Power disputeRenewable energy bill pits solar companies against trade groups
It seems like a small thing: Just 0.5 percent.
But it's enough to get energy and other business groups upset with the solar industry.
Solar power companies are facing opposition from a group of industry associations over what appears to be a small change in how soon power-generation companies are required to step up purchasing of the renewable energy. A bill in the state Legislature could increase electricity costs, but solar groups said the increase is negligible and the adjustment is necessary to restore jobs.
The fight was set off by the Pennsylvania Chamber of Business and Industry's recent estimate that House Bill 1580 would cost businesses $1 billion. Solar power groups are calling that an exaggeration.
"They're looking at worst-case scenarios, or even beyond that," said Ron Celentano, president of the Pennsylvania Solar Energy Industries Association and owner of Montgomery County-based Celentano Energy Services.
The solar industry helped forge the bill, which would require a 4.5 percent increase in the amount of solar energy credits that generators must buy between 2012 and 2015 as part of Pennsylvania's Alternative Energy Portfolio Standards. It mandates that the state's power-generation companies get 0.5 percent of their total energy from solar by 2026.
The solar requirement would return to its current schedule of increases until 2019, when the increases would be reduced so the 2026 purchases are still just 0.5 percent of total power, according to the bill.
On June 6, the Pennsylvania Chamber — backed by 11 trade groups from oil, gas, petroleum, electric generation, retail, manufacturing and other industries — released a opinion urging legislators to reject the bill, saying it would cost businesses $1 billion over 10 years.
The solar energy industry says the bill's cost comes to an average of 4 cents a month for the residential consumer, with commercial and industrial rates being a slightly higher percentage of their electricity bill. The annual percentage increases would be 0.0351 percent for residential, 0.0459 for commercial and 0.0629 for industrial customers, according to the solar association.
It used future energy retail increases from the state Public Utility Commission's report "Electric Power Outlook for Pennsylvania 2011-2015" to calculate the cost to consumers and businesses of power generators buying more solar credits.
The chamber said the bill — which has more than 100 sponsors — would cost businesses about $1 billion over 10 years in increased energy rates if the electric utilities had to buy more of their supply earlier from solar sources.
Shawn Good, the director of government affairs for the Harrisburg-based chamber, described solar's treatment in the renewable energy portfolio as "preferential" and said HB 1580 was another subsidy for an industry incapable of standing on its own.
The chamber took its numbers for the cost from the Energy Association of Pennsylvania, yet Good could not say how they were calculated.
Energy Association representatives were not immediately available to comment.
The solar association's analysis of HB 1580 places the total increased cost over the next 14 years at $99 million.
The bill already was amended to take out parts the solar industry wanted, such as closing Pennsylvania's solar credit market to out-of-state providers, which would have done the most to stabilize it, Celentano said. Prices on solar credits plummeted during the last couple years because of a flood of solar projects and energy credits.
The current solar bust cycle is a product of the incentives, such as Pennsylvania's Sunshine grant program and federal tax credits, he said.
"When I looked at it, I said, 'We're going to blow through our (alternative energy) requirement, and its going to get bad,'" Celentano said.
And bad it got for many Pennsylvania solar companies, including those in the midstate.
The market flood reduced the demand for solar work, said Mike Barnes, president of Cumberland County-based I Need Solar. That meant companies cut their workforces up to 75 percent.
"The bomb blew up years ago when the market was flooded and companies had to move their work out of state," he said.
Lower Allen Township-based I Need Solar put most of its employees on layoff while others are traveling to states with a stable credit price and demand to install solar panels, he said. I Need Solar cut its field crews from 65 to about 20, and administrative jobs were cut from 12 to 4.
Solar construction could pick up again in 2016 because of increases in solar-energy-purchasing requirements, Barnes said. However, federal tax credits are scheduled to expire, reducing incentives to install solar.
Passing HB 1580 would stabilize the Pennsylvania market, he said. By front loading some of the solar purchasing requirements, there would be a larger immediate market for credits and possibly solar installations, meaning more work for companies, he said.
"It would help those who got into the market under the premise there would be a reliable market for (solar credits) at least for a few years," Barnes said.
Without changes to the solar requirements, investors and developers could likely pass over Pennsylvania for greener fields in states such as New York and Massachusetts.
"No one's really interested in Pennsylvania," said William Nelson, an energy market analyst for New York-based clean energy and carbon market investment firm Bloomberg New Energy Finance.
Pennsylvania has the lowest prices for its solar energy credits — $42 on average — so there's no incentive for energy investors to get into the market, he said. HB 1580 could increase that price to $82, according to a Bloomberg note to investors from May.
Nelson didn't think half a percent was enough for fossil fuels industries that backed the chamber's position to care much about solar's impact on their business, but Celentano didn't share that view.
"Once you put in a technology like this, you reduce the need to buy fuels," he said. "That's a threat to any of these groups that sell in that market."