State legislators here have kept a pretty low profile on renewable policy, particularly with regard to solar power. Alaska is the final frontier, and remote settlements mean many homes are built off-grid, i.e. ideal for self-sustaining renewables like small-scale solar. Along with rising fuel costs, Alaska’s frontier nature makes it an ideal candidate for solar power, and the legislature should adopt aggressive measures to promote solar use by its residents. Unfortunately the legislature has failed to provide strong solar power rebates and other incentives, so far.
Alaska’s (Lack of A) Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar power.
Unfortunately Alaska lacks any state or local Renewables Portfolio Standards. As we’ve seen in other states that lack an RPS, no targets (and no penalties for missing targets) for renewable energy production has translated into very little being done to promote solar power here.
Solar Performance Payments in Alaska
The Golden Valley Electric Association (“GVEA”) – Sustainable Natural Alternative Power (“SNAP”) Program pays GVEA customers for every kilowatt-hour (“kwh”) of solar power produced by systems up to 25 kilowatts (“kw”). SNAP participants may either sell all produced energy to the utility, or may integrate the SNAP program with net metering to sell only surplus electricity (after home usage) back to GVEA.
Unfortunately GVEA’s SNAP program is the only performance payment available in Alaska. Even worse, as you are about to see, the GVEA SNAP program is almost the only incentive, period, available to promote residential solar power here.
Alaska Solar Utility Rebates, Tax Credits, and Tax Exemptions
We said almost, because amid the cold empty plain of (missing) solar power incentives, there is one lonely piece of legislation that authorizes municipalities to exempt residential solar power systems from taxation, i.e. exempts the value the solar power system adds to your home from being counted in property tax calculations. Note that we said the state legislation authorizes municipalities to exempt your solar power system from property taxes. The law does not require that municipalities do so. Be sure to ask the expert installer we partner you with about whether or not your town offers such an exemption.
Utility Prices in Alaska
We pay a little bit more than the average state for electricity out here. Quite a bit more, really. Alaska’s average electricity price is 17.57 cents/kwh; well above the national average of 11.43. We know you hate paying that extra (almost) 30% on your electric bill. But where you’re currently seeing larger bills, you could be seeing bigger savings! Higher electricity prices means greater opportunity to save money by producing your own clean, earth-friendly solar power. Not to mention the fact that the rising environmental costs and dwindling supplies of fossil fuels is going to lead to even faster rises in energy prices, likely sooner rather than later. When energy prices start going up and up (and up), you’re going to be saving more and more (and more) money for making the switch to solar now.
Alaska Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.
Alaska has statewide net metering standards in place. Utilities are required to offer net metering to all systems up to 25 kw. All surplus energy is credited to your next month’s bill at the retail rate, and all credits may be carried over indefinitely.
That’s a pretty great net metering law for residential customers. We gave net metering a “B” overall only because of the system size limit. We’d like to see that 25 kw cap raised significantly to allow commercial, industrial and other high-demand customers to meet all on-site electricity generation needs through solar power.
Between 2009 and 2011 Alaska had a statewide net metering law, but no standards regarding the procedures through which a customer gets connected to the grid – a necessary prerequisite for net metering. That change in May 2011 when the Regulatory Commission of Alaska (“RCA”) passed uniform interconnection guidelines. While the RCA’s standards are not the fullest we’ve seen, they do lay a foundation for getting you on to the grid. Each utility is required to draft a standard interconnection agreement of no more than two pages. A utility may require a customer to have liability insurance if the insurance is easily available at a reasonable cost, but the utilities can not require you to install an external disconnect switch. Here again we’d like to see the 25 kw system size limit raised to allow for larger customers to take advantage of net metering savings.
5kW Example Return on Investment in Alaska
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – even without state incentives, that’s still going to drop a lot!
- Since the feds calculate their incentive based on actual out of pocket costs, no state solar power rebates or other incentives means a bigger federal solar tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500.
- After the federal solar tax credit we subtract your first year’s energy savings, which we estimate to be about $754. That brings your cost after the first year to $16,746, a discount of nearly $8,500 from the starting cost.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 15 years. After that you’ll be turning a profit (yes, a profit) for the rest of the life of your solar panels, which is typically about 25 years total.
- In addition to those direct wallet-fattening savings, you also increased your home value by $19,710.
- Not to be forgotten, you’ve created a lot of green for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 76 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Alaska Solar Consensus
Despite high electricity costs nearly screaming for an efficient (and clean) option like solar power, solar policy here is sadly lacking. It all starts with the RPS, and just like every other state we’ve seen without minimum targets for renewable energy production, Alaska has done little to nothing to promote solar power. With payback timeframes and year 1 discounts lagging, the best Alaska can pull is a “D” grade.