A key legislative priority for Arkansas’ solar power industry advanced in the state Legislature Tuesday as the Senate Insurance & Commerce Committee unanimously approved Senate Bill 145.
The measure could potentially double or triple home and business solar installation in a state with plenty of sunshine but a relative few solar projects, supporters say. The bill, sponsored by Sen. David Wallace, R-Leachville, and expected to go to the Senate floor on Thursday, would reverse Arkansas policy by allowing third-party financing for customers putting in solar panels.
That could spur up to triple the solar installation jobs in Arkansas, according to an analysis from the Business Innovations Legal Clinic of the William H. Bowen School of Law at Little Rock that was released last week.
The third-party element of the bill is crucial, offering government entities and nonprofits a chance to do net metering, the accounting process utilities use to credit customers for excess solar they put onto the electrical grid. That third-party option would give entities like schools, churches, cities, counties, universities and state agencies a chance to take advantage of federal incentives and lower the cost of solar arrays. Basically, the third-party would reap tax benefits, and the nonprofit or government group would reap substantial energy savings.
The bill would also raise limits on the size of solar arrays that can operate under net metering. If the bill passes the full Senate, it will move to the House, where it will first be considered by the House Insurance & Commerce Committee, then on the House floor.
“Advanced energy technologies provide jobs and energy savings in states that deploy them,” said Katie Niebaum, executive director of one of the bill’s big backers, the Arkansas Advanced Energy Association. “Demand for innovations like solar energy has grown rapidly across Arkansas, and AAEA members are investing in local communities to meet that demand. Solar development can play an enhanced role in the state’s economy and create new jobs if we allow greater access to this advanced energy resource. Along with AAEA, the bill has drawn support from the Association of Arkansas Counties, Walmart Inc., Ouachita Electric Cooperative Corp., Audubon Arkansas, the Associated General Contractors of Arkansas and the County Judges Association.
The state’s utilities, who had signaled some opposition to the bill, have seemingly backed off, several industry sources said. Niebaum called the Senate committee vote “the first of many hurdles.”
One industry leader, Seal Energy Solutions President and COO Heather Nelson, said she and her colleagues are encouraged by the enthusiasm the bill has generated. “We continue to hope that public policy and legislation will be drafted in ways that promote the opportunities that lie with solar for every individual, business, farmer and municipality across Arkansas,” she said in a statement to Arkansas Business.
She said the solar jobs could help all of Arkansas’ 75 counties, and she noted that pricing for solar installation has dropped more than 60 percent over four years, “and financing options are better than they have ever been, with residential clients seeing cash flow-positive” results in the first month.
“The narrative that non-solar clients are subsidizing solar clients has been proven false by evidence presented to committee with Senate Bill 145,” Nelson said. “The future for solar is now here in Arkansas, and Seal Energy Solutions is humbled and honored to be a part of this growing industry in our home state.”
The outcome was encouraging to solar advocates, already bolstered by remarks Arkansas Public Service Commission Chairman Ted Thomas made at “Advanced Energy Day” at the Capitol last week. The PSC, which oversees the state’s utilities and their rates, has been considering changes to the state’s net metering policy for three years. One sticking point has been determining what rates utilities should pay for net-metered power put back on the grid. Utilities have argued for a “two-channel” system, which would charge one rate for energy pulled from the grid while crediting solar customers with a smaller rate, perhaps half, for the excess power they put back on.
Utility testimony in the long-running PSC case, known as a docket, argued that utilities must recoup their infrastructure costs in serving net-metering customers, and must also make sure that no costs are passed to utility customers without solar. It was that argument Nelson disputed, citing evidence presented to the Senate Committee by Ouachita Electric General Manager and CEO Mark Cayce, who said solar power actually saves money for his co-op and its members by reducing the burden of meeting peak power demands.
Cayce, whose co-op is headquartered in Camden, testified before the panel a few weeks ago.
Thomas, a lawyer who has chaired the PSC since January 2015, told the AAEA in brief remarks that “big picture” legislation to expand the state’s solar marketplace could accelerate Arkansas’ economy if leaders embrace encouraging policies. The state is ranked by many measures as 11th in its amount of annual sunshine, but places near the bottom of state rankings for solar adoption. Considering land availability in the state, Thomas said capturing that resource could make Arkansas a key player in the solar industry nationwide. “There is a very good opportunity for solar that is produced here to be sold in north and (East Coast) markets,” Thomas said.