Indiana’s Solar Industry Has Slowed Way Down. This Bill Could Fix It, but Lawmakers Won’t Hear It.

The beginning of 2018 was quiet for the once-booming solar industry in Indiana — “crickets” quiet. Installations slowed and installers were forced to lay off employees.

It seemed that some of their worst fears were coming to fruition: That state’s 2017 decision to pass Senate Bill 309, striking down an incentive for homeowners to install solar panels, would upend the industry just as it was starting to grow.

Meanwhile, across the state line, Illinois’ solar industry was a national leader, growing 37 percent in one year and casting a dark shadow on Indiana.

So, lawmakers introduced a bipartisan bill aimed at restoring the incentives. “We wanted to restart that conversation because this is still an open wound for many people,” said one those lawmakers, Sen. J.D. Ford. Removing the incentives, he said, “took the legs out from the industry.”

But their proposal — Senate Bill 430 — is not expected to see the light of day. Sen. Jim Merritt, R-Indianapolis, chair of the Senate Utility Committee, and Indianapolis mayoral candidate, said he will not give Ford’s bill a hearing.

“I think we need to give this some time for us to see where we went wrong and where we went right,” he told IndyStar. “I’d like to give 309 some time to see if we did in fact dampen down the solar industry. And that’s why I didn’t hear the bill this year.”

‘2018 exceeded our fears’

The year before the legislature passed SB 309, which removed the incentives, Indiana’s solar industry was among the fastest growing in the country. The industry added 1,100 solar jobs in 2016, growing the industry by 72 percent, according to the Solar Foundation. The state’s residential solar capacity also doubled between 2016 and 2017.

But as talks of ending so-called net metering surfaced, everything changed. Under net metering, utility companies were required to pay customers the retail rate for any electricity their solar panels put back on the energy grid. Utilities fought the system, arguing those customers should only receive the wholesale rate, which is much lower.

And net metering died in Indiana.

In 2017, the growth rate of Indiana’s solar industry dropped 93 percent. That year, the state added only 75 jobs. Installers rushed to get jobs done under the wire for residents racing to get solar panels before the law’s December 31 cutoff to be grandfathered in for the most robust net metering incentives. But with the new year came little new work.

“2018 actually exceeded our fears in terms of negative impact, the first half of the year especially,” said solar installer Chris Rohaly, who owns and operates Green Alternatives, Inc. He had to lay off three people last year.

“It was a real blow for our financial health,” he added, “and we are still trying to dig out of that hole.”

Tariffs levied by the Trump administration only added to their misery, causing a national slowdown in solar installation, said Sean Gallagher, vice president of state affairs at the Solar Energy Industries Association. He said the tariffs, which made solar panels and related parts more expensive, will result in a nationwide $8 billion loss in solar investment by 2022.

Indiana did not suffer the worst fate in 2018. The solar industry still grew 12 percent, while some states saw declines. Still, Indiana’s growth pales compared to the growth happening right next door in Illinois, where the industry experienced a 37 percent job boom during the same period.

“Federal policy provides the baseline” for the industry, Gallagher said. “How solar really does in a particular state really depends on the policy the state implements.”

Illinois casts a dark shadow

In 2016, the Illinois legislature passed the Future Energy Jobs Act, a sweeping package of policies and incentives aimed at boosting renewable energy and the related jobs.

The incentives from the law are funded by ratepayers, and amount to a few bucks a month.

It’s important to note that Illinois’ utilities are deregulated, so the markets function differently than those in Indiana. But some of the policies fueling Illinois’s renewable transition have been tried in regulated and deregulated states alike.

Notably, the Illinois law mandates that 25 percent of the state’s electricity come from renewable sources by 2025, and that it increase the state’s solar capacity more than 40 times by 2030. It introduced a community solar program to help schools and neighborhoods take advantage of solar power and net metering, which is also available to residential customers.

Indiana once pursued similar policies, but retracted some or enacted toothless versions of others. In addition to nixing net metering in 2017, Indiana remains the only Midwestern state with no way of enforcing its renewable energy goals.

