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9 November 2022

Idaho utility pushing to reduce rooftop solar payments

Last week the Idaho Public Utilities Commission (IPUC) in the US held the third and final public hearings concerning utility Idaho Power’s plans to cut rooftop solar compensation rates by 60% or more.

Solar installers, environmental activists and rooftop project owners were among those calling on the IPUC to reject any such reforms. On the utility’s side was its own research, published last month, in which it calculated the value of “excess” renewables. The utility argues that rooftop solar owners are making unfair profits at the expense of everyone else on the grid, the same objection raised in Net Metering disputes by traditional utilities in other states such as California. Complaints about grid connection costs are equally familiar.

Petitioners, some citing a study from Crossborder Energy commissioned by the Idaho Conservation Club and the Idaho Sierra Club, objected to various parts of the utility’s logic. One counter-claim is that the utility did not consider renewables’ role as a hedge against natural gas price spikes. Another is that seasonal variation of photovoltaics works in Idaho’s favour, as peak demand comes from heightened AC and agricultural power use in summertime.

The most fundamental objection was that the logic of the energy transition comes down to reducing emissions, not to pure cost-effectiveness, while a related point was the expectation of costs imposed on emissions by the federal government in future. But it was not hard to challenge the utility’s logic on costs either – for the calculation of avoided energy cost it used a three-year average from 2019-2021 to produce $28.24 per MWh. Crossborder Energy contradicted that with the past year of Energy Imbalance Market (EIM) prices, arriving at $47.3 per MWh instead.

In fact, Crossborder Energy reached a total value of $183 per MWh for distributed solar generation – $30.3 per MWh from ‘Avoided Carbon Emission Costs’, $11.7 per MWh from ‘Fuel Hedging Benefit’, and a further $141 from the components listed in the below table – where Avoided Energy refers to fossil fuel costs and T&D refers to Transmission and Distribution.

From Crossborder Energy’s review

One stark criticism Crossborder Energy makes of Idaho Power’s logic is assigning an Effective Load Carrying Capacity (ELCC) of only 7.6% to new distributed solar. Crossborder contrasts this with a 34% ELCC expected from the under-construction Jackpot solar farm, and observes that a similar 7.8% ELCC is used in California for distributed solar – but that is a state with vastly higher solar penetration. Idaho certainly doesn’t need to build mass standalone energy storage like California does.

The utility’s side of the argument is helped by Idaho’s low electricity prices, a quarter below the national average thanks to hydropower. Idaho Power states that it will be buying power from the Jackpot Solar farm at a mere $22 per MWh, which it contrasts with payments of $100 per MWh for residential solar. Looking at that contrast it is easy to concede that Idaho Power has a point, and that Net Metering is an old and outmoded policy.

Idaho Power would reduce its current range of between $80 per MWh and $100 per MWh to between $28 per MWh and $40 per MWh.

The problem is that Jackpot Solar is only 120 MW capacity, and that Idaho Power’s 100% clean energy target is still set all the way into the future for 2045. This is liable to fall afoul of federal policy and eventually of carbon border taxes.

This is the latest episode in a policy conflict going back months and years in the state. Net Metering was of little relevance when it was introduced two decades ago in the state, but as it grew in scale the utility began to chafe. In June 2017 the state had only 11 MW from 1,468 Net Metering users, but this tripled by late 2019 and now 380 MW comes from combined utility and distributed solar, 10% of the state’s peak demand.

Conflicts between Idaho Power and IPUC flared up in 2018 and 2019 on the topic, with the 2019 conflict seeing the Commission reject Idaho Power’s proposal to cancel Net Metering. Idaho Power’s study on the value of residential solar exists because IPUC instructed the utility to conduct the research last year.