A Utility's Push for Solar Fees Could Shut Down the Entrepreneurs Who Built Iowa’s Solar Economy

Lawmakers are considering a new solar fee, urged on by a utility owned by Warren Buffett’s Berkshire Hathaway. Small-business owners see their future at stake.

Ideal Solar’s owners, Troy and Amy Van Beek, walk among the solar panels at the Maharishi University of Management’s solar array. Credit: Dan Gearino/InsideClimate News

Ideal Solar’s owners, Amy and Troy Van Beek, helped launch a solar industry in Iowa. They and other small business owners fear a proposal in the legislature would increase the cost of rooftop solar enough to chase away future customers. Credit: Dan Gearino/InsideClimate News

This story was co-published with The Weather Channel.

FAIRFIELD, Iowa — Walking between rows of solar panels in the largest project their company has ever done, the co-owners of Ideal Energy feel a mix of pride and unease. One giant task is almost done, and many more are just ahead.

"I couldn't have done it with anyone else," said Troy Van Beek, an entrepreneur and former Navy SEAL, about his wife and business partner, Amy Van Beek.

Over the past 10 years, this couple has been a leader in launching a solar industry in Iowa, showing how entrepreneurs can build a market almost from scratch.

Now, they and other small business owners are in a political fight for their future as they try to keep Iowa lawmakers from passing legislation that they fear could kill the state's still young rooftop solar industry.

A proposal making its way through the Iowa legislature would impose new monthly fees on homes and businesses that own solar power systems, adding years to the payoff period before customers' utility-bill savings would cover the cost of adding solar. It's part of a national wave of utility-backed plans that would reduce the financial benefits of home solar, to the benefit of utilities. The leading supporter of the Iowa bill is MidAmerican Energy, a utility owned by Warren Buffett's Berkshire Hathaway.

The entire state of Iowa had less than 1 megawatt of solar installed in 2009 when the Van Beeks started Ideal Energy. Nearly all of the country's solar development was in the sunniest states or in states with substantial subsidies for rooftop solar, of which Iowa was neither. Today, Iowa is up to 96 megawatts, the majority of it installed on homes and businesses.

Ideal Energy is one of about a half-dozen Iowa solar installers that entered the market when it was nearly nonexistent and built it project by project.

Chart: Iowa's Solar Power: Where Is the Growth?

The site of the couple's walk was a 1.1 megawatt solar array with battery storage, located in a field about a mile from their Fairfield office. In California and other leading solar states, 1.1 megawatts is nothing special. Here it's huge.

It is a showpiece for everything Ideal Energy can do, and a leap from the small rooftop solar systems they installed when the company consisted of Amy doing all the marketing and Troy doing all the installations. Now with about 30 employees, the company still installs systems on houses, although the co-owner is much less likely to be climbing on the roof and turning screws.

Iowa only ranks 39th in installed solar power. (Wind energy is king here, with more than 8,400 megawatts.) The state's solar market has been so small that most of the large national players don't bother with it.

To kickstart solar in Iowa, local businesses needed to take risks—and that's what Troy and Amy did.

Building a Solar Industry Almost from Scratch

In the mid-2000s, Iowa's solar industry was "microscopic," consisting of a few solo entrepreneurs and some electrical contractors who occasionally did solar as a sideline, said Barry Shear, owner of Eagle Point Solar in Dubuque, who started his company in 2010 and is a founding board member of the Iowa Solar Energy Trade Association.

There were projects here and there, but nothing resembling the solar economy that has started growing there recently. It now tops 800 employees at 64 businesses, most of which are installers or developers, according to the national Solar Energy Industries Association.

"If you're in a place like Iowa, it's probably not going to make sense for an entrepreneur to say, 'I'm going to go all-in on solar,'" said Eric O'Shaughnessy, a researcher at the National Renewable Energy Lab.

