NOTEBOOK

Opinions are all over the map on the value of solar power

People in the solar industry like to say that Texas is second only to California in its potential for solar power — particularly West Texas, with its abundant sunshine. But Texas has, nonetheless, done little to encourage the spread of solar — it has no statewide net metering policy, which requires utilities to buy the excess electricity produced by small residential and commercial solar systems. In states like California, net metering has encouraged the widespread adoption of solar energy and helped avoid electricity shortages and price spikes during periods of peak demand on hot summer days.

Texas’ lack of a statewide net metering policy, meanwhile, has hindered the spread of rooftop systems as solar companies and retail electricity providers are left to determine their own values for solar power.

But Texas residents who get rooftop panels are eligible for federal tax credits; companies can qualify for a tax abatement if they build utility-scale projects that produce more than 1 megawatt, or enough to power 200 homes on a hot Texas day. And so solar has started to spread, albeit slowly, as Texas utilities, retail electricity providers and grid operators try to resolve problems that state government hasn’t take on — like determining rates for solar power sales and how to work home-generated solar power into the grid.

Texas solar companies gathered in Austin last week for a small summit to talk about how the industry, among other things, values the energy that it produces. But there seemed to be little consensus. The regulated utilities said they want to be able to raise transmission rates on all their customers to account for the customers who rely on solar and no longer need their transmission lines.

Solar panel companies, on the other hand, argued that homeowners should be compensated for the energy they put into the grid. Houstonbased Sunnova often fights for a higher price for solar power than retail electric companies will give, said Meghan Nutting, the company’s vice president of policy and government affairs.

Valuing solar power is not a problem exclusive to Texas’ deregulated market. El Paso Electric, the public utility in the far western corner of Texas, has thousands of customers in Texas and New Mexico producing their own solar power. The company is working on a rate structure that will pay those customers for the power they generate, said Jim Schichtl, the company’s vice president.

But the utilities have to get something out of it, too, Schichtl said. As more customers require less power from the grid, utilities have to consider the business they are losing. For example, when customers produce their own power, less electricity travels on transmission lines, meaning less revenue for utilities, which are charged with maintaining the reliability of the system.

The problem comes if utilities don’t earn enough to cover the fixed costs of maintaining and upgrading their transmission.

“Recovering a revenue requirement or cost is pretty important,” Schichtl said. “You have to recover the cost of the service you provide.”

Schichtl argued that the growth of solar power in Texas has made the state’s competitive and noncompetitive markets more alike.

“I don’t think we should say anymore that El Paso is not a competitive company. That’s not true anymore,” he said. “We are competing with our own customers.”

“You have to recover the cost of the service you provide.” Jim Schichtl, El Paso Electric