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State could make reliability of home solar more accessible

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Photo courtesy of Bill Howley Photo courtesy of Bill Howley
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With major storms walloping West Virginia's grid twice this year, the old ideal of back-to-the-landers and survivalists — getting off the grid — starts to seem like just plain good sense to some people.

Small-scale solar systems have come a long way since the 1960s. And when they're tied to batteries and to the grid, they offer the convenience of utility service with the assurance of reliability. 

"Just think if we had this in neighborhoods around the state," said Calhoun County solar owner and electricity policy observer and blogger Bill Howley. "We wouldn't have all these people running into gas stations when there are blackouts to get fuel for their generators — we wouldn't have all this pressure on emergency services and shelters."

Beyond ensuring reliability that utilities can't, home solar systems can also generate income, Howley pointed out. And a market for solar systems creates jobs and expertise in a forward-looking field. 

But that's a demand, and a market, that the state's policies make or break. 

The Price of Reliability

Howley said his six solar panels, an installed capacity of 1.4 kilowatts, generate 7 to 7.5 kilowatt-hours of electricity on a sunny fall day. That's far less than the daily average household use of 1,200 kWh/month or about 40 kWh/day. But Howley's bank of eight deep-cycle 6-volt batteries, fully charged, can keep his critical systems going for a week with no sun at all.

A hybrid inverter automatically directs power from the grid and the solar panels to the house or the batteries as needed, or up to the grid when there's extra — turning the meter backward.

Howley's neighbors lost power for two weeks after the June 29 derecho and for another three days after superstorm Sandy in October. He did not lose power. 

His system cost $22,000 in 2010. It'll pay for itself in … well, that depends, since a solar system pays for itself in three main ways.

It may qualify for federal and state tax credits — Howley's got $8,000. It of course saves money by displacing power purchased from the grid; that might come to around $1,000 a year for him.

And if the owner gets the system certified in states that mandate certain amounts of renewable generation through Renewable Portfolio Standards, it earns renewable energy credits, or RECs, that have value in REC markets. Utilities buy RECs to meet RPS mandates in the states where they operate.

In some states, that's a significant part of the payback. Right now, for Howley and other West Virginia solar owners, it's insignificant.

W.Va. REC Certification Complex

Howley registered his system on regional grid operator PJM Interconnection's GATS system. GATS supports REC markets by tracking the serial number and characteristics of each megawatt-hour of electricity that's generated. 

He applied to Ohio, Pennsylvania and Washington, D.C., for certification that his system's RECs would be accepted in those jurisdictions. The process required one form that was available on the Internet, he said. 

But it was more complicated when he applied for certification with the Public Service Commission of West Virginia under the state's 2009 Alternative and Renewable Energy Portfolio Standard. The AREPS aims to shift the state to 25 percent alternative and renewable sources by 2025.

Howley and nine other residential solar owners filed in 2011 for certification, the first to file in the state. Forms were not available online; each had to initiate a formal case filing. 

The commission responded by asking the applicants to show, as required in its rules, that they had "revenue-quality" meters — the kind utilities use. When a petitioner pointed out that the GATS system, on which the PSC's rules are mostly based, does not require small generators to have such expensive meters and that its own rules are internally inconsistent, the commission then required applicants to provide further information about their meters and even about the rules in other states. 

"It's an undue burden on innovators in West Virginia, having us provide information that no other state asks for,"  Howley said. 

The commission ultimately granted a "hardship waiver" over the meter issue and certified the first 10 applicants together on Dec. 7, more than a year and several laborious filings after Howley first applied.

It may get better. Based on this experience, the commission is considering a rulemaking or amendment, according to PSC spokeswoman Susan Small, that could address the revenue-quality meter requirement.

"The exact scope of that rulemaking is still being considered by the commission," Small said. "It is not the commission's intention to make this a more onerous process than necessary, but they take their responsibility in certifying these credits very, very seriously."

It may not matter much, Howley said: Being certified in West Virginia probably won't help solar owners anyway.

W.Va.'s AREPS Holding Solar Back

There's a more fundamental problem for them, and that has to do with the structure of the state's AREPS.

States typically enact portfolio standards to integrate a significant share of generation from renewable sources. But West Virginia's AREPS awards RECs not only to renewables but also to natural gas and even to modern coal plants. 

Because of the liberality of the AREPS, the state's major utilities said in compliance plans they filed in 2011 that they won't need to do anything to meet the standard through 2025. 

That is, there won't be a market for RECs in West Virginia any time soon.

A few years ago, it wasn't an issue: West Virginia solar owners could sell their RECs in other states for good money. In 2010, some West Virginia solar RECs earned $300 and more in Ohio and Pennsylvania, according to GATS records. When Howley's system started up in the fall of 2010, he got about $200 in Pennsylvania. 

In-state credits remain around $200 in those states. But now that their markets are developed, they are less interested in out-of-state credits. This fall Howley got $17 from Pennsylvania.

So to circle back: Figuring electricity savings, tax credits and REC income into payback period, John Christensen of Mountain View Solar and Wind in Berkeley Springs calculated the payback period for a typical home installation went from seven years to 10 when RECs dropped from $300 to $100. 

As things stand now, Howley expects his West Virginia system to pay for itself in about 15 years.

That differs from Maryland, where Howley's son has a similar system. That state's tax credits and the REC market its RPS created will enable Howley's son's system to pay for itself in four years. 

It also differs from Ohio, where an AEP-Ohio offer that responds to that state's RPS not only reduces payback time but eases the up-front burden. The utility will pay part of a homeowner's installation cost based on a couple of formulas, according to Alternative Energy Resources Manager Mark Gundelfinger — one of which is half of the cost up to $12,000 — in return for the system's RECs. 

Howley thinks West Virginia needs to revisit its policies.

"I think we're learning from these storms that the matter may be somewhat more urgent than anyone has recognized," he said. "The world of ‘cheap' is over now because utilities are either going to be forced to invest in a real overhaul of the distribution system, or we're just going to be paying higher and higher rates based on the emergency cost."