The Iowa Utilities Board (IUB) recently accepted a proposed rule change from Alliant Energy, one of Iowa’s two major electric utility providers. This new ruling will drastically change how net metering works in Alliant Energy’s service territory and will reduce the financial viability of new solar installations. The new rules are scheduled to go into effect on April 1st of this year. Alliant Energy services over 488,000 electrical customers across Iowa.
In 2016 the IUB asked Iowa’s utilities to develop net metering pilot projects “for the purpose of expanding renewable distributed generation (DG) in Iowa.” According to the IUB the aim was to encourage development of more solar and wind projects. Alliant Energy’s proposal will have the opposite effect, according to solar industry experts.
Alliant Energy’s new net metering rules will add a cap on how much solar generation is eligible for net metering. Under current rules, net metering is naturally capped by a customer’s total annual energy usage – how many kilowatt-hours (kWh) of electricity are used in a year. Under the new, more complex rules, net metering may be capped based on an arbitrary percentage of a customer’s annual energy usage the year prior to the solar installation. Typical small business and residential customers could see a 30-40% reduction in net metering eligibility. Reductions could be as high 70%, depending on how the final rules are implemented.
Channing Congdon, Director of Design at Ideal Energy, said that the result could be a 40% or greater reduction in solar installations for residential and light commercial customers in Alliant Energy’s Iowa service territory. “You typically only want to install what you can net meter,” he said. He went on to say that due to the difficulty and complexity of the new net metering rules, some larger commercial projects would no longer be financially viable at any size.
The Solar Energy Industries Association defines net metering as “a billing mechanism that credits solar energy system owners for the electricity they add to the grid.” When a solar installation generates more electricity than it uses and is net-metered “the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the home’s electricity use exceeds the system’s output. Customers are only billed for their ‘net’ energy use.”
Solar industry insiders are surprised by the IUB’s decision. Solar is a growing industry and many of Iowa’s neighbors, including Illinois, Minnesota, and Missouri, have adopted pro-solar policies. Forbes recently reported that, “In the United States, more people were employed in solar power last year than in generating electricity through coal, gas and oil energy combined.” The new net metering ruling will limit the financial viability of solar projects for Iowans, stunting the growth of the industry.
This article contains an update. A previous version released on February 15th stated the net metering reduction would be 60-70% rather than 30-40%.