The debate over net metering for solar systems has made its way to Wisconsin and the state has done more than any other to kill the solar industry. Earlier this month, Wisconsin Public Service Commission voted to allow We Energy to increase fixed charges for every customer and lower the price solar customers are credited for solar energy, effectively killing the solar industry before it gets started.
Across the country, utilities have been trying to fight off the growing rooftop solar energy industry and if legal challenges from the solar industry don't hold up this could be a formula to fight solar around the country.
What's going on in Wisconsin
In a rate case approved by regulators, We Energy has been approved to charge customers a $16 monthly fixed fee plus $0.1349 per kW-hr. That's an increase in the fixed fee from $9 per month previously and slightly lower cost per kW-hr.
Solar customers will also have to pay $3.80 per kilowatt per month and will only get $0.03 per kW-hr for excess energy created each month. In other words, a customer with a typical 5 kW would have to pay $35 per month just to get on the grid, even if they don't use any net energy.
Solar energy isn't big business in Wisconsin today, but this will kill what industry there is and delay the time of solar energy becoming economical in the state. It's really a shot across the bow before the industry can even get started. Worse yet for the solar industry, this could lay out a blueprint for fighting solar for utilities in other states.
How solar energy is going to fight back
While this will delay solar energy's growth in Wisconsin, it's not a deal killer long-term, it just may force a strategy change. Solar companies are beginning to add energy storage to solar systems and that would allow them to save excess energy created during the day and use it at night. The need for net metering would be reduced and the solar system itself wouldn't need to access the grid, saving the hookup cost.
SolarCity (NASDAQ:SCTY) and SunPower (NASDAQ:SPWR) are leading this space, moving beyond the testing phase for batteries into commercial sales. As batteries become more common in solar installations solar companies and homeowners can get around some of these restrictions.
The other way the industry is fighting back is through challenging Wisconsin's ruling in court. It'll take some time to see if the challenge will work but the industry is trying.
This won't be the end of the fight against solar
We Energies isn't the first and it won't be the last utility to fight the growth of the solar industry but it might be the most successful. It could be laying out a strategy that will work for other states to challenge solar, especially where the industry hasn't gained a foothold. This will be a development to watch because it could hinder the growth of SolarCity, SunPower, and competitors in residential solar.
Travis Hoium manages an account that owns shares of SunPower and is personally long SunPower shares and options. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.