AL consumers face obstacles to achieving max solar savings

Published: Nov. 7, 2017 at 4:45 AM CST|Updated: Nov. 7, 2017 at 5:21 AM CST
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MONTGOMERY, AL (WSFA) - After many years, the quest to 'go green' continues. The US is still working to transition away from non-renewable energy sources like coal and natural gas.

Solar power has grown in popularity thanks to declining equipment costs but it still may not offer the level of savings some residential consumers expect.

According to experts, there is plenty of sunshine in Alabama to warrant solar power investments. In fact, one study says the state has the 19th best solar potential in the country. But the same study also lists Alabama near the bottom in terms of realizing that potential.

Magdi Sayegh is one of the few Montgomery residents who have made the leap to solar power. He says panels installed on the roof of his home reduce his monthly power bill by as much as 80 percent, depending on the time of year.

And since the panels are connected to the statewide power grid, he can sell back his unused electricity to the power company.

"If I am producing more than I'm using, I'm pushing into the grid," Sayegh explains. "If I am using more than I'm producing, I'm taking from the grid."

Sayegh's system did not come cheap. It cost nearly $30,000 to install. But he says that a 30% federal tax credit, combined with his cheaper power bills, made it possible.

"In three years, the system was paid for," he says.

For residential consumers like Sayegh, the potential savings associated with solar power depends on the state in which they live. In Alabama, there are several obstacles that can reduce a solar power customer's overall savings.

Obstacle #1: Capacity Charge

In Alabama, the Public Service Commission allows the power company to charge solar customers who are connected to the grid an extra fee, which is added to their monthly bill. It is a fee that some other states do not allow. And it eats into a customer's solar savings by as much as $20 per month or $240 per year.

"That is a capacity charge," explained Alabama Power spokesman Mike Jordan.

Jordan says the fee is fair because most solar power users still rely on the power company in the overnight hours and other times during which the sun is not shining. Ensuring that the necessary power capacity is available to them when they need it comes at a cost, he says.

Obstacle #2: Rate of Purchase

Another way Alabama differs from some other states is the rate at which the power company pays solar customers for their unused electricity. It's much lower than the rate at which they sell that same electricity. The discrepancy is another way in which potential savings for a solar customer can be limited.

Jordan says the higher purchase price takes into account the cost the power company must pay in order to maintain the state's electricity infrastructure.

"What we're now purchasing that power back for is less all of that other infrastructure, which we made the financial investment to create," Jordan says.

Obstacle #3: No state incentives

Finally, Alabama only offers financial incentives for commercial projects. State incentives for residential solar projects are not available.

"I'm hoping that the projects that go through industry or commercial will work the market up," says Karl Frost of the Alabama Department of Economic and Community Affairs. "Hopefully it will then become an option for residential."

Renewable energy only accounts for an estimated .02 percent of Alabama's total electricity generation. Non-renewable sources are still cheaper in the end, which translates into cheaper prices for consumers. But providers are looking to the future.

Alabama Power recently agreed with the Public Service Commission to develop up to 500 megawatts of solar energy over six years. Projects already underway include solar farms at Fort Rucker, the Anniston Army Depot, and in Chambers County (a partnership with Wal Mart). Some electric co-ops are making similar investments.

Additional links for information:

Alabama Power's frequently-asked questions about solar power

Solar Energy Industries Association: solar data state-by-state

2017 state solar power rankings from 'Solar Power Rocks'

Alabama Power Army solar projects generating power at Fort Rucker, Anniston depot

Alabama Power's renewable energy certificate (REC) program

ADECA energy financing programs 

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