Solar growth remains strong in Indiana

By Steve Garbacz | KPC News - The Star

Solar power production has doubled every year since 2013 in Indiana, and northeast Indiana has been no exception, as businesses, schools and residents have added solar panels to their buildings.

The Indiana Utility Regulatory Commission’s recently released fiscal-year 2017 report said Hoosiers participating in net-metering programs for solar power doubled from about 8 megawatts in 2015 to nearly 16 megawatts in 2016, the most recent year of data available.

It’s been a sharp and steady increase in Indiana from barely 1 megawatt of solar power in 2011.

Net-metering is a program that allows electric users to generate a portion of their energy on their own, with the local utility serving as a backup. If people generate more electric than they use, they receive a credit on their utility bill.

Although solar power has been steadily growing in recent years, the sun is responsible for just a tiny sliver of Indiana’s overall energy profile. Solar power now accounts for just about 0.2 percent of Indiana’s total power generation, while coal accounts for 64.6 percent, natural gas 17.4 percent, nuclear 9.8 percent and wind 4.3 percent, according to the IURC.

The IURC doesn’t have data for 2017 yet, but interest and growth in solar power continues to remain strong, said Eric Hesher, president and owner of Renewable Energy Systems, a solar installer located in Avilla.

“We’re basically seeing substantial growth every year in the business as people become more aware of how well the systems work and the financial advantage it gives small business,” Hesher said.

Renewable Energy Systems has completed several local projects, including installing a solar fields at Reliable Production Machining & Welding in Kendallville, Wible Lumber in South Milford, Sylvan Cellars Event Center and Aggregate Systems in Rome City as well as smaller projects for some local gas stations and restaurants.

The company also has done small commercial and residential installations in Noble, LaGrange and DeKalb counties, as well as in Fort Wayne and across the border into Ohio.

Fremont Community Schools built a $4.2 million, 1.79-megawatt solar field that’s in operation. Garrett-Keyser-Butler Schools continues to study solar power as a possibility for its schools, Superintendent Tonya Weaver said.

Growth in solar is due to a few factors, including tax and financial incentives in place at the state and federal levels, increasing solar efficiency, decreasing material costs and continuing increases in retail energy prices.

“The cost of the system components of the system have continued to come down year after year. It can add to the financial return on some of these projects,” Hesher said.

Electricity is still relatively cheap in Indiana compared to other states. The Hoosier state has the 18th lowest average electric price, but had ranked as high as fourth-cheapest back in 2002, according to the IURC. The cost is a little higher than Kentucky, but lower than Michigan, Ohio and Illinois rates.

Indiana’s electric advantage is slipping because the cost of using coal as fuel has increased, and the state still relies on coal as fuel for about two-thirds of its power.

“The general trending of increased coal prices observed since 2003 and decreasing natural gas prices have reduced Indiana’s relative price advantage,” according to the IURC report.

As retail electricity costs rise — Indiana Michigan Power had sought a nearly 20 percent price hike in July, for example — solar becomes more competitive since sunlight is free and the costs of systems has come down.

A residential system still runs about $20,000-$30,000 and has about a 10-year payback period, but some larger commercial installations can recoup the investment in about five years, Hesher said.

There are still, however, several potential speed bumps for solar in the future.

Indiana lawmakers did tweak rules regarding net-metering in this spring’s legislative session, which halved the window during which new customers can be reimbursed at retail power rates from 30 years to 15 years.

State Rep. Dave Ober, R-Albion, chaired the House utilities committee that worked extensively on that bill and said he expects even though the window has shortened, solar will continue to grow in the short term.

Lawmakers also may revisit some aspects of the net-metering bill in 2018. For example, Ober said lawmakers may discuss ideas to create longer reimbursement windows for public schools that could make solar projects more attractive to districts.

“I suspect that over the next five years what we’ll see is a number of individuals who are able to make those types of investments go solar, because we’re phasing down the incentives,” Ober said.

At the federal level, a tax credit for new solar projects also will start tapering off starting in 2019.

Potential changes in international trade and tariffs also could have dampening effects on the solar industry. The U.S. imports solar panels produced in China because there’s not enough domestic production, while the Chinese-produced equipment has also helped to decrease cost, Ober said.

Although solar power is being propped up by government incentives now, the technology is improving at a rate that could make solar viable even after those benefits fade out, Hesher said.

That’s the goal with these types of renewable energy incentives, to help start development with the intent that innovation will improve the product and make it competitive by the time the temporary incentives end, Ober said.

So, for now, the outlook for solar continues to appear sunny.

“In the short term, in the next four to five years, we don’t see solar slowing down too much,” Hesher said.