He has studied the role of entrepreneurs in the solar economy and found that the pioneers were often very small businesses that did not stick around. But some of those early businesses lasted long enough to build a base of customers and help to popularize solar in their regions.

"There are people who took risks way back when, and a lot of this is because of them," O'Shaughnessy said, referring to the solar boom that has taken hold in many parts of the country.

Most of Iowa's solar projects are built for homes, farms or businesses, like this solar array that Ideal Energy built on an apartment building in Fort Madison, Iowa. Photo courtesy of Ideal Energy.

Most of Iowa’s solar projects are built for homes, farms or businesses, like this solar array Ideal Energy built on the School House Apartments building in Fort Madison, Iowa. Photo courtesy of Ideal Energy.

Another other key element has been policy support, such as tax credits, said Matt Edwards, co-owner of CB Solar of Des Moines, a solar installation company that launched in 2013.

"Without that jumpstart, maybe there isn't an industry," he said.

The key federal policy has been the investment tax credit, which currently allows solar system owners to deduct 30 percent of the cost of a project. This credit will soon phase out, dropping in value in 2020 and 2021 and then going away. In addition, Iowa has a 15 percent solar tax credit, which is set to step down on the same timetable as the federal credit.

Iowa's solar companies have been preparing for the loss of the tax credits, which they think they can endure because the prices of solar components continue to fall. But the addition of solar fees, which could take effect this year if the measure passes, would be too much, solar advocates say.

"Margins are razor thin everywhere, so anything you do that affects the economics is important, and utilities know that," said Becky Stanfield, Midwest director for Vote Solar. "They are trying to design these charges to be just enough to suppress the solar market."

The Utilities' Argument

The leading Iowa solar companies work together on policy issues, but they are up against some heavy hitters. MidAmerican is leading the charge for the solar fee legislation, joined by statewide business groups.

MidAmerican says the proposal means solar customers would pay "their share" of the costs to maintain the electricity grid. Almost all solar customers are connected to the grid, allowing them to buy electricity when they need it and sell excess power to the grid for a credit. Solar advocates point out that rooftop solar helps decrease demand for power from the grid, avoiding the cost of building new power plants and reducing the burning of fossil fuels that contributes to climate change.

Versions of the bill have passed in the Iowa Senate and a House committee. The next step is a floor vote in the House, which could happen any day. The fact that a vote hasn't yet happened is a sign that the House's Republican majority doesn't yet have the votes to pass it. People on both sides of the issue say this is a close one.

The bill does not specify an amount for the fee, but MidAmerican says a typical household with rooftop solar should pay an additional $328 per year to cover grid services. This figure, which is about $27 per month, is likely what MidAmerican would seek to charge if the bill passed. And that is enough to deter future customers, Troy believes.

The Solar Entrepreneurs Fighting for a Future

Troy Van Beek grew up in rural Wisconsin and became a Navy SEAL, the special operations force that does some of the military's most dangerous work. From there, he moved to private security, eventually working with two partners to start a security firm.

Everything changed for him on a hot day in Nairobi. He was sitting behind the wheel of an SUV that was stopped in traffic. A man walked up to the vehicle's open window and began to speak.

"He had a bottle in his hand and he said he was going to break the bottle on my face if I didn't give him 50 shillings," the equivalent of less than one U.S. dollar, Troy said. "I looked up at his face and he had the most bloodshot eyes I've ever seen. "I was like, 'Ok, you win,' and I paid him off and I slipped out of there."

The encounter weighed on him. At the root of it, he thought, was a grossly unfair distribution of resources between the wealthy world and everywhere else. He began to think about how energy policy played a role in this, and saw value in the sustainability of renewable energy.

"It transformed me," he said.

He looked online for college programs that specialize in sustainability and found one at the Maharishi University of Management in Fairfield.

