Dive Brief:

Kentucky legislators on Thursday approved rolling back net metering for solar customers, to the disappointment of solar advocates and environmentalists in the state.

Senate Bill 100 limits customer choice, the environmentalists argue, while Kentucky utilities say net metering unfairly shifts costs to non-solar customers, echoing a countrywide debate over solar rates. The bill also would allow the Public Service Commission to determine credit amounts for solar via utility-claimed costs rather than kWh value, another frustration of solar advocates according to Lane Boldman, executive director of the Kentucky Conservation Committee.

The Kentucky bill contrasts with two wins for lowering barriers to solar deployment last week in Maine and Arkansas. In both states, bills had the backing of business and ratepayer advocates in favor of eliminating market barriers, such as net metering, third party financing and project size caps, all of which now exist in Kentucky solar laws.

Dive Insight:

As the cost of solar drops, business customers see the advantages of switching to the carbon-free resource. But the battle over who will produce the energy and how they get compensated continues across the country as utilities grapple with how to navigate a less centralized market structure.

"The question isn't, is solar good, the question is who's going to own it and what way is it going to manifest itself?" said Boldman.

"Is it going to be large solar farms by the utilities? Or is it going to be a mix of neighborhood and community solar installations? Or is it also going to be independent resident residential solar done by independent installers?"

Electric generation in Kentucky is dominated by coal-fired power, but as the demand for energy goes down in the state and business customers realize they can generate their own power, the more than 20 utilities across the PJM Interconnection and Southeast energy markets in the state see their business model threatened.

The legislative majority flipped from Democratic to Republican three years ago and the "uncertainty" of where the market is headed led to utility lobby efforts that businesses, solar developers and environmentalists have been fighting. Part of that battle ended last week when the bill passed the State Senate 50-38 after passing the House earlier that day.

"I think what [utilities are] trying to do is just get a handle on where they're going with solar and then try to align the customer base to that," said Boldman.

"And it's too bad they don't see a place for rooftop solar as well, or independent solar as well, because I think it would still benefit them. It's not competition. There's only about a thousand residential installers and a thousand residential installations in the state, just not much."

Existing laws in the state cap net metering capacity at 1% and net-metered systems at 30 kW. Solar makes up only 0.10% of the state's current electric generation.