A few years ago, Arkansas changed how individuals and organizations with solar panel arrays are compensated for the energy they generate for the grid. Ozarks at Large's Jack Travis noticed while reporting on solar arrays coming online this spring that all were grandfathered in under the old rules and wouldn't be able to operate under the new ones. He spoke with a local solar company to learn more and offers this report.
Across Arkansas, the math on solar power changed almost overnight. Where a school district or business once got paid close to retail price for the extra power their solar panels sent back to the grid, they're now getting a fraction of that.
The shift came from Arkansas Act 278, which cut net metering rates and ended a financing model that helped fund dozens of solar projects around the state.
John Coleman is with Entegrity Energy Partners, a Little Rock-based company that designs and builds solar and battery storage projects for clients, including the University of Arkansas, the city of Fayetteville and several Northwest Arkansas school districts. Coleman says the old policy credited solar customers at the retail electricity rate.
"Basically, what net metering is, is they allowed for every kilowatt hour that was generated by solar was credited at what the retail rate," Coleman said. "That any given customer would pay. So, you know, typically in this area, it's anywhere from 8 to 10 cents a kilowatt hour. If we were generating solar, every kilowatt hour was credited there, whether it was consumed at the local building level, or was pushed back onto the grid, the utility was required to give that value to it. Which is really important."
Now, Coleman says that credit has dropped to about 2.5 cents per kilowatt hour. Customers also lost the ability to combine multiple utility meters into a single project, a strategy Coleman's company used for clients like Fayetteville Public Schools to offset electricity use across several buildings with one solar array.
"You can't aggregate those meters in the same way," Coleman said. "There's a lot more hurdles and really not the economic value isn't there for the energy that's being generated. So it largely pushes you to do what we call behind the meter generation, where we would build solar that's just large enough to service the building, a given building, directly so that that building is consuming that energy all the time. We're not pushing energy back on the grid."
Utility companies pushed for Act 278, arguing that customers with one-to-one net metering weren't covering their share of grid maintenance costs, an argument known as cost shifting. Coleman says that debate was still being worked out by the Arkansas Public Service Commission, the body that normally regulates utility rates, when utilities took the issue straight to the legislature, instead.
"I think the complexity of the issue, the utilities really utilize that to kind of bypass the Public Service Commission, go straight to the legislators and lobby them effectively on this cost shift issue without really providing evidence to demonstrate that it was actually occurring," Coleman said.
Coleman says the timing of solar generation makes the lower rate more consequential than it might appear. Solar output peaks on hot afternoons, the same hours when electricity demand and the wholesale price of power are highest.
"When you think about an August afternoon and it's hot and humid here in Arkansas, and solar is generating a lot of energy, everybody is consuming energy at a clip that there's a lot of demand on the market at that point," Coleman said. "And so the market, if you look at the marginal pricing on the grid, the market will reflect that. You can actually see what those values are. But the way the policy was written, were only designated that basically that 2.5 cents, they call it the wholesale rate for energy. So it really hurt the economics of these projects."
Coleman says Entegrity has completed 57 solar projects around Arkansas. However, the rush to finish them before the law took effect has since slowed to a stop. The company has shifted new solar development projects to Kansas and Missouri. These new projects take a different approach, but of course, Entegrity is a private company, and Coleman couldn't share his secrets. That being said:
"We feel really good about the stuff that we are pursuing," Coleman said. "It just means that we've had to expand a lot more in our territory and what we're covering to be able to kind of reach the same revenues and whatnot that we were before."
He says it's been a hard trade-off to see the business go elsewhere.
"I grew up in Arkansas," Coleman said. "It was really cool during that period of time when we were growing, to be able to kind of establish those roots here and make that investment and have that impact. I mean, I think thankfully for our company, we are diversified."
To make up the difference, Coleman says Entegrity has leaned more on energy efficiency retrofits like LED lighting or HVAC control. They have also started to focus more on solar battery storage, which works differently than solar. Instead of selling power back to a utility, a business stores energy and draws on it to lower its demand charge. He says battery prices are dropping and electricity rates are rising, making these projects pretty attractive, though the technology isn't as far along as solar was when net metering was more favorable. But he expects the market to close that gap.
"We see where we can go do those projects and have to go drive that work," Coleman said. "And we think that's going to help carry along with some of the energy efficiency stuff and then the depleted solar, but still the solar that's left remaining, we know where it's going to be cost effective and the types of projects we can do. So I think in that regard, we're excited and kind of motivated to figure out those puzzle pieces. But it is fatiguing to constantly have to like shift and flow. The technology side of it is hard enough if policy and markets all kind of stayed the same. But when you're trying to figure that piece out, the financing piece and adjusting with the ebbs and flows and policy and markets too, it's a lot."
He also pointed to a separate law passed last year called the Generating Arkansas Jobs Act, aimed at fast-tracking energy projects tied to AI data centers. Some data centers are funding their own natural gas plants to power their facilities, but that added demand for natural gas drives up costs across the wider supply that other utilities also depend on. And the law lets utilities pass those rising costs on to regular ratepayers.
"Which is really unfortunate," Coleman said. "And there's just not as much oversight because the time that is allocated for the Public Service Commission to provide review on these projects was limited under that bill, for the purposes of fast tracking that investment."
Coleman says he understands the pressures that lawmakers are under to attract that kind of investment, even if he expects it to push electricity rates higher over time.
"On the one hand, you want that private investment in the state," Coleman said. "You know, AI is a huge part of that. And when you look around the economy, where the investment is occurring, so I can kind of understand how they got there. But I think it's going to lead to longer term cost impacts across the rate bases. Which is really unfortunate."
He expects relief, if it comes, will depend on how loudly ratepayers complain to their lawmakers as bills climb. Coleman says lawmakers have shown some openness to revisiting net metering, but he hasn't seen enough momentum yet to expect changes soon.
"And there seem to be a lot of favor for that," Coleman said. "There are a couple of key senators in the state that have driven that bill and then other subsequent bills. And a lot of the other legislators are kind of pointing to those leaders to come up with something."
For now, Coleman says his company is staying in the fight, even as more of its growth happens outside of the state that gave it its start.
Ozarks at Large transcripts are created on a rush deadline and edited for length and clarity. Copy editors utilize AI tools to review work. KUAF does not publish content created by AI. Please reach out to kuafinfo@uark.edu to report an issue. The audio version is the authoritative record of KUAF programming.
