and therefore increase the property taxes paid by the consumer.
In addition to hidden costs, some bad actors have used solar installations to scam consumers. In 2015 an Arizona judge released more than 1,000 customers from their leases from a predatory company that failed to install nearly three-quarters of the units and withheld state payments owed to customers.
In other states predatory companies can install panels claiming the cost to the homeowner will be significantly lower than buying electricity from the utility company, but when utility rates remain steady, the rates charged by the solar installer increase over time costing the homeowner more than if the panels had never been installed. As solar becomes more popular, stronger consumer protections will be needed to stop predatory companies like these.
Recent improvements in efficiency and decreasing costs of production will make rooftop solar an ever larger producer of electricity in America, however Alabama lawmakers should stay vigilant in future policymaking to ensure that the hidden costs are not shifted to non-solar users, especially low income consumers who cannot afford higher electric bills. Smart policies can protect all consumers and help make energy more affordable.
Alex Ayers is the executive director of Family Businesses for Affordable Energy (FBAE). FBAE launched the Make Solar Safe initiative for consumers and policymakers to better understand how to protect solar power customers from predatory companies, unsafe construction, and other hazards.