TVA Slashing Rooftop Solar, Other Privately-Owned Solar

Published December 2, 2015

The Nashville Banner – Amy Eskind – December 2, 2015

While the nation’s solar capacity has increased more than 400 percent over the past five years, due in part to individuals and businesses buying their own solar energy systems, local energy advocates say Tennessee Valley Authority (TVA) is thwarting the movement here.

A coalition of business owners, renewable energy advocates and TVA ratepayers have launched a Free The Sun campaign, in an effort to put pressure on the TVA board to be more supportive of rooftop solar and other private solar projects. The group is also calling on President Barack Obama to send a directive to the federally appointed TVA board to expand the solar program.

The campaign is a reaction to TVA’s announcement in October that it will remove the premium it had been paying for power produced by individuals and businesses with privately-owned systems. In the future, TVA will pay only retail prices for that energy. In addition, TVA caps the total amount of new solar capacity in its programs, and in 2016 that maximum will be merely 20 megawatts (MW), down from 130 MW this year. The board will allow only 10MW in new small-scale projects in its program, down from 11.3 MW this year. The mid-size program will be cut in half to only 10 MW in new solar next year, and it will only be open to local power companies, driving out private solar developers from this market sector. TVA will also eliminate a program for large-scale solar projects up to 20MW.

After 10MW of new residential and small commercial solar are contracted next year, people who want solar must invest in a solar energy system, sell 100 percent of the energy generated at TVA’s set price, and will receive only the wholesale price for that energy. It may not seem worth the investment. Both the solar industry and environmental advocates believe TVA’s changes will effectively kill this market segment before it can even really get started, according to a statement by the Southern Alliance for Clean Energy (SACE). Futhermore, not all of the applications to TVA actually get built, but all applications are counted toward the maximum, so much less than the maximum was built this year, according to Grace Robertson, marketing manager at LightWave Solar. Robertson expects that the 10MW cap next year will boil down to half that capacity in new systems.

“We are trying to stop this disastrous trajectory by advocating for TVA to maintain its current solar programs while allowing time for public input on any changes,” the Free the Sun campaign said in a statement. “Since TVA is owned by the federal government, we think there is an opportunity for the White House to step in to reverse the anti-solar policies.”

Amid climate change talks in Paris among world leaders and the president’s focus on clean power, the cuts in TVA’s solar programs are puzzling. Thirty-one percent of greenhouse gases produced in the United States are created in the process of electricity generation, according to the Environmental Protection Agency, making carbon-free solar energy a viable clean energy option that is thriving in most of the country. Tennessee currently has 121 MW of solar energy installed, enough to power only 11,000 homes, according to the Solar Energy Industries Association.

“TVA spends billions of dollars disposing of fossil and nuclear fuels,” says Steve Johnson, president of LightWave Solar and board member of the Tennessee Solar Energy Industry Association. At the same time, “the annual investment for new solar generation has been cut every year since 2012,” Johnson says. “It should be a good business for them—they are not paying to build the plants.”

Joe Hoagland, vice president of stakeholder relations for TVA, says retail prices still represent a subsidy. “We’re buying it at retail and we’re turning around and selling it at retail,” he says. “It’s not a good value.” TVA is not against rooftop solar for those who want it, but installation prices have come down enough that further subsidies are unwarranted, Hoagland says. Furthermore, the subsidies that began in 2011 to help the local solar industry get started were never intended to last beyond 2016, according to Gail Rymer, TVA spokeswoman.

Johnson says the industry is prepared to handle the decline in subsidies, but he and others need to know what they can offer customers going forward. He says he has yet to see contracts for 2016, has not been given a program starting date, and does not know what TVA will pay for the energy generated and for how long. Johnson says TVA is constantly changing the program, such as the decision last week to eliminate a waiting list for people interested in signing on to the solar program.

“Right now there are no contracts for 2016 and the program’s closed (for this year),” says Johnson. He questions the necessity of capping the program with a maximum of new installations for the year. “The program should be open all year, every year,” he says.

TVA has tended to be difficult to pin down on solar. “They’re a monopoly and they don’t want any one else generating power,” he says. “They’re always fuzzy, always changing. We would like them to be transparent with their prices and goals. They should decide for three years what they are going to do, tell everybody, and stick with it.” At that point, the public can decide if it makes sense to invest in solar.

Johnson and SACE say that the benefits of solar, including the financial benefits of environmental credits the TVA gets from clean energy generation, are not fully taken into account when the agency claims that energy from small solar systems is too expensive.

In addition, TVA requires homeowners and businesses with their own systems that are connected to the public grid, which most are, to sell 100 percent of the energy produced back to the grid. This is not in keeping with prevailing policies across the country.

With the exception of only six states, every state in the U.S. has a legislative policy on net metering, which allows a homeowner or business to use the energy produced on site and only buy from or sell to the public grid when necessary. Only four states have no net metering at all: Tennessee, Mississippi, Alabama and South Dakota.

TVA is a federal entity that was established in 1933 during the Great Depression to bring cheap electricity to the region, control flooding, and create jobs. Local power companies in its jurisdiction are required to buy all of their power from TVA and handle distribution to end-users. It is the only one of its kind in the country. “We don’t distribute directly to the consumer,” says Rymer. “It’s a different set-up. We can’t have net metering as a result.”

That argument does not sit well with some.“The simple fact is that many states have been able to generate significant investment in renewable energy with private capital,” says Jim Rossi, Director of Program in Law & Government at Vanderbilt University Law School. “In order for that to happen in this part of the country it will first be necessary to remove some of the barriers to investments in behind-the-meter resources. That doesn’t require privatizing TVA, but I also do not think its monopoly should extend to energy services it refuses to even allow its residential customers.”

Net metering supporters contend that allowing customers to use the energy they produce onsite reduces transmission costs and decreases energy demand on the grid during peak times. However, net metering also reduces the amount of electricity that a customer purchases from a utility, effectively reducing TVA revenue needed to fund all of its power-generating projects, which may help explain the lack of interest. TVA spokespeople deny this. The entity also counts on ratepayer revenue to service its debt, now nearly $25 billion, according to TVA’s 2014 Annual Report.

While leaving rooftop solar behind, Hoagland says he is looking for more cost-effective ways to increase solar capacity. Solar energy provided less than one percent of TVA power consumed last year, and it will have to grow. TVA’s 2015 Integrated Resource Plan calls for 150 to 800 MW in large scale solar added by 2023, and 3,100 to 3,800 MW by 2033. The exact amount will depend on the growth of energy demand, the price of solar, and the price of competitive energy sources.

Two community solar pilot programs are in the works and TVA has just contracted to buy energy from River Bend Solar, a proposed private 80MW solar farm in northern Alabama, which will be the largest solar farm in the Valley. TVA is searching for opportunities to duplicate that kind of arrangement in other parts of its territory, but is in no rush to do so. “We’re well positioned, with Watts Bar 2 (nuclear facility) coming on line soon,” Hoagland says. “We’ve got some time. We want to make sure that the solar we add helps keeps costs down for all ratepayers.”