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Kentucky Residential Solar Costs Are Set To Increase Next Year

Gray Watson/Creative Commons

Beth Nahinsky wants to reduce her reliance on fossil fuels. That’s why she was planning to buy solar panels for her home in the Tyler Park neighborhood in Louisville.

Then a tree fell on her house and the money Nahinsky saved instead went to repairing the roof. Now, she doesn’t think she can afford the solar panels.

And the timing is unfortunate. Starting next year, it will be more expensive for Kentuckians to install solar panels on their homes.

Federal solar tax credits will get smaller beginning January 1, 2020; the same date that Kentucky’s new net metering law takes effect.

Anyone who puts solar panels on their home through the end of the year will be eligible for a 30 percent federal tax credit for the cost of the system. Next year that drops to 26 percent and by 2022 it will disappear completely for residential customers.

Under a new state law that takes effect in 2020, the Kentucky Public Service Commission will decide how much utilities can charge solar customers for the electricity they feed back into the energy grid.

Credit Ryan Van Velzer
Beth Nahinsky stands outside her home in Louisville’s Tyler Park neighborhood.

While the new rates are yet to be decided, it all but ensures that costs will rise for solar customers who buy in after the new year.

“I would say if you want certainty in your decision about solar, 2019 is the last year you can lock in 25 years of net metering — no worries what the Public Service Commission decides — and also get a 30 percent tax credit,” said Matt Partymiller, Kentucky Solar Industries Association president.

Right now, solar customers receive a credit from utilities for the full retail cost of the electricity they put back on the grid. But beginning next year, utilities can apply to the commission to set new rates for net metering customers.

At that point, the commission will decide rates that reflect the “costs necessary to serve” net metering customers. This will likely include the costs of transmitting and distributing electricity, a cost not reflected in the current rate.

Investor-owned utilities like Louisville Gas & Electric and Kentucky Utilities will have to file individually, meaning the costs for solar customers could be different across the state.

The Public Service Commission will take comments on how to best implement the new law until September 20.  A court hearing will be held at the commission office in Frankfort on October 1.

Partymiller says he’s optimistic that the commission will set rates close to the retail rates utilities are paying now.

But at the end of the day, even if potential customers like Nahinsky are motivated by the environment, Partymiller says the majority of solar customers are still making a financial decision.

“And if that final consideration doesn’t weigh out, I don’t suspect they will be as incented to purchase solar, especially in the short-term,” Partymiller said.

Nahinsky, for her part, said the idea of paying off solar panels for the next two decades is daunting, but she still hopes she can afford it down the road.

“Because if we keep depending on fossil fuels I think that we are going to see more issues with the climate and more adverse effects in every aspect of life, if we don’t take care of the climate now,” she said.

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