Limited Vision

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Our vision for the future of solar energy used to extend only as far as our own rooftops. For much of the past decade, utilities and regulators were focused on reducing costs for rooftop solar arrays. In addition to rebates and incentives, we designed rates and rules that subsidize the use of solar power systems at customers’ homes and businesses.

Arizona’s current “net metering” rules, for example, require TEP to pay top dollar for the leftover energy from rooftop solar arrays. Our electric rates also provide steep discounts to solar customers, even though their service costs are
about the same as everyone else’s.

Because these subsidies are funded through the rates paid by all TEP customers, they represent a shared investment in our community’s solar energy resources. Which begs the question: Are we really getting the most for our money?

Probably not, when you consider that TEP can buy energy from large, community-scale solar power systems for about half the price we pay for the excess output of rooftop systems. Also, the panels in many of our systems move to face the sun throughout the day, allowing them to provide power in the critical late-afternoon hours when most rooftop systems under-perform.

Most importantly, the benefits of community scale systems are shared by all customers – not just those who can afford their own systems.

TEP wants to provide more solar energy for less money. We’re developing cost-effective solar options for all our customers, including rooftop arrays that benefit more than just one rooftop. But when it comes to meeting our entire community’s future energy needs with solar power, it makes sense to think big.

TEP plans to propose updated rates and a revised net metering rule before the end of 2015. The costs TEP must pay to provide service – for power plants, poles, wires and a bunch of hard-working employees – don’t vary much with customer usage. But our rates recover most of those costs through usage-based charges. So customers who avoid energy charges through solar power systems and net metering credits don’t pay enough to cover the cost of serving them. While TEP can buy solar power for about 5.8 cents per kilowatt-hour, net metering customers receive credits worth about 11 cents per kilowatt-hour. Most rooftop systems are fixed in one direction – south – maximizing production over the course of a day and capitalizing on the current net metering subsidy. This means their output fades in the late afternoon, when energy demands typically peak. Through the new TEP Residential Solar Program, we’ll be installing solar arrays in areas where their excess output will provide the most value to our local electric system.