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Reimbursement rates frustrate solar panel adopters in Alabama

Solar Panels

Joe Bennett and Michael Churchman install some of the 64 solar panels that they will install on the roof of Remodeler's Outlet in Anniston. The two men work for Eagle Solar and Light in Birmingham. 

Clayton Angell thinks that in about two years’ time the new solar panel system atop his Anniston business will begin paying for itself.

He expects the 66-panel, 22-kilowatt system will generate about half of the energy needs of his Remodeler’s Outlet, located in a 71,000-square-foot former textile mill on Noble Street.

The system should be up and running in about a week, said a representative of the company installing it.

Others looking to invest in solar systems of their own might want to study up on the cost of doing so in Alabama, however. Solar proponents say the state lags behind nearly all others when it comes to incentivizing solar usage, making it less attractive as a savings measure.

Alabama ranked 49th nationwide in installed solar capacity, according to Solar Energy Industry Association, a nonprofit solar trade association.

The Arizona-based conservation nonprofit Center for Biological Diversity in an April report listed Alabama among the worst 10 states in the U.S. when it comes to policies that discourage solar panel usage.

The group’s study notes that Alabama Power, the state’s largest utility, does not allow for net-metering, meaning a utility provider pays solar power users for their extra electricity at about the same amount that the utility charges customers for electricity.

Instead, Alabama Power charges a fee  of between $20 and $25 a month to solar users who sell solar-generated electricity to the company.

Jacki-Lyn Thacker Lowry, a spokeswoman with Alabama Power, in a message to The Star on Wednesday wrote that those monthly fees to solar users are intended “to ensure that customers who don’t have renewable energy systems aren’t subsidizing those who do.”

“In other words, that customers who have solar systems and who are still tied to our grid are paying their fair share of the costs of the wires and poles and other services we provide, including us having energy capacity ready to go for them when their systems aren’t producing power,” Lowry wrote.

Utilities in many other states, however, studied the matter and found that solar users selling back to those utilities would not result in additional costs being passed down to regular utility customers.

The Mississippi Public Service Commission completed a study in 2014 that found that “it is in the best interest of ratepayers to proceed with the development of proposed net metering and interconnection rules.”

A 2013 study by Vermont’s Public Service Department said that “net-metered systems do not impose a significant net cost to ratepayers who are not net-metering participants.”

Alabama Power has about 100 residential, commercial and industrial solar users who sell energy back to the company, Lynn wrote.

For Angell, going solar fit with his business model.

Angell’s company sells, among other things, energy-efficient windows and doors, which are among the highest energy-saving products a homeowner can invest in, Angell said. For that reason, Angell said, his company studies energy consumption.  

“So this fits with our overall business model,” Angell said. “It’s amazing for a business. The incentives are really strong.”

The federal government’s Solar Investment Tax Credit incentivizes residential and commercial solar applications with a 30 percent tax credit on the cost of those systems. Businesses, however, can also deduct from taxes the cost of the depreciation of those solar systems.

“And you're saving money on electricity,” Angell said.  

Angell said it will take years to pay off the $40,000 cost of the system, but within two years it should begin paying for itself.

“We use between $3,000 and $3,500 a month worth of electricity, so our bill will be cut in half, hopefully,” Angell said.

He won’t be simply using that solar system, sold and installed by Birmingham-based Eagle Solar and Light. Angell’s company is partnering with the Birmingham company to sell those systems at the Anniston store.

Sam Yates, owner of Eagle Solar & Light, said by phone Wednesday that he sells both commercial and residential solar systems.  

“The technology has improved light years in the last decade,” Yates said.  

Angell agreed, and said the cost of solar systems has come down in recent years, but Alabama lags behind most other states in solar usage.

Angell said he could have opted for a larger solar panel system, but chose not to, as he has to “sell the power back to Alabama Power at only 25 percent of the rate that we pay for it.”

Additionally, Angell’s system doesn’t include a bank of batteries to store that electricity, so any extra power generated must be sent back to Alabama Power at that lower rate.

The Anniston Museum of Natural History in 2011 installed a rooftop solar system using a $250,000 stimulus-funded grant from the Alabama Department of Economic and Community Affairs. That money was also used to build an interactive exhibit to explain the solar system to museum patrons and to remodel the hall in which that exhibit is installed.

That system has prevented more than 261,000 pounds of carbon dioxide from being released in the air, and saved the museum about $19,400 in utility costs since 2011, according to the system’s online monitoring service.

Dan  Spaulding, museum curator, said the museum’s solar system is more than just about saving on the electrical bill. It’s also used as an educational tool to teach visitors about going solar.

Citing solar energy as a means of helping to offset global warming, Spaulding said it’s “an alternative energy to offset the coal and petroleum we’ve been using.”

Staff writer Eddie Burkhalter: 256-235-3562. On Twitter @Burkhalter_Star.