House panel approves bill to reduce solar power incentive

A House panel has approved a bill that would eliminate much of the financial incentive for installing solar panels in Indiana.

The bill was approved Wednesday by an 8-5 vote and goes to the full House for consideration. It's already been approved by the Senate.

Utilities say the current Indiana system of compensation is unfair because it requires them to pay solar panel owners for power at retail cost—which is more than it would cost the utilities to produce the same amount of energy. They also stress that they own the infrastructure the solar panel owners rely on to feed their excess power onto the grid and should be compensated for it.

Republican Sen. Brandt Hershman's bill would significantly reduce that rate in five years, although it would protect current solar panel owners for 30 years.

Solar power provides only about 1 percent of the country's energy, and an even smaller percentage in Indiana. But the industry's recent rapid growth has traditional power utilities worried that it could eventually eat away at their business.

The cost and efficiency of solar technology has improved in recent years, but solar proponents contend the bill would reduce the return on surplus energy by nearly three-fold. They said that would likely kill the emerging industry by making it difficult, if not impossible, to break even on an expensive investment.