FreeState is beginning the transition from net metering to parallel generation for new residential renewable accounts as a surge in solar installations reaches rate tariff limits.

Harvesting sunshine has seen a significant surge in the last decade. FreeState leads the state in cooperative member solar generation now, but that was not the case in 2009 and 2010 when LJEC and Kaw Valley Electric Cooperative boards set a net metering limit to ensure rate stability for all member classes.

In 2014 the State of Kansas adopted a net metering policy for Kansas Corporation Commission (KCC) regulated, investor-owned utilities to offer 1% net metering for Kansas utility customers. The cooperatives, which are not regulated by the KCC and were not required to uphold the statute, decided to go beyond the rule, citing the membership’s best interests. The boards set their limits at 5%, well above the statute, confident it would take the cooperatives well into the future based on the rate of adoption of renewable energy at that time.

But times have changed.

Solar Surge

The trustees set limits for renewable interconnection based on a first-come, first-served basis. In the past decade, the cooperative has seen an incredible increase in member-generated residential solar, and the demand does not seem to be decreasing any time soon.

“It’s hard to believe, but solar has increased 1,000% in the east district over 10 years and 4,000% in the west district in that same decade,” said Matt Lambert, FreeState’s energy use coordinator. “That increase is staggering in a relatively short amount of time.”

Lambert said that since he joined the cooperative in 2016, the increases in solar installations are 95% in the west and 133% in the east.

“Solar is just more affordable, but also it’s much more understood,” Lambert said. “People want to be more energy independent; they want to be more conscious about their carbon footprint, and they just want to do something.”

While the cooperative supports renewable energy, the surge in solar power has put pressure on the limits set all those years ago.

“The boards never anticipated getting this close to that tariff limit,” said CEO Chris Parr.

“Members need to understand that FreeState’s tariff limits were written and adopted for a reason,” Parr added. “If we allowed unlimited solar through net metering, it would affect our ability to provide equitable rates across all classes, and we would see much more cross-subsidization. We want to avoid that as much as possible. We must look at what benefits all our members, not just those willing to invest in renewables.”

When FreeState set these limits, cooperative solar projects were not on the cooperative’s radar. Since then, opportunities have surfaced that would benefit all members. The trustees decided to investigate those options.

Why not raise the limit?

Raising the tariff limit seems like the next step, but Parr said it does not work that way.

“Raising the tariff limit is just not that simple,” Parr said. He added that the cooperative would need to undergo a total cost-of-service study to make any changes, and, even then, it may not be enough to raise the limit.

“Because we are a not-for-profit distribution cooperative, we have to ensure that costs are covered and keep costs as equitable across all rate classes,” Parr said. “It’s not an easy task, and it’s about equity at the end of the day.”

Parr explained that most members end up subsidizing a small percentage of members who invest in renewables because there is no way to recoup the cost of grid connection. Interconnection is part of the solar installation process.

“We try to limit the cross-subsidization as much as possible,” added Parr. “The interest in solar and renewables, in general, has been incredible. It has shown us that renewables are important to our members. That gives us confidence that our solar projects are positive when providing members with the safest, most affordable, and reliable energy we can.”

Cooperative Solar

The FreeState board of trustees’ mandate is to do whatever is necessary to keep rates stable and low for the entire membership. Management and staff are committed to that directive, and one aspect of maintaining stable rates has been the cooperative’s solar partnerships, including the Kansas Sun Power Program in the east district, and in 2023 we will continue by partnering with Evergy in the west district.

These large-scale projects benefit every member and not just those who can invest in their solar projects. How does this benefit everyone? By keeping costs low and securing energy at the lowest prices possible.

“We have had opportunities to build green energy beneficial to all FreeState members,” said Parr.

“We wanted to take advantage of that. We know members care about green initiatives and keeping costs low, and these projects are a way we can meet both of those goals, financially and environmentally.”

Parr and Lambert emphasized that district solar projects are separate from the tariff limit.

“Our solar projects include a purchase power agreement (PPA),” Parr said. “This means that we purchase power from these farms through our partners Today’s Power, Inc., and Evergy.”

“The purchase of this renewable power fits into our overall power contracts,” added Parr.

Metering Transition

Lambert says the transition is not a moratorium on solar projects or options, but a shift in metering and the change in no way means members who want to add solar are not allowed to invest.

“We want to remind members that you can still do that if you want to add solar,” said Lambert. “We just have to go with a parallel metering.”

“Members who want to pursue solar will still be able to obtain credit for their production; it will just be a smaller amount,” Lambert added. “We are confident this option should be available for at least the next few years.”

When installing solar, members look for a return on investment or payback on the system. Lambert says that a net metering system was always a long-term payback on the investment. That parallel generation will still have payback, but it may take longer. Other energy reduction methods like LED lightbulbs, heat pumps, adequate insulation, and heat pump water heaters all have a quicker payback than solar.

“Using Less energy is almost cheaper and more environmentally friendly than creating and consuming more energy,” Lambert said.

“We do want to point out that members who are currently on net metering systems will be grandfathered in, which will not change,” said Lambert. “This transition is going to impact new solar installations.”

Lambert also encourages members to contact the cooperative before deciding to invest in solar because members need to weigh several factors before moving forward with the projects.

“Solar is a big investment,” said Lambert. “We want to protect our members’ investments. Unfortunately, some members work with solar companies that do not provide correct information, or maybe that company doesn’t have the information, to begin with.”

“It’s so important for you to have a conversation with us before the installation,” Lambert added. “We want you to do it the right way; we want to do it in a way that will make sense, provide payback, and meet the project’s goals.”

Both Lambert and Parr reiterated that solar is still a viable option for members who wish to go that route. Still, the transition to parallel metering will impact the payback or financial benefits of the installation.

“A conversation with us will help answer questions,” said Lambert.