By Guy Page
Reduced power rates subsidies and increasing interest rates, leading to reduced sales of solar arrays, preceded the June 3 filing of bankruptcy of the parent company of Vermont’s legacy solar power company, SunCommon.
Four days after state regulators dropped the guaranteed ‘net-metered’ payment price for solar power by two cents per kilowatt-hour, iSun, parent firm of SunCommon, filed for bankruptcy.
State law obligates utilities to buy power from the owners of permitted solar power arrays. The cost per kilowatt-hour established by regulators was once more than 20 cents per kilowatt hour, but now is below 15 cents – still far above the market rate for power, which hovers around five cents per kilowatt hour. Ratepayers without solar power in effect subsidize the high rates utilities must pay to solar power array owners. When the solar net metering law passed more than a decade ago, the Legislature justified the high set rate as a means to reduce carbon emissions and reduce spiking energy costs at hours of peak consumption.
As reported last week in VDC, the Vermont Public Utilities Commission on May 30 announced that all net-metered solar power installations seeking permits after August 1 will receive two cents per kilowatt less than the current rate. A petition for bankruptcy filed June 3 in the State of Delaware is signed by Jeff Peck, founder of Peck Electric, which became iSun after Peck Electric acquired SunCommon and then became a publicly-traded company on the NASDAQ.
The PUC decision was good news for owners of currently-installed solar generators, but bad news for companies like SunCommon trying to entice new customers.
“These cuts represent the seventh reduction to net metering compensation since 2017, a period that has seen a 32% drop in net metering installations,” Peter Sterling of industry trade group Renewable Energy Vermont said June 5.
As competitor Green Mountain Solar explained in a June 3 press release:
Vermonters who already have solar panels and net-metering agreements with their utility will not be affected by the upcoming rate decrease. In fact, along with these changes comes the announcement of a new blended residential rate for solar net metering, which will increase the base net-metering rate to $0.1839 per kWh, up from $0.1765. This will also take effect on August 1st, 2024. The value of your solar does increase with rising utility rates, and we are seeing that in effect at the state level with this update.
For those considering transitioning to solar, there is still an opportunity to secure the current rate by submitting the necessary permits before August 1st. Those who sign before August 1st, will earn $0.1639 on their solar going forwards. After the August 1st deadline, any new solar customers will earn $0.1439 (two cents less).
This effectively means that customers who submit permits after August 1st will receive 12% less credit for their solar energy production, due to the additional $0.02 reduction per kWh.
Renewable power industry spokesmen say the cut will cost rooftop solar owners almost $5000 in lost credits on their electricity bill over 10 years.
In addition to the prospect of reduced income, solar installers like SunCommon also face a serious challenge in skyrocketing interest rates. As seen below, interest rates under three percent have jumped to 7.5% in just two years.
A rooftop solar power installation costs $15,000-$20,000. Not as pricey as a new car, but still too much for most families to pay out of pocket. Knowing this, solar power companies offer financing. When interest rates are low, so are monthly payments. But high interest rates give prospective buyers pause.
Although the news of the bankruptcy seems abrupt, the proverbial stormclouds have been building all year long. As Solar Power World reported June 5:
“The publicly traded company was acquired by The Peck Company Holdings in 2021. iSun spent the last few months restructuring and working to correct course. In March, the company announced a new CEO, followed by a restructuring of the executive team and a reverse stock split in April. The future is uncertain after filing for bankruptcy.”
While Vermont’s net-metering law requires regulators to make solar power accessible to Vermonters of all incomes, the PUC’s overall mission requires it to deliver electricity at the lowest possible cost. Under the Scott administration, the PUC has apparently given weight to the latter.
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