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The future of American solar energy is being threatened. President Trump announced on Monday that he would impose tariffs on imported solar panels. Meanwhile, on the same day, the Kentucky House of Representatives announced the bones of House Bill 227 that will be a punishing job killer and a potential dagger in the future of Kentucky’s solar energy production.
Solar energy sounds so simple, but there are hurdles—practically and politically. You have to collect the sun’s energy; convert direct electric current to alternating current; store the power in a battery; or put it on the electric grid. This gets expensive, but the cost of installing a solar system has been coming down for years. There has been a generous 30% tax credit for those who install solar systems, and even if the tax credits are eliminated, the cost of solar panels have continued to go down and could, in a free market, continue to go down to the point where tax credits, although clearly helpful, might become less relevant.
The president’s 30% tariff will be a body blow. It won’t cripple solar energy, but it will slow it down. Solar panels account for 30-35% of the cost of a solar installation. But it’s striking that the President chose solar to be his whipping boy, along with imported washing machines.
You don’t suppose the coal industry had something to do with this, do you? Coal has been in decline while natural gas has become cheaper. So why did the coal and power companies, with their vast network of political influence, decide to pick on solar energy? Solar represents about 1% of Kentucky’s total energy. Why aren’t the power companies lobbying Frankfort to put a surcharge on LED lights? The nearby E.W. Brown electric generating station has plans to shut down two of three smokestacks. One reason: LED lights.
You can’t run for Kentucky statewide office without singing coal’s praises. Senate Majority Leader Mitch McConnell talks out of both sides of his mouth. During the last presidential campaign, we heard the worshipful refrain of coal everlasting. After Trump was sworn in, McConnell confessed that the coal economy wasn’t going to come back anytime soon. It’s simple economics. Natural gas is cheaper.
So the bitter coal industry, mad that they’re losing a game they once ruled, is clawing back and picking on solar. They’re employing a familiar bag of tricks—peddling influence and funneling money to political action committees that buy off the politicians who live by campaign contributions.
A Kentucky State Senate bill to alter solar net metering was tabled last year after a huge public outcry. The Senate sub-committee was impressed with the growing solar industry that now outstrips coal industry employment. You don’t dare mention clean, environmentally friendly jobs to a Republican-controlled Kentucky government. You’ll raise their ire. Instead, you must keep it simple: Solar is creating jobs. Republicans, always wobbly on the environment, do understand jobs.
This year, the Natural Resources and Energy Committee will try to ram House Bill 227 through the House. They want to avoid the calls, emails and rooms full of protestors that the Senate sub-committee encountered last year. They may even go populist and argue that solar installations are only for the rich who can pay cash, even when the evidence shows nearly 45% of all solar energy systems are financed.
The Kentucky House Committee shouldn’t ignore the USDA’s loans and grants from the Rural Energy for America Program (REAP) for energy audits, which provide as much as 25% payment toward solar systems. This amounts to a significant savings when coupled with a 30% Federal tax credit.
Solar Energy Solutions, who installed my solar system in rural Salvisa, Kentucky, provided this HB 227 nutshell of what’s coming up for discussion Thursday morning (Update: the committee meeting to consider the bill has been postponed until Thursday, January 31):
1:1 Net Metering is dead: Excess energy production which is now credited at retail (1:1) for later use will now only be credited for cash or equivalent at the end of each billing period.
Excess energy production (often banked for use later in the year) will be at the ‘electric suppliers sole discretion’ be paid out in cash or equivalent or credited to the next bill (no guarantee) at a rate of around 2.7 cents/kWh – 3.5 cents kWh NOT 9 cents/kWh.
Supporting utility presentations state that only 2% of homeowners’ energy is exported or credited for use later. The actual figure is 60+%.
No value at all is given to solar production when numerous state and independent Public Service Commission studies show it to have a value closer to or greater than retail. Even Indiana just valued it at wholesale + 25%.
HB 227 proposes to make these changes and kill our solar future, skilled jobs and young industry in just 173 days on July 15th. Even Indiana just gave a 5-year transition period.
Existing systems will be grandfathered in, but no assurance is given that it will be at their current retail 1:1 retail rates.
Grandfathered Net Metering systems cannot transfer to successors or subsequent homeowners reducing the value of the solar investment to 0$.
The sun makes so much sense. The sun is 93 million miles away and wirelessly delivers energy to rural America in nine seconds—free of charge!
You couldn’t make up something this exciting. Grade school general science comes to life and contends with Frankfort politics.
If you’re a Kentucky resident, here’s where you can find your Kentucky legislator. They need your immediate attention.
And here’s a link to the members of the Kentucky House Standing Committee of Natural Resources and Energy who will meet on Thursday at 8 am in room 171 of the Kentucky Capitol Annex.
Allen Bush lives in Kentucky. His articles for the Daily Yonder include stories about Kansas pies, a North Carolina farmer, and Kentucky donut burgers.