December 27, 2019 | Jaffe Law
Going Solar at the Siegal Household – payback and net metering
This summer, I was approached by a number of vendors of solar panels. Their offers were all very similar. Power your home, the Michigan Public Service Commission was getting ready to make a change in the State’s net metering program (more on that below) and they would finance our purchase so that we would be cash neutral or cash positive from the point at which the system came on line; long term warranty and app that would allow me to monitor the system in real time. We discussed it and went with Modern Mill Solar. The process for approval, installation and start up was a bit cumbersome but as of last week we are up and running and generating our own electricity (sort of).
We are not off the grid. The excess electricity we generate is sent to the electric grid and we are credited on our electric bill for providing that energy to the grid. 2008 Public Act 295 mandated that 10% of the State’s electric power be generated from renewable sources by 2015. Net metering customers would get credit for excess energy returned to the grid at retail rates. That means that the utility pays us at the same rate we pay them. This is a hot button issue because the utilities are obligated to maintain the grid and have adequate backup generation capacity and those things cost money.
In 2016, Michigan enacted a law, 2016 Public Act 342, which increased the Renewable Portfolio Standard (RPS) from 10 percent to 15 percent by 2022 and implemented a deadline to impose a “grid” fee for future distributed-generation customers. Current DG solar customers and new customers who join a program before the instatement are exempt from the grid-charge for 10 years.
In May of this year, the Michigan Public Service Commission approved a new DG program where it took something of a compromise approach between solar advocates who claim that solar generators don’t add costs to the grid and utilities who wanted a monthly fee and to pay generators at a wholesale rate. The MPSC explained that it approved an inflow/outflow mechanism that will credit generating customers at the retail rate, minus transmission charges, or 7.477 cents per kilowatt hour for the first 17 kWh/day. The MPSC said that this ensures that the customer is not getting credit for transmission and distribution services that it is not providing.
For a standard residential installation, under the new rate structure, the MPSC projects a $15,700 installation payback to take 13.3 years. The same system under net metering was projected to take 9.4 years, which is about what I estimated for our system. Time will tell if my projection is low or high but I will report back to you.
The above is intended as general information only by the author and should not be construed as legal advice or as creating or soliciting an attorney-client relationship. You should consult your attorney for guidance with respect to any particular issue or legal inquiry.