The sun continues to rise in Missouri! Since 2008, when Missouri voters passed the Renewable Energy Standard by a 2 to 1 margin, the solar industry has been growing rapidly across the state. This citizen initiative created a rebate program that requires investor-owned utilities like Ameren and KCP&L to pay a $2 per watt rebate for new solar installations. This, coupled with the broader 30% federal tax credit, has made solar a cost-effective complement to grid-based energy.
It actually started with the Easy Connection Act in 2007. This allowed businesses and residents to interconnect a renewable energy system, like solar or wind, to a grid-tied electrical system. The clean renewable energy produced locally is consumed first, and additional energy requirements are pulled from the grid. If the renewable energy system produces more energy than is needed, the excess electricity flows out onto the grid, and the electric meter essentially “spins” in reverse. This process is called net metering, and ensures that you are credited for any energy that you supply to the utility. However, if you are a net producer during any billing cycle, the utility is only required to pay you their avoided cost, which is usually less than a third of the retail price you pay the utility.
Without the financial incentives, solar is a break-even investment here, because we continue to enjoy exceptionally low electric rates in Missouri. Even with recent double-digit rate increases, our electric rates (generally 7-8 cents per kilowatt hour) are well below the national average (10-11 cents), and dramatically lower than rates in California (13-15 cents) and New York (15-17 cents). But even these higher rates pale in comparison to rates in Hawaii (28-30 cents) and other countries (Germany is around 30 cents and Denmark is around 40 cents!)
With fallen prices and financial incentives, the value of solar has never been better. A five kilowatt (kW) system, which can produce more than half of the electricity consumed in an average home, will likely cost only $10-12K after the incentives. Power production warranties are typically 25 years, so you can expect the system to produce clean, renewable energy for decades, and the fixed cost of the electricity is likely below what you’re currently paying for electricity from the grid! We all expect energy prices to rise, so this is a good way to lock in a portion of your energy as a hedge against the expected rate increases. If you choose to sell your property, the solar array will be a differentiator and have a positive effect on property value.
Now is a great time to act. A number of trade organizations, namely the Missouri Energy Development Association (which represents the utilities), filed suit against the Public Service Commission, which was charged with carrying out the will of the people to create the rules for Renewable Energy Standard. A preliminary decision has ruled the rebate unconstitutional, citing that ratepayers should not bear the burden of the cost of the incentives. The Missouri Attorney General’s office has stepped in to assist in the defense of the rebate, and the appeal is expected to be heard by the Missouri Supreme Court.
During the appeal process, it is expected that the court will issue a stay to maintain the rebate until the final ruling. I encourage you to contact the Attorney General’s office to voice your support, and your elected officials to do what they can to develop clean, renewable energy in Missouri. Don’t let the sun go down on you!
This was published in the Going Green section of the August 2011 issue of Spirit Seeker magazine.
Postscript: The courts ultimately ruled in favor of the solar industry, maintaining the constitutionality of the utility rebate. Since then, solar prices have fallen further so that the utility rebate is as much as half of the installed cost!