In 1954, Arizona Public Service Co. brought the pioneers of solar power to Phoenix for the first national solar conference in the United States. That meeting helped spur broader interest in the use of solar power and, more importantly, helped launch a national commitment to solar research. One of the first major research facilities was created by APS in Tempe.
Nearly 60 years later, solar power is a reality. As the costs associated with solar power have come down, the amount of electricity APS generates from solar power has gone up — to nearly 700 megawatts by the end of 2013, which is enough to power the homes of 175,000 APS customers.
Some of that power comes from large-scale plants built by companies like Arizona-based First Solar and owned by APS. Some of it comes from independent power producers who sell the output to APS. And an increasing amount of solar power comes from the many APS customers who choose to install rooftop solar panels on their homes and businesses.
All of this progress has helped to make Arizona a national leader in the adoption of solar energy. Only one state, California, had more solar installations in 2012 than Arizona. Later this year, Arizona’s solar status will go even higher when Solana, the largest solar-power plant in the United States, begins operation in Gila Bend and sells its output to APS for use by our customers.
Recently, solar power has been in the news in Arizona for a different reason, related to a question about how customers who own rooftop solar panels should be paid when they generate more electricity than they need. Today Arizona uses a program called net metering, an important and widespread tool that has helped solar proliferate in Arizona and elsewhere. Properly designed, we support it.
The problem is in the details. APS is currently required to pay customers who have installed rooftop solar panels up to 25 cents per kilowatt hour for the excess energy they generate. To put that number in context, we could produce or buy that power elsewhere for approximately 5 cents per kilowatt hour. When we pay up to five times more for electricity than we could buy it on the competitive market, the result is higher rates for customers who do not have rooftop solar.
How significant is the problem created by this subsidy? We estimate that the average rooftop solar system on an Arizona home adds $20,000 in costs for non-solar customers over its lifetime. As more customers install solar — incentive applications for rooftop systems are coming at the rate of approximately 150 per week — the burden on non-solar customers becomes greater and greater. Eventually, you run out of your neighbor’s money.
We believe that when all the facts are known, all parties — even owners of rooftop solar, who today are getting a very good deal — will acknowledge that the current subsidy just isn’t fair to other customers. That’s why we have convened a series of meetings, open to the public and any interested parties, to put the facts on the table and work collaboratively for a solution.
Our 50-plus years of experience with solar energy convinces us that, if everyone works together in good faith, we can find a solution that preserves rooftop solar as a cost-effective option for customers who want it; protects the interests of customers who do not or cannot install solar; and preserves a fair profit for rooftop solar installers who run their businesses well.
Don Brandt is chairman and CEO of Arizona Public Service Co.