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Critics say a recently announced low-income solar program by DTE Energy stretches the definition of “community solar” and will shortchange participants.
The program is a result of a settlement signed by DTE Energy and about a dozen Michigan environmental groups, which see it as a positive step toward expanding solar access in lower-income areas. Others, though, say it will deny customers the financial benefits of owning solar and largely benefit the utility.
“It doesn’t come close to meeting hardly any of the hallmarks of a community solar program,” said Rob Rafson, a regulatory witness for Great Lakes Renewable Energy Association, which was the lone group to object to the settlement. “It’s a piece of crap … and it is aggressively financially positive to DTE in every respect.”
A spokesperson for DTE Energy said in a statement that state regulators “did not find merit in any of GLREA’s claims” and noted that the Michigan Public Service Commission’s settlement order refers to the program as community solar.
The settlement grew out of a DTE proposal for customers who use the company’s Voluntary Green Pricing program, which allows them to pay a premium for clean energy to subsidize lower income people who couldn’t afford it. When environmental groups objected to the plan before the commission, DTE initiated settlement discussions.
The parties agreed that DTE would build three solar installations of at least 250 kilowatts in Highland Park, River Rogue and Detroit, and establish a program in which low-income customers in those cities can subscribe to receive power from the installations, along with a $25-$30 per month credit. A council composed of three low-income residents and representatives from a nonprofit, small business and DTE will help oversee and implement the program.
DTE will contribute only $300,000 to each installation and will solicit charitable donations to pay for about 70% of the project’s costs. The utility says it won’t profit off of the program, but it will own the installation, which represents a departure from most community solar models across the country.
DTE’s ownership of the assets eliminates a major benefit to the community, said Will Kenworthy, Midwest regulatory director with the Vote Solar advocacy group.
“In my head I think of it as ‘utility-owned community solar’ with elements that are community based, but obviously it’s not community solar because the utility owns the assets,” he said. “That means it’s not giving the community wealth building opportunities that community ownership models provide.”
Vote Solar signed the agreement and plans to help implement the program, but Kenworthy stressed the group agrees with many of the shortcomings identified by the project’s critics.
Highland Park environmental group Soulardarity decided not to sign the settlement because of the ownership arrangement and the reliance on charitable solicitations to fund much of the program. The company, which reaped a $30 million windfall during the pandemic and recently gave its CEO a raise worth more than the new program’s cost, should be fully paying for it, said Jackson Koeppel, Soulardarity’s executive director.
“The fundraising efforts will cover almost the entire cost of the program, so DTE is claiming it has concern for low-income people but not funding this, and that does not make sense,” he said. “We think the shareholders should pay because they can afford to.”
DTE will also compensate low-income subscribers less than what it compensates regular rooftop solar producers. The company argued in negotiations that the compensation rate for low income subscribers is what the rate should be for all rooftop solar owners service territory wide, Koeppel said.
And while the program’s low income subscribers will be compensated about 3 cents per kilowatt hour, DTE will sell power to them for about 20 cents per kilowatt hour, Rafson said.
Koeppel called the formula that the utility uses to establish value for energy generated by the installations “deeply flawed,” and he charged that the arrangement creates a financial benefit for DTE.
“There’s a delta between what they should be paying households and what they are actually paying, and that delta is going somewhere — if not the shareholders, then the company,” Koeppel said.
Rafson noted that DTE will benefit from a 26% tax credit, and it will likely hire a subsidiary that will charge above market rate for construction. The sum of such arrangements will add up to an approximately $47 million DTE benefit, Rafson said, all while the company frames the project as a charitable act.
In its order, the MPSC said the agreement “provides for community involvement.”
“The community solar pilots included in the partial settlement agreement represent constructive steps in providing a community solar option to DTE Electric customers that may otherwise not be able to participate in [clean energy] programs,” it wrote. It also opens the door for further experimentation in ownership models when the program is reviewed in the coming years.