This is Part 5 of our ongoing coverage of the MPSC solar work group. See the entire series here.

Solar installers said the roof fell in for rooftop solar in Michigan in 2012 when the utilities significantly changed their pilots.

Five years ago, when DTE Energy and Consumers Energy launched small pilot programs offering premium rates to customers for power from their solar panels, Michigan companies like Oak Electric, in Waterford, and Four Elements Energy, in Lawrence, became very busy installing solar systems on homes and small businesses across the utilities’ service areas.

“You go back to 2009-2011 and we had three crews out there, 10 guys, all they did was install solar,” recalled Jeremy Zinn, of Oak Electric, which offers a full line of commercial and residential services. “It was probably 50 percent of our business.”

But, in 2012, the roof fell in for rooftop solar in Michigan, when the utilities significantly changed their pilots.

That happened, installers said, because DTE’s Solar Currents and Consumers’ Experimental Advanced Renewables Program (EARP) drastically cut their rates for new participants, citing sharply falling solar panel prices.

Oak Electric and Four Elements Energy staff said the much lower rates, combined with the lotteries the utilities resorted to for selecting participants from the many applicants that flooded their programs, quickly reduced participation—and solar installers’ business volume.

“So now it’s just two guys doing solar,” Zinn said of his current operation. “It’s hit or miss: Some weeks they’re busy, some weeks they are not.”

Zinn and Art Toy, of Four Elements, which works exclusively with small wind and solar power projects, will be at the April 8 Solar Work Group meeting in Lansing, sponsored by the Michigan Public Service Commission. The group is looking into how best to revive the state’s flagging pace of solar development, which is now well behind many other states’. They will share their concerns about the two utilities’ current solar pilots. Neither utility wants to extend the program after they reach their modest goals, which roughly amount to one or two percent of what a medium-sized, coal-fired power plant produces.

Toy’s partner, Dan Alway, said utilities must “stop trying to minimize solar development. The MPSC has to look at proposals and make sure they will drive solar forward in Michigan, not hold it back.”

Falling Behind

Many solar advocates emphasize that the reason Michigan is falling behind other states has little to do with sunshine.

In 2012, according to Clean Technica, Michigan was in the lower half of state rankings for total and per-capita solar development. It lags far behind New Jersey, Delaware, Massachusetts, Illinois and other states hardly famous for sunny days.

The difference, solar advocates say, is that those states have strong pro-solar policies that range from mandates and utility and state rebates, to local and state personal and property tax incentives and exemptions. They rank in the top 10 for pro-solar policies, according to Clean Technica’s analysis, while Michigan ranks 37^th.

The April 8 work group meeting is the fourth held by MPSC. The group, which includes DTE and Consumers officials and solar business advocates, could recommend replacing the utilities’ small, overcrowded pilots with different programs. Advocates are pushing for programs that promote steady, predictable expansion of Michigan’s panel power but don’t push up electric rates or use lotteries.

Advocates argue that such an expansion will create jobs in Michigan, help protect customers against volatile natural gas and coal prices that push up rates, reduce harmful emissions and greenhouse gases from those fuels and, if done correctly, leave rates largely unaffected.

They also point to polls that indicate people strongly prefer more renewables to more coal- and gas-fired power plants, want stricter enforcement of pollution laws, support more government spending on renewable development, and are willing to pay a bit more for renewables.

Suggestions for Success

Zinn and Four Element’s Daniel Alway, who spoke to MLUI last week, hold similar views on what’s wrong with Solar Current and EARP, and they have some suggestions for how best to replace them.

Zinn said Solar Currents is now a “mediocre program.” He observed that about 300 people showed up to hear the details of Solar Currents’ first phase, which paid half the cost of the solar installations and a premium rate for power production. But when the company extended the program and lowered both its upfront financing and rates for excess electricity, there were “maybe 25 people there.

“I almost said ‘Don’t even bother, just get out of the way,’” he recalled. “I don’t think the programs are designed right, and a lot of solar guys have given up and just left the state. And a few guys just went under, too.”

Zinn and Alway argue that Michigan’s only other existing path to rooftop solar success—state-mandated net metering, where utilities pay retail electric rates for rooftop solar, but only for the amount of electricity the customer typically uses—now makes more sense than the pilots. That is because electric rates will rise in coming years, pushing up net metering rates, which would become higher than the rates set by the pilots’ fixed-price, long-term contracts.

Both also strongly dislike using lotteries to pick applicants for the pilots.

“It just kind of smothers things a bit,” Alway said. “It is really hard to go through all of that work [of designing a system and filing an application] and then you don’t get in and you’ve got to wait six months [for another drawing.]”

He added that when it’s a commercial customer who is unsuccessful in the drawing, it “doesn’t go over too well with the CEO and the CFO.”

Zinn also cautioned about paying too much for solar; he said that in some other states, it created a solar rush that pulled in a lot of out-of-state companies.

“They take advantage of the program, and then they leave,” he said.

Both agreed that for the current pilot programs to develop Michigan’s solar potential more effectively—and increase the jobs that come with it—DTE and Consumers should pay a bit more, respond to applications on a first-come basis instead of a lottery, and set larger, longer-term goals than the current six- or seven-megawatt goals.

Both changes, they said, would halt what they say is a ruinous boom-and-bust cycle, and save money for everyone involved—from customers to installers to the utilities.

“If you only have a program like that here for a little bit, you can’t train a workforce that will get really good and efficient at it. With a permanent program, you can hire and train people, knowing they will be around for awhile,” Zinn said.

Alway said the solution for picking up Michigan’s solar slack might lie in somehow expanding the current net metering program.

“Net metering isn’t wonderful, but it is relatively realistic” compared to the very high rates DTE and Consumers originally paid for their solar pilots, he said. “But those retail rates ignore the true value of solar. It’s power that is there when you really need it” on hot days, when firing up gas-fired peaker plants to meet heavy, air conditioning-demand is extraordinarily expensive.

Alway added that a “community solar” policy would also be a big help, since many people do not live in buildings that can accommodate solar, while many more can’t afford to invest in an entire system, but could buy shares in one.

Both added that utility fears about renewables driving up rates are unfounded. Pointing to the surcharges both companies initially installed to pay for meeting their renewable energy mandates, Alway said the fact that both companies are now eliminating them demonstrates that “renewables are now no more costly than any other way to make energy.”

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org.