Troy Van Beek and his wife and business partner, Amy, in their largest project so far, at Maharishi University of Management in Fairfield, Iowa. Credit: Dan Gearino/InsideClimate News

Troy Van Beek and his wife and business partner, Amy, launched Ideal Energy in their small town of Fairfield, Iowa, because they saw a need for sustainable energy. Credit: Dan Gearino

Amy was born in Fairfield. Her parents had moved there in the late 1970s as part of the influx of people who built a community based on the teachings of Maharishi Mahesh Yogi, the Indian guru who popularized transcendental meditation.

The meditation community, many of whom had come from the coasts, had an uneasy relationship with the people who had been in Fairfield for generations. "It was totally weird," she said. "It was like we were living in a fishbowl here. It didn't mix well with traditional Midwest culture."

She left Fairfield to go to art school, but soon returned and finished a studio art degree at Maharishi University. She started working at her family's construction business, which is where she found her affinity for shepherding big projects.

She had her first conversation with Troy at a dinner party in 2006, and they married in 2012.

Finding Solar Demand in an Untested Market

Fairfield, population 10,400, has elements of a typical Iowa county seat city, from the Hy-Vee grocery store to the grain elevator. But they are intermingled with the architecture and philosophy of the several thousand residents who have made meditation a central part of their lives.

In 2008, city leaders in Fairfield convened a panel to draft a plan for how to encourage businesses and households to better embrace renewable energy and sustainable living. Troy became a member of the committee.

He got to know the people in Fairfield's business community and learned what they needed in terms of managing their energy use and costs. He found one big obstacle: There was no local company that could provide the energy services that the businesses wanted.

In response to this demand, he and Amy started Ideal Energy there in 2009, working out of their house. They started as a consulting firm, working with clients on ways to reduce energy use. They did not intend to specialize in solar installations, but that turned out to be what many of their early clients wanted.

Southeast Iowa had a steady supply of solar customers, including households, retailers, small factories and farms.

Ideal Energy's largest project has been a 1.1 megawatt solar array, built with energy storage, for Maharishi University of Management in Fairfield, Iowa. Photo courtesy of Ideal Energy

Ideal Energy’s largest project has been a 1.1 megawatt solar array, built with energy storage, for Maharishi University of Management in Fairfield, Iowa. Photo courtesy of Ideal Energy

Ideal Energy and Iowa's other solar pioneers took risks in entering an untested market, but they also had some lucky breaks. A big one came from the utility Alliant Energy, which had a solar rebate in the early 2010s that, when added with federal and state tax incentives, made it so that the energy savings from projects would cover costs within a year or two.

The Alliant rebates contributed to what was, by Iowa standards, a solar boom from 2012 to 2014. The state had its first year with more than a megawatt of new solar in 2012, with 1.08, which jumped to 3.94 in 2013, followed by 15.19 in 2014, before Alliant began phasing out the program because the demand was more than the company had budgeted for.

Alliant, the state's second-largest utility after MidAmerican, has not taken a position on the legislative proposal.

'We Want to Survive This Process'

Ideal Energy's most significant customer turned out to be just up the road from its offices. The 1.1 megawatt solar and storage project, about three times larger than any other the company has done, is in a farm field across the street from Maharishi University.

Completed in mid-December, the project's solar panels are mounted on racks that tilt throughout the day to follow the sun, increasing their power output. Together, the solar array and batteries will provide enough electricity to meet more than one-third of the campus' needs.

Amy says other large projects are being finalized, though she can't discuss the details quite yet.

At the same time, the legislative proposal "threatens our business and the people we employ," Troy wrote in an op-ed in an Iowa newspaper.

If the bill doesn't pass, the Van Beeks will be able to concentrate again on managing their growth. At about 30 employees, they are still small enough that they can personally oversee every project, and they don't want to lose that.

They can see that the solar market, a market they played a big role in building, is gaining momentum. They want Ideal Energy to make it through growth with its values intact.

"We want to grow at a rate that we can do this sustainably," Troy said. "We want to survive this process."

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