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Indiana solar industry prepares for loss of net metering

After next summer, it will take residents who want solar longer to pay it back

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OUT OF TIME—  Indiana residents will find it harder to make a return on investments into personal solar panels after net metering ends in June.

Indiana residents who want to install solar panels on their homes are running out of time. A law passed in the Indiana General Assembly in 2017 has put a chokehold on small solar projects in the state and continues to de-incentivize Hoosiers from choosing distributed solar power.

Indiana Senate Bill 309 was passed into law on May 2, 2017. The law effectively ended incentives for Indiana residents to install solar panels on their properties. The main incentive, net metering, will be done away with for any new solar projects completed after June 2022.

“Essentially it disincentives solar owners from producing more solar then they would be using during the day,” said Solarize Indiana Coordinator Hannah Kasak-Gliboff. “I think another reason this is important is that net metering allowed people to install solar themselves and have distributed solar energy. Without that, the only real alternative still using solar would be a solar farm. Solarize Indiana sees it as a shame that distributed solar isn’t something that will be as valuable after June 30.”

Distributed solar refers to small, individual solar operations that are attached to roofs or existing structures. Many households and businesses with distributed solar are still connected to the local electrical grid.

”During the day, they’re producing a lot more solar than they’re actually using, and all of that enters the grid and can be used by other households or businesses in the area,” Kasak-Gliboff said. “There’s a meter that keeps track of how much energy is going towards the grid, and at night, when the homeowners start drawing energy from the grid, that meter is also keeping track. With net metering, that means that whatever is produced by the solar array and is going to the grid is valued at the same price that that home or business could be drawing from the grid.”

Net metering refers to the practice of utility companies crediting solar owners the retail value for any extra energy solar panels put back onto the electrical grid. Under the new law, solar owners who put electricity back onto the grid will only be paid wholesale price, which is much lower than retail price and will make it harder for residents to recoup the cost of installing the solar panels in the first place.

Kasak-Gliboff said residents with distributed solar usually would not pay anything on their electric bill because the repayment for putting electricity back onto the grid would cancel out any costs for electricity use.

“Without net metering, the utility only credits the solar owner sometimes only about three cents per kilowatt,” Kasak-Gliboff said. “That’s only the wholesale rate rather than the retail rate. And that means the home or business owner, they don’t break even. They don’t get their return on investment on solar array for up to 25 years, instead of it being paid off in just 10 with net metering.”

Rick Ortman, manager at Ortman Drilling and Water Services, said he has benefitted greatly from distributed solar and net metering. It took him about 10 years to pay off the first round of solar he had installed. Now, Ortman said he is upset about the loss of net metering, especially since he is planning to add another solar array.

“You never want to put in too much solar, because if you generate more than you use, you don’t ever get payed anything back,” Ortman said. “We’re just really going to have to see whether it pays back or not.”

Chris Rohaly, president of Green Alternatives, Inc., a company that installs solar panels throughout central Indiana, said the passage of Senate Bill 309 accelerated some people’s decisions to get solar arrays installed in their homes.

“It basically started a ticking clock,” Rohaly said. “What we saw in 2017, several organizations really advertised heavily as part of the lobbying effort to try to influence the direction a little bit, albeit unsuccessfully. Then they turned that into, ‘well, let’s get everybody installed that we can.’”

After that initial push towards solar, people backed off solar because they no longer thought of it as an option. Rohaly said people were not sure if they were “even allowed” to install solar because of the confusion around Indiana’s solar industry in 2018.

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Since then, Indiana has not seen the sort of growth in solar power that was expected before Senate Bill 309 was passed into law. There have been attempts to renegotiate net metering in the Indiana General Assembly since then, but the efforts have lead nowhere.

“There is no choice for consumers,” Rohaly said. “You are buying your electricity, your energy source, from a monopoly. The regulatory body over the monopoly is probably not sufficiently equipped to do what they’re supposed to do, which is counterbalance the monopoly by keeping them in line. They are completely outgunned by the utilities.”

Laura Ann Arnold, president of Indiana Distributed Energy Alliance, said that utility companies were required to find a system to replace net metering. CenterPoint Energy came up with an idea called instantaneous netting.

“Currently, net metering is a one-for-one credit on a kilowatt to hour by kilowatt to hour basis, and it is done on a monthly basis,” Arnold said. “Centerpoint proposed to use what they referred to as instantaneous netting, which we have characterized as no netting. The state law says instead of doing it on a credit of kilowatt to hour by kilowatt to hour, you do it based on the value of the cost on that kilowatt hour. The analysis shows that it is very unfavorable to customers.”

There are many organizations fighting against instantaneous netting in Indiana, including Green Alternatives, Inc., and Solarize Indiana. Rohaly is worried about how these changes are going to affect business in the future.

“We’ve had to develop plan B, because I don’t want to send people home without a paycheck,” Rohaly said. “You do have to be connected before July 1 of next year, but if you don’t have an application in before April 1 of next year, it’s likely you won’t even be considered.”

Rohaly said the volume of people wanting solar has risen, and there are people who will not get panels installed before time runs out on net metering.

Kasak-Gliboff said people looking to erect solar panels will likely opt for smaller solar arrays without net metering. She also emphasized that the June 2022 deadline to be grandfathered in to net metering for the next 10 years is quickly approaching.

“It’s also important to note that the installation process takes a little while,” Kasak-Gliboff said. “The installer needs to get all the parts ready, have workers come out, schedule a date and all of that, so in order to be installed by June 30, which is the cutoff, people should really start thinking about it as soon as possible.”

Both Kasak-Gliboff and Rohaly said people interested in solar should be aware of companies from outside of Indiana coming into the state and overcharging people for solar arrays. They said with the net metering deadline looming, some companies are taking advantage of scared residents.

“We’ve been seeing anywhere from 30 to 50 percent over what we think is the market price,” Rohaly said. “We just had probably the worst case we’ve ever seen just this week. An older couple signed a contract for just a simple house system with basic storage, and they wanted $65,000. That’s robbery. The $30,000 to $40,000 range was more reasonable for what they were looking at.”

Rohaly said Green Alternatives, Inc. will have to find creative solutions to continue after net metering is off the table. He said solar designs will have to be more targeted and thoughtful, and the industry will need new tools. He believes solar energy storage off the electric grid will become a large part of the industry for people still interested in producing their own energy.

“There will still be a solar industry after this bill if we have anything to do with it,” Rohaly said. “You may just have to change your concept of what a system contains.”