TVA solar buyback program reaches its cap

Published May 3, 2013

Written by G. Chambers Williams III, The Tennessean
May 3, 2013
 
The solar energy boom in Tennessee is about to go bust, according to some of the state’s solar-power system installers, a fate they blame on the region’s federally owned electric utility, the Tennessee Valley Authority.
 
TVA announced recently it already had reached its cap on projects the agency will provide financial incentives for during 2013.
 
“That means I won’t be able to sign up any more customers until next January, and I can’t go that long without any work,” said Gary Wolf, co-owner and lead installer at Sundog Solar Energy LLC in Nashville. “I’ll probably just have to go out of business.”
 
In the past, TVA had a more liberal program of incentives, which included paying a premium of up to 12 cents per kilowatt-hour over the regular retail power rate of 10 cents to give homeowners and businesses an incentive to install solar arrays.
 
But the power agency began a new program last fall called Green Power Providers that put a cap on the amount of solar-generation capacity TVA would subsidize during the last three months of 2012 and all of 2013. It also lowered the maximum size of an installation from 200 kilowatts of generating capacity to just 50 kilowatts, and limited companies from building more generating capacity than the total power they used in the previous year.
 
The problem is that the maximum 7.5 megawatts allowed from renewable systems for calendar year 2013 has been reached. TVA has already cut off any new applications for systems that range from 10 to 50 kilowatts, which are typically commercial installations.
 
Some capacity may still be left for smaller systems of up to 10 kilowatts, typically what a home would use, but that’s nearing its limit as well, said Steve Johnson, owner of Nashville’s LightWave Solar.
 
TVA also reduced the premium it pays for solar power to 9 cents per kilowatt-hour for 2013 and plans to cut the subsidy another 3 cents each year until it is completely phased out. Then the agency will pay the same for solar power as it charges for other forms of generation, including coal and nuclear.
 
“It all comes down to these caps,” Wolf said. “The 7.5 megawatts is not enough for this large of a utility serving parts of six states. The city of Los Angeles alone has its own municipal program that is several times larger than TVA’s. But TVA is still in a mindset that solar is bad and is somehow in competition with them.
 
“While some states around us have much bigger programs, we’re in the single digits in TVA land,” he said. “We’re still stuck in the 19th century with coal generation and 20th century with nuclear, but they don’t realize were in the 21st century now. Solar is inevitable, but they are trying to kill our solar industry. We just want a more sensible program.”
 
250 installations approved this year
TVA disagrees, though, and defends its program.
 
“These are popular renewable-energy initiatives and they have successfully reached their goals this year,” said TVA spokesman Mike Bradley. “The Green Power Providers program made 7.5 megawatts of capacity available, and we have reached that for 2013, with more than 250 installations approved. And we’re not accepting more applications until more capacity is available in 2014.”
 
Bradley said there is a possibility that some of the 7.5 megawatts that already has been reserved could come back on the market later this year if the successful applicants don’t complete their approved installations within the required 180 days.
 
Johnson complained that a lot of the capacity was taken up by speculators who submitted applications and got approval, but might never actually build those systems. If TVA releases that capacity after the 180 days are up, some of the installers might be able to hang on, he said.
 
“But TVA has said it will release the unused capacity by the end of the year, and if that means December, we won’t be able to wait that long,” Johnson said.
 
Bradley said TVA set the limits on the solar program to protect its customers.
 
“We’re trying to do this without major rate impacts,” he said of the solar-power incentives. “We don’t want to put the extra costs associated with renewable-energy growth on the backs of our ratepayers.
 
“Costs of solar generation have gone down, so incentives have gone down accordingly,” Bradley said. “Everybody’s hope is to see renewable-energy costs on par with other forms of energy, and for it to be self-sustainable, with no need for subsidies.”
 
Contact Tennessean business writer G. Chambers Williams III at 615-259-8076 or cwilliams1@tennessean.com.