Forecast for Missouri Solar Industry: Partly Cloudy
In 2008, two-thirds of Missouri voters approved the Missouri Clean Energy Initiative, which required that investor-owned utilities in the state get at least 15% of their electric power from renewable resources like wind and solar by 2021. Voters were promised that a 1 percent cap would be placed on utility costs to minimize impacts on utility rates. However, the way that cap would be calculated was vague, and allowed considerable interpretation on the part of utilities and the Missouri Public Service Commission, which regulates them.
The $2 per watt rebate that was born out of the 2008 legislation spawned a new industry in Missouri. Prior to its passage, there were only a few companies that offered solar installations, and the cost with no financial incentives had a 30-year payback. Since the rebate (capped at $50,000 for 25 kilowatts) was put into place in 2010, the installed cost of solar has dropped by more than 50%. Combined with the 30% federal tax credit (and benefits of accelerated depreciation for businesses) the net cost after incentives is a small fraction of the installed cost, with paybacks less than 2 years on commercial projects and 5-7 years on residential installations. As a result, thousands of solar projects have been completed, creating hundreds of jobs in dozens of small but growing businesses despite the turbulent financial landscape.
All of this growth has accelerated the amount that the utilities have spent paying rebates, and in May this year the Missouri legislature passed a bill that would begin phasing out the $2/watt rebate starting in 2014. The solar industry supported this measure, recognizing that the rebate had become a substantial portion (as much as 2/3) of the installed cost of solar. Industry supporters believed this would stabilize the availability of the rebate, which remains a crucial piece of the financial incentives necessary to entice most businesses and homeowners to invest in solar.
In July, Kansas City Power & Light filed a request with the Missouri PSC to suspend payment of rebates, citing that they had hit their 1% cost cap. This sent shock waves throughout the industry, especially for Kansas City-based solar installers. Upon investigation of the basis for the cost cap calculation, the PSC determined that KCP&L planned to invest in wind farms beginning in 2018, and was pulling forward the costs associated with those projects. Surprisingly, the PSC allowed these costs to be included in the poorly defined rules for the 1% cost cap, and as a result, the funds for the rebate are projected to be exhausted as early as 2015.
This represents a real threat to the Missouri solar industry. The concessions made to stabilize the industry with the phase-out of the rebate were earnest attempts to maintain the viability of solar. Given the impending expiration of the 30% federal tax credit after 2016, solar will have to stand on its own after a very short period of subsidy. Yet the fossil fuel industry, which received tremendous subsidies in its infancy, continues to receive vastly greater subsidies, both direct and indirect.
I urge you to contact your state representatives and the Missouri PSC to voice your support for the solar industry. It’s important that we understand the myths, and invest in clean, renewable energy here in Missouri, creating good jobs that contribute to a strong local economy. The Missouri Solar Energy Industry Association, or MOSEIA, provides a strong representation for the industry, but lawmakers and regulatory agencies need to hear from you to balance the well-funded and powerful lobbies of utilities and big businesses. Contact MOSEIA to help battle climate change, and help change the climate and forecast for the solar industry!
For more information or to see how you can help, contact Heidi Schoen at HeidiSchoen@moseia.com and/or go to MOSEIA’s website (www.moseia.com) and click on “Connect with MOSEIA” in the bottom left corner of the page to get policy updates.
This will be published in the Going Green section of the November 2013 issue of Spirit Seeker magazine.