HOUGHTON – Last spring, Jason Blough invested $23,000 in a 9-kilowatt, self-installed solar array at his Chassell home. With a 30 percent federal tax credit, he expected to pay for the rest of the system in less than 10 years by selling excess power generated by the panels back to the electric company, using Michigan’s net metering system.

But less than a month after his installation was complete, a new bill introduced in the Michigan Senate could make the investment essentially worthless.

Senate Bill 438 would eliminate the net metering program, which requires electric utilities to purchase consumers’ solar or wind-generated electricity at the same retail rate they sell it for. Net metering would be replaced by a value of solar (VOS) system in which customers sell the power they generate to utilities at wholesale generation rates, about 4 cents per kwh, then buy back the power they use at retail rates, about 21 cents per kilowatt-hour for Upper Peninsula Power Company customers in Houghton County.

“People up here have already been hung out to dry as far as rates,” said Blough. “They’re among the highest in the country. People have either financed systems, or invested instead of putting away for retirement. … I took money I would have used for retirement.”

According to Abhilash Kantamneni, Blough’s colleague at the Keweenaw Research Center and a solar expert who plans to testify before the Senate Energy Committee Thursday, the proposed system would push back the timeframe for solar panels to pay for themselves from about 10 years to more than 40, well beyond the warrantied lifespan of the panels. Essentially, according to the headline of a post on his website, abhilashkantamneni.com, he feels the bill would “end solar in Michigan.”

Even worse for solar owners, they can’t even power their own homes with what they generate. Every watt would go to the power companies at the 4-cent rate, and every watt they use would have to be purchased retail.

“This doesn’t make any sense at all,” Blough said. “I should get the power I’m generating for myself for free. Even if you buy my excess at wholesale, that’s not nearly as bad as if they turn around and sell me the power I just sold them at wholesale.”

Kantamneni said the bill appears to be driven by Michigan’s large utilities, though he doesn’t understand why they would be threatened by what amounts to just a tiny fraction of Michigan’s overall electric generation.

He said the Michigan Public Service Commission considered three alternatives before recommending the VOS buyback system specified in SB 438, then went with one formulated by downstate DTE Energy that would pay home solar providers at a rate determined by the cost of fuel the utilities would save – 4 cents per kwh.

Some other states use VOS methodology to determine buyback rates, Kantamneni said, but also consider other costs they’re saving utilities, such as reduced transmission costs and less need to expand production. States such as Wisconsin and Texas offer 10 to 14 cents per kwh, he said, still well under most U.P. rates but close to par with some Michigan rates.

“I think a fair real value of solar has to come from a comprehensive review of solar on the grid, not from a utility company,” he said.

Michigan Technological University professor Joshua Pearce, who has been involved in solar research for many years, said his work shows even net metering buyback rates working out as a subsidy for utilities, largely because most solar electricity is produced during peak usage hours when it costs electric companies the most to keep up with demand.

Kantamneni noted that not only would eliminating net metering hurt those who have already installed solar systems, and stop the plans of those interested in doing so, it would also put out of business the small startup companies that have been popping up to fill the solar market.

State Sen. John Proos, R-St. Joseph, sponsor of SB-438, could not be reached for comment, but he said in a July press release that he feels the state should have a goal of cleaner energy generation, but should not subsidize or regulate production to meet those goals.

“I don’t think the Legislature should be involved in picking winners and losers,” he said in the release. “Michigan ratepayers have helped prime the pump for these new technologies since 2008. Now it’s time for them to compete head-to-head.”