We Energies has proposed an innovative pilot project that would increase the amount of electricity it generates from solar power without passing the costs onto its existing customers. This information was originally published in the Milwaukee Journal-Sentinel:
The company also has proposed a smaller pilot project in which it basically would rent space for solar panels on the rooftops or property of commercial and industrial customers.
For the main project, large customers who want to support renewable energy could buy an interest in a solar project that We Energies would operate. The pilot project would be limited to 150 megawatts.
The customers would receive a credit each month on their bills for the revenue from the project, less operating costs and depreciation. The operating costs would include the return, currently 10.2 percent, that We Energies is allowed to earn on investments for its system.
“Customers want to be the key driver for sourcing more renewable energy for Wisconsin,” said Richard Stasik, a director of state regulatory affairs for WEC Energy, the parent company of We Energies.
The proposed pilot project would give large industrial and commercial customers — who typically need more electricity than can be generated by rooftop solar panels — a simple way to meet goals for using renewable energy.
At the same time, We Energies would add more solar power to its system without passing the costs on to all of its existing customers, potentially increasing rates, while still making a profit on its investment.
“This is a creative idea,” said Tyler Huebner, executive director of Renew Wisconsin. “We have to give them credit for this.”
The project’s scale is expected to lower costs.
“With some conservative estimates, we believe customers will save money with these investments over time,” Stasik said.
The power from the solar project would be sold at wholesale rates. But many of We Energies’ largest customers now pay close to wholesale rates for power.
The Public Service Commission is expected to rule on the proposed projects in the next few months. Specific contracts also will need to be approved by the commission.
A similar pilot project was approved for Madison Gas & Electric Co. last year.
“It is a novel approach that both utilities are taking, and it is a relatively new thing throughout the country,” said Martin Day, administrator of the Division of Energy Regulation at the PSC.
We Energies hasn’t disclosed the planned project. But it has been expected to buy the remaining 150-megawatt interest in a 450-megawatt solar project in southwestern Wisconsin.
Nationally, 150 megawatts is enough electricity for roughly 24,600 residences.
For the smaller pilot project, customers would receive a monthly lease payment in exchange for allowing We Energies to put solar panels on their property.
The lease payments would be tied to the amount of power, up to 2.25 megawatts, generated on the site.
The appeal for customers, such as school districts, is they would not have to come up with the money on their own to install solar panels.
We Energies, which plans to hire contractors to install the panels, basically would be providing a turnkey service.
Both pilot programs could appeal to customers who don’t want to become experts in solar power — or want the chore of cleaning solar panels or replacing inverters, the devices that convert direct current to alternating current, said Day of the PSC.
The pilot project would be limited to 35 megawatts, and We Energies would set aside 10 megawatts for nonprofit organizations or government entities.
Rooftop solar panels now generate an estimated 65 megawatts in Wisconsin, Huebner said.
Competing in the market
The project also would give We Energies experience with operating so-called distributed solar generation — as opposed to large power plants — and how that new capacity would tie into its local distribution system.
It also would give the company a better sense of what investments it may need to make in its distribution system in the future.
We Energies would be competing to some degree with private companies that now install and arrange financing for solar panels for commercial customers.
But Mike Cornell, energy consultant and director of business development for Arch Electric, in Plymouth, supports the proposed pilot project.
“It’s a neat approach to growing solar,” he said.
Arch Electric, which installs commercial and residential solar panels, has seen its business quadruple in the past three years.
“There is plenty to go around,” Cornell said.
That said, state law may bar other companies from doing what We Energies is proposing: Lease space for solar panels.
The law, which is somewhat of a gray area, prohibits a third-party from owning solar panels and selling the power to a business or organization as well as to We Energies.
“It’s the one thing that’s holding the industry back in this area,” Cornell said.
The PSC has been asked to change the restriction but has said that the issue should be left to the Legislature.
We Energies would oppose any change, said Stasik, the director of state regulatory affairs.
We Energies, though, has been awash in excess power.
That is no longer the case after the company shut down the 1,190-megawatt coal-fired power plant in Pleasant Prairie this year. And, in all likelihood, We Energies eventually will need additional generating capacity that could be met through the two proposed pilot projects.
In the past, We Energies didn't embrace solar power, Huebner said, partly because of its excess capacity.
“It wasn’t a business opportunity for them,” he said. “Now it is.”