How is Solar Power Regulated?

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by Dan Harding
solar.calfinder.com
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Government regulation is a preeminent issue in any major industry. As the solar industry continues to grow at a fast rate, the debate on how the industry is and will be regulated continues to heat up. So far, a lack of uniform rules and regulations seems to be the main conundrum. Many large-scale solar projects are currently tied up in courts and committees, while regulations on utilities and grid interconnection dominate the smaller, distributed-generation side of the industry.

Environment

The debate regarding environmental impact is having a profound effect on concentrated solar power (CSP) projects, especially in the sunny Southwest. There, the debate centers around how land-consuming power plants on public property affect local inhabitants. Big Solar wants a fast-track to solar development on federal lands, while local governments and environmental groups are hesitant to allow plans to go forth without preset regulation, or at least environmental impact surveys.

Last year, the Bureau of Land Management (BLM) put a moratorium on solar land-lease applications in order to conduct such surveys. The jury is still out, but it looks like certain solar energy zones will be put in place to regulate where solar developments may be fast-tracked.

Permitting

Another growing issue is that of city and county permit fees for solar installations of all sizes. The problem is that fees vary so widely from one municipality to another that it is causing confusion and hurdles for solar companies and consumers alike. In one city, total fees might cost $300, while next door they total $1,000 or higher. Solar activists argue that permit fees were acting as a solar disincentive, working in direct opposition to otherwise effective incentives.

And many cities are responding. Los Angeles County, for example, has promised to lower its fees from $1,143 to a uniform $370. In Colorado, the state legislature took control by setting statewide solar permit fees at $300 for residential systems and $1,000 for non-residential. Indeed, permit fees seem to be an area in which most potential regulators agree that uniformity is key.

Solar Power Providers

With a larger scale comes potential regulation of solar power providers, which typically deal in power purchase agreements with utilities, although utilities now have the incentive to build their own solar power plants as well.

The regulation of power providers is likely to stir up the most debate and therefore the most contention among industry and government leaders. Current regulations such as state net metering laws essentially regulate utilities while benefiting providers, but the prospect of taxing power providers is rejuvenating the regulation debate.

In Arizona and southern Colorado, the issue is currently in deliberation at the state or local level. The eventual regulations coming out of these and other Southwest governments could well set precedents and/or cause more dispute. Many in the solar industry are happy to deal with regulation at this time, while the general mood toward solar power is one of leniency and fast-tracking a still fledgling industry. Yet as the cost of solar panels continues to drop, the notion of taxing solar power will grow in popularity as government incentives inevitably decrease from current highs.

At this point, it's unclear exactly how home solar power providers and the solar industry will be regulated, and a firm answer on the matter may not come for years. The odds are that volatility on the subject - unless the federal government steps in one way or another - will remain high until the solar industry is firmly established within the greater energy industry.

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