“Freedom Isn’t Free” is the often-quoted final line in a stirring patriotic song that immediately came to mind after reading a recently published opinion piece titled, “It’s Time for Energy Freedom in Alabama.” The Energy Institute of Alabama was created to promote reliable, affordable and clean energy. As part of that mission, we strive to bring clarity and balance to one-sided, misleading information. Our objective is to distinguish fact from fiction and, in this case, there are some blatantly inaccurate facts and heavily biased opinions.
I want to be clear: The Energy Institute of Alabama is comprised of six organizations that generate and/or sell electricity. Institute members have – and are – increasing solar capacity. In other words, despite the assertions in the article, We strongly support solar power generation and the infrastructure needed to support it. Remember, however, that sunshine is free but harnessing, storing, and using it is not. Investment in large-scale solar production is expensive and takes time.
There are three other important issues the article fails to fairly explain.
Let’s start with net metering. Simply explained, net metering allows those with solar panels to sell their excess electricity to their local power company and, in some states, requires the power company to buy it at full retail price. Sounds simple, right? But the retail price the solar user gets reflects the power company’s fixed costs for power plants, substations, transmission lines, repairs, etc. – none of which the solar customer pays. That’s not fair to the company and its customers, so power companies generally oppose a requirement to buy power and to buy it at an unreasonable price.
The majority of solar customers need to rely on the local power company for power when solar is not available. That brings us to the grid fees and capacity charges. To cover the cost of keeping these marginally paying customers connected and serviced, the local power company may charge a fee. Without that fee, non-solar customers are essentially subsidizing those who pay less by using solar power.
Contrary to statements made in the article, grid fees and capacity charges are not fees on those who harvest their own energy. Grid fees even the playing field for solar customers who want the advantage of reliable electricity. The authors of the article oppose grid fees and support net metering so that solar customers can save money to the disadvantage of everyone else. That is unfair to the local power company’s full-service customers and undermines the long-term stability of its ability to meet current and future electricity needs.
Alabama’s future electricity needs are a special concern in the economic development arena. You will find no stronger economic development force in Alabama than the six members of the Energy Institute of Alabama and their partners in the energy industry. They are constantly working to recruit the top industries with the best jobs to our state.
Our members know that a strong, reliable energy network is critical to the success of Alabama’s economic development efforts. Anything that undermines our energy sector, like net metering, undermines our economy in the long run.
Finally, the article supports allowing third parties to finance and own solar systems and sell clean energy directly to customers. Third-party financing of solar systems is enticing because it provides homeowners and businesses a way to harness solar energy without upfront costs. If that sounds too good to be true, it is. The third-party owns what’s on your rooftop and either leases the equipment to you or sells, as in requires you to buy, the energy it captures. The third party is now a utility and it is likely taking advantage of government incentives and tax breaks while you save very little on your energy costs. Plus, you have a long-term commitment that makes selling your property difficult because the commitment transfers to a buyer.
The bottom line is this: Be careful of the freedom dangled before you. Nothing is free – even Alabama’s sunshine has a cost when you want it to light up your home at night and warm it in the winter. Our state is blessed to have a strong, reliable, and affordable energy network comprised of many of your friends and neighbors. Our goal is to continue to promote a diverse energy sector and those who support it.
Seth Hammett is the chairman of the Energy Institute of Alabama and vice president of business development for PowerSouth Energy. Hammett spent 32 years in the Alabama House of Representatives, including 12 years as Speaker of the House. Visit Energy Institute of Alabama for more information.