Independent Study Confirms Viability of Demand Charges for Solar











In a recent proposal by Tucson’s UniSource Energy Sevices (UNS), the company sought to decrease subsidies to solar customers by changing the way they charge. By switching from net metering to demand charges, UNS hopes to lower the variable monthly cost of utilities for its non-solar customers while making sure that the high-income customers using solar pay a fair price for usage.

Arizona Public Services (APS), Arizona’s largest utilities provider, supported UNS by submitting a study conducted by Navigant Consulting, a third-party firm, that disproved the claim of solar interests that the move toward demand charges would kill the industry.

In part, the study claims that solar companies earn a 40 percent project return on rooftop solar leases in UNS’ territory alone. Of this finding, the writers of the report state, “We conclude that solar TPO [third-party-owned] providers have headroom to adjust to some changes in rate structures while maintaining project returns.”

Arizona utility companies agree that the current system of net metering charges creates a situation in which solar customers receive an unfair subsidy for unused energy, an incentive that means higher installation prices from the solar companies who, because of their overpricing, invest little in technological advancement. UNS, APS, and others hope that the switch to demand charges will force solar companies to rethink the importance of improving on their renewable energy source before making a profit off of it.

What the study proves is the viability of demand charges without the loss of a a working income for solar companies. The industry will continue to grow under the new plan as they push to give their customers a better product. Thus far, solar companies have only claimed that the losses will be too much for solar energy to continue as a feasible source, something the study has disproven.

APS’ senior vice-president of public policy, Jeff Guldner, argued that the Navigant study shows there’s room to make net metering changes, adding, “We’re not saying what those changes are, but don’t just say you can’t.”

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