Solar
Solar is the new kid on the block in Texas but it comes in many varieties. Because solar is scalable it can range from small solar panels on a home of 3 or 6 Kilowatts, to medium-sized “Community” solar on commercial or multi-family roofs, or in slightly larger solar farms of 1 or 10 MWs, or even really, really big solar utility-scale farms like one in Northeast Texas being built that would total over 1,000 MWs, on a scale with a coal or nuclear power plant.
While all photovoltaic solar has the advantage of producing electricity with zero emissions and little or no water use, local solar has the advantage of providing electricity close to where it is used, avoiding the need for major transmission infrastructure. Utilities - whether private or public -- and retail electric providers can help encourage local solar development by adopting a suite of programs and policies that encourage solar’s use.
Onsite Use. While the PUC of Texas and ERCOT do provide some guidance and rules around interconnection standards, ultimately local utilities decide what kind of permit fees, interconnection standards and inspections are needed to hook up local solar to the distribution grid. These policies can vary widely in Texas and the better utilities work to make it easier for solar development.
In addition, in Texas there is no overall policy on payments for the generation of onsite solar electricity in the event that a local homeowner or business generates more electricity from solar panels than they use. Thus, it is up to the local public municipal utility, electric cooperative or retail electric provider what they choose to pay.
The Texas Clean Energy Scorecard found that most Retail Electric Providers don’t even make clear what their policy is on metering and paying for excess generation. Our analysis only found a handful of companies, including Green Mountain Energy, Shell Energy Solutions, Nueces Electric Cooperative, Chariot Energy, Reliant and TXU, that were clear about what they offered in terms of paying for household solar generation.
Similarly, public entities like municipally-owned utilities and electric cooperatives offered very different approaches to solar payment policy. These policies are sometimes referred to by names such as “net-metering” “Feed-in-tariffs” or “performance-based pricing.” Most entities have moved away from true “net-metering” which is considered the gold standard of solar policy. Austin Energy is unique in Texas in that it has recently gone to a form of performance-based pricing called Value of Solar, which is a form of “Net-Generation.”
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Net metering subtracts solar generation from electricity consumption, and you are only billed for the difference. If generation exceeds consumption, the rules change depending on the utility company: in most cases you get a credit that is rolled over to the next month, and in some rare cases they actually pay you for surplus energy. The most generous policies pay full retail rate for the extra generation.
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Real time metering subtracts solar generation from electricity consumption every minute or every 15 minutes, and you are billed for the difference. While it sounds similar to net metering, it is not because you are always billed the retail rate of electricity for the energy you use from the grid, and you are usually compensated for the excess electricity you put onto the grid at a much reduced rate that is frequently closer to the wholesale electric rate. (e.g., you pay $0.10/kWh for the energy from the grid and only get paid $0.03 for the energy you put onto the grid.)
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Feed-in tariffs are rates that apply for surplus electricity exported to the grid. While net metering values consumption and generation equally, a feed-in tariff provides a different price tag for surplus generation. FITs are normally smaller than the retail kWh price, but utility companies may set them higher to incentive solar power in new markets. If the FIT and the retail kWh price are equal, you are basically getting net metering.
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Performance-based incentives reward you based on generation, even if you don’t have surplus production. This means you get the incentive regardless of whether you consume or export the electricity generated.
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Value of Solar rate. Similar to performance-based incentives or pricing, the utility’s Value of Solar is a tariff that pays solar owners for ALL generation produced, while also separately metering and charging energy use. In Austin, Value of Solar is computed annually based on a number of factors, including peak energy value, transmission and distribution benefits, and environmental, community and economic benefits. Austin Energy offers a Value of Solar rate for both residential and commercial customers, though at different values. It should be noted that some REPs, COOPs or utilities value the energy from a local solar at or near the wholesale rate and do not pay for the many benefits of local solar generation to the electric grid or the environment.
Other Programs: Community Solar and Roofless Programs
Several public energy utilities -- and a few private entities -- have expanded the types of programs they are offering residential customers that in some cases avoid issues of reduced revenue or potential issues of cross-subsidization. These include solar roof leasing programs, community solar programs and “shared” multi-family solar programs.
According to data from NREL and information collected through the Texas Clean Energy Scorecard, by the end of 2019, there were 14 public and private utilities that had developed or were in the process of developing a community solar program in Texas. In all these utilities were providing 18 separate projects and about 65 MWs of solar energy. Most of these community solar models were developed in the Muni and Co-op markets, while five projects were being offered by four REPs in the retail choice markets. A single Investor-Owned Utility -- El Paso Electric -- was offering a project outside of the ERCOT market. Both the Muni and Co-op markets and the retail choice markets offer their customers various ways to subscribe to community solar programs. Most of the projects developed in Texas adopt “pay-as- you-go” (PAYG), which is a subscription model where customers pay a certain rate per kWh or per month for solar energy. PAYG subscriptions can replace a customer’s electricity rate for consumption or can be associated with a specific level of generation that is netted with consumption.
A few projects offer a subscription model called “pay-upfront” (PUF), where customers pay the upfront cost for solar capacity and receive a monthly bill credit for the agreed term. Only one project by El Paso Electric adopts loan/lease (LL) where customers pay monthly payments based on the amortized upfront cost of solar capacity and receive monthly bill credits for the agreed term.
CPS Energy in particular has expanded both its community solar program and a no-upfront cost solar roof leasing program. Both of these programs allow members of the public to have access to solar power and benefits at reasonable costs. Full information can be found here on their latest program, which involves leasing portions of carports - https://go.bigsunsolar.com/cpsenergypostcard/. Under this program, residential ratepayers can get access to solar, own it and get a credit on their bill every month.
Under the solar roof hosting program, https://www.solarhostsa.com/, both residential and commercial ratepayers with appropriate roof space pay no upfront cost and are credited 3 cents per kilowatt hour generated by the solar panels on their bills for hosting the solar power.
Austin Energy also offers a community solar program, which replaces the normal Power Supply Adjustment (fuel) charge with a Community Solar Adjustment. The Community Solar rate is slightly higher than the normal power rate, though a lower rate is available to customers who qualify under the Community Assistance Program (https://austinenergy.com/ae/green-power/solar-solutions/for-your-home/community-solar.)
Austin Energy is currently developing a new standard offer program for community solar that is expected to be operational in 2024 and that would allow third-party solar installers to build solar that would serve the community solar program.
A new program in Austin called the Multifamily “Shared” Solar Program (https://austinenergy.com/ae/green-power/solar-solutions/for-your-multifamily/mf-shared-solar) allows owners of multi-family complexes to install solar on their roofs, and then provide access to the power to the renters through a “virtual” Value of Solar rate. In other words, there is no need to separately meter each panel and provide the benefits to individual renters, but apportion an amount of the solar system to each apartment. This helps lower costs for solar on multi-family projects and allows renters access to solar power and to the residential Value-of-Solar Rate.
Other public entities like Pedernales Electric Cooperative, Farmers Electric Cooperative and CoServe Electric have also recently begun community solar programs.
Unfortunately, with a few exceptions - Green Mountain Energy, Shell Energy Solutions and the Nueces Electric Cooperative (which operates in the competitive market) -- the competitive market has yet to embrace the potential to work with third-parties to develop local solar energy.
Encouraging the development of local solar options through community solar and onsite models is one way to grow clean energy in Texas that can directly benefit communities and local job creation.