So when Gallagher looks at Illinois, he’s not surprised to see that solar installations have started to skyrocket, along with the jobs needed to complete them.

“All those new jobs are a result of people getting ready to go out and implement these programs,” Gallagher told IndyStar. And what Illinois did was in “pretty stark contrast to what Indiana did in 2017,” he added.

That’s when the state legislature passed a law to phase out net metering. An IndyStar review of the industry in that same year found that the legislation was likely premature and highly disruptive to a still-developing industry.

In fact, most of the growth Indiana installers experienced last year was due to increased demand in Illinois and other neighboring states with proactive policies, industry experts said. Local installers agreed, saying that is where they are doing many of their jobs. 

Jim Straeter, an installer and founder of Ag Technologies Inc., is one such installer who said he has made a conscious effort to expand outside of Indiana because of SB 309. He said the amount of solar his company sold in 2018 was “definitely down.”

“Illinois now has the reputation of leading the Midwest in renewable policy implementation,” Straeter said. “Indiana is solidly on the bottom as far as reputation in renewable implementation goes as we are the only state that has enacted negative policy legislation in the Midwest in recent years.”

Chance to undo 309 goes nowhere

SB 309’s author, then-Sen. Brandt Hershman, argued net metering was no longer needed to create a solar power incentive. While solar panels were expensive when net metering went into effect, the price had dropped due to a flood of imports.

But by the time the the bill took effect, tariffs had begun to change the equation, making solar panels more expensive again.

Asked in January 2018 whether the tariffs would lead Indiana to reconsider net metering, Merritt, the net metering law’s co-author, said he’d have to wait and see.

“We need to give [solar] as much of a push as possible,” he told IndyStar then. “We’ll monitor it, and if it does change the financial landscape, then we’ll act.”

A year later, Ford, D-Indianapolis, would argue the financial landscape has changed and Indiana’s industry is struggling. But Merritt said it is too soon to tell.

“I think what we need is at least two years, maybe five years, for everything to settle out,” Merritt said this week. “Let’s give it some room to find out if we put a complete damp blanket on solar.”

Other states have not been so reluctant.

It took Nevada lawmakers just one year to reinstate its net-metering program after its removal prompted installers to cease operations and customers to complain. And after a steep drop from 2016 to 2017, the state saw a sharp jump in residential installations last year once the program was reintroduced.

Heavy hand of utilities

Many solar industry experts and advocates say utilities have wanted to keep residential installations to a minimum so they can add renewable energy sources to their portfolio and charge customers more for it. In Indiana, utility solar installations more than doubled in 2018 after net metering ended.

As SB 309 was being considered in 2017, utilities and their political action committees poured millions into the legislature in the form of gifts, entertainment, campaign contributions and lobbying, according to an IndyStar analysis. 

Sen. Mark Stoops, D-Bloomington, who is a co-author on Ford’s bills to reinstate net metering, said “the state of Indiana is stepping on competition” to help the utilities. 

Merritt, who chairs the Senate Utilities Committee, has received more than $80,000 in campaign contributions since 2010 from the Indiana’s five investor-owned utilities and the Indiana Energy Association.

Defending his independence, Merritt said his “friends in the utility industry weren’t too happy” when he proposed an unsuccessful bill in 2009 that would have expanded net metering.  

“I can’t speak to campaign contributions,” he said. “But I know what I’m doing here and support net metering and support solar.”

Merritt said he wants to see the state’s more than 3,000 solar jobs double. Still, he said he is “satisfied with our measured approach.”

Ford and others see it differently. His bill has bipartisan support with co-authors Sen. Vaneta Becker, R-Evansville, and Sen. Ron Alting, R-Lafayette. Both Becker and Alting voted against 309, which passed the Senate handily. The vote in the House, however, was much narrower — 56 to 43 — which surprised many.

It was a controversial bill then and remains a contentious issue, Stoops said, which is exactly why he thinks SB 430 should be heard.

“If it got a hearing, I think many people would wake up,” he said. “I think a lot of the people who felt it was a bad idea would show up.”


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