Residential solar industry down 90 per cent one year after net metering decision

One year after SaskPower’s decision to close its rooftop solar net metering program and not renew it, the residential solar industry in Saskatchewan is a shadow of its former self.

In September 2019, SaskPower announced its net metering program for residential solar projects had reached its power generation cap and decided not to renew the program in its existing form.

Brenden Owens is an owner at Prairie Sun Solar in Regina. He wasn’t happy about SaskPower’s decision, which has meant a big loss of business.

In the past year, Owens said the company has gone from doing 70 or more residential solar installations in a year to maybe five now. Owens said the company had to lay off three-quarters of its staff, going from eight employees down to two.

To be able to keep the company going it had to shift away from residential solar. Owens said the company already had some commercial work, but decided to put more eggs into that basket as well as things like smart energy management and general electrical work.

Owens said the company would not have survived without the change.

“We’ve been pretty strong on the commercial side of solar but the residential side kind of disappeared off the map. So if you were a company that wasn’t in on the commercial side, you were only focusing on residential (and) you really kind of lost all your work,” explained Owens.

Staffing at Prairie Sun Solar is now back up to six employees but some of them are in different roles as the skill set the company needs has changed.

Owens said he understands why SaskPower made the decision it did.

“I mean, at the end of the day it’s got to be sustainable to the guys that supply the power … It really doesn’t matter what we do as companies,” he said. “I mean, we tried to do whatever we could and didn’t get anywhere with it, so at the end of the day, why fight it?”

The industry

Prairie Sun Solar is one of the few companies that have been able to stay above water.

Owens personally knows of five companies that “disappeared completely” because of the ending of the net metering program.

Erwin Heuck is the managing director of the Distributed Energy Association of Saskatchewan, of which many solar companies were members.

He said, at his last check, the solar industry has dropped by 90 per cent in the past year since SaskPower’s decision — from about 1,000 installs per year to fewer than 100 now.

“It was tragic,” said Heuck.

Heuck estimates, at its peak, Saskatchewan’s solar was a $30-milliion-a-year industry, but not anymore. He said between 200 and 250 were employed in solar and many of them have lost their jobs because there’s not enough work.

Some companies have been able to pivot to commercial solar work, but Heuck said there’s only so much work in that area. He said the COVID-19 pandemic didn’t help either.

“The value of the product was down and with COVID and other things, I think people, financially, they obviously just had other priorities,” said Heuck.

The original net metering program included a rebate for solar panels and an agreement for SaskPower to buy excess power at the same price that the Crown corporation sold it for, about $0.14 per kilowatt. When that program reached its cap, SaskPower responded to the calls for something new with a program that had no rebate and would only buy excess power at about $0.07 per kilowatt.

“When you get beyond 15 years (to pay off the project), for some homeowners they don’t know if they’re going to still be living there,” said Heuck.

Heuck said it’s not attractive enough for residential customers. He explained the industry now mostly consists of large companies that can write off the assets and install solar panels to offset their own power use.

Heuck also feels SaskPower’s decision to review the program was premature. He said other jurisdictions will wait until residential solar hits around five per cent of residences, but SaskPower shut this program down when less than one half of one per cent of residences in the province had solar.

He said SaskPower also did it abruptly, not giving companies enough time to pivot and save their businesses.

The argument against

Part of SaskPower’s argument at the time was the program wasn’t sustainable. Some argued it amounted to a subsidy for the industry. However, Heuck said it was an incentive, which other industries get when the government recognizes the value of their businesses.

Minister Don Morgan wasn’t the minister responsible for SaskPower at the time the decision was made, but he currently holds the portfolio and was made available to answer questions this fall.

Morgan said the original net metering program wasn’t meant to be a long-term program.

“The idea was to try and generate some interest in solar energy, try and develop a bit of a market for solar panels (and) develop qualified installers,” said Morgan.

Morgan said the program had always had a 16-megawatt capacity or a time limit, and it ended up reaching the capacity cap first.

“It was there for developing that much capacity. It did, so now we’re trying to move on with something that’s more equitable and more sustainable,” said Morgan.

At the time the decision was made, then-minister Dustin Duncan said buying power back from rooftop-solar was at a premium compared to larger, commercial solar projects.

He said the old program would have had a net negative impact to SaskPower of about $54 million by 2025, but the new program would only cost between $4 million and $5 million.

Speaking now, Morgan said SaskPower believes it’s at a good balance right now.

“What the goal of SaskPower is now is to try and develop long-term, sustainable utility programs — things that benefit the province’s electrical grid, things that keep electrical rates as low as possible for the entire (province),” said Morgan.

He said 178 applications have come in under the new program.

One of the Saskatchewan Party’s election promises was to extend a small rebate to every SaskPower customer, costing about $260 million over the next year.

When asked why the government could do that but not weather the cost of the old net metering program, Morgan said the rebate is necessary to help with the effects of the pandemic and that everyone in the province will see a benefit, not just a small subset of customers.

Morgan didn’t have anything to say about the people who lost jobs or their companies in the wake of the SaskPower decision, saying he didn’t have the information to speak to the particulars of what people in the industry did before or after the decision.

Morgan did contend that good things came out of the original program. The industry developed some expertise, and the cost of installations and panels has come down.

“We’re hopeful that (the industry) will continue to grow and develop, but grow and develop in a way that’s sustainable for all of our users,” said Morgan.