Correction: Joe Ozegovich receives about $400 in MLGW credit annually. 

Joe Ozegovich was an early adopter of solar energy. He installed solar panels at his Bartlett home in 2012, and he gets about $400 in Memphis Light, Gas and Water credit every year because of it. 

But Ozegovich is an outlier. He signed up for a Tennessee Valley Authority program — which no longer exists — more than a decade ago that incentivized people to invest in solar panels and sell the power they generated back to TVA at a premium. Then, TVA sold it to other customers as a “green credit.”

Beginning in 2005, there were 278 MLGW customers — commercial and residential — who installed solar panels under that program, but TVA discontinued the program in 2019. Ozegovich is one of 66 local participants finishing out his contract.

MLGW power bills expected to increase in October

The number of solar panels dotting residential rooftops and yards across the U.S. has increased twentyfold in the past decade, but in Shelby County, growth has been slower.

Bryan Jacob, the solar director at the Southern Alliance for Clean Energy, has authored six reports on solar power in the region, and Tennessee has been lagging. Around 3.7% of U.S. homes were powered by small-scale solar power systems in 2020. That figure is 0.06%, or fewer than 300 total, among MLGW customers. 

The costs versus the benefits

Ozegovich is the energy and climate co-chair of the Sierra Club’s Tennessee chapter, and he credits his dad for his gravitation to clean, efficient energy. Ozegovich grew up in New York, and his childhood home was built in the early 1930s. When the energy crisis occurred in the 1970s, his dad invested in insulation, transitioned from oil to natural gas and bought more efficient cars: a Chevy Vega and Ford Pinto, at the time. 

Like Ozegovich’s decision to install solar panels a decade ago and enroll in TVA’s program, it was a heavy lift, but he’s reaped the benefits of his early investment.

“I try to communicate tax savings as a way to get people to think ahead, even if they’re not an environmentalist,” he said. 

As of last August, there’s a 30% federal tax credit that can offset an investment into solar panels. Even with that credit, it takes a long time for Shelby County residents to see a return on their investment, and MLGW tells customers that installing solar panels isn’t an overall money-saving measure because of the upfront costs.

“Solar is difficult to justify in this region based on economics alone,” MLGW said in a statement. 

When retiree Jacques Morrise installed solar at his Millington home in 2021, it cost him $62,000 between the panels, the installation and the batteries he bought to ensure that he didn’t lose power even when there was an MLGW outage in his area. 

On average, a residential solar panel system costs between $16,000 and $23,000.

By the numbers

Since 2019, when TVA phased out the program in which Ozegivich is enrolled, the net growth of Memphis homes with solar has fluctuated: 69 in 2020, 89 in 2021, 62 in 2022 and 27 so far this year. 

Jacob ranks utilities and states by calculating the watts of solar power per customer, to control for vast population differences. 

In the Southeast, there are 580 watts of solar power per customer, on average. TVA customers had less than half of that in Jacobs’ most recent report, and Tennessee customers had about a third.

He’s watched states such as Florida climb in his annual report rankings and said it’s because some utilities have incentivized residents to invest in solar power.

The cost of installing solar panels has dropped by half over the past decade, but it’s still out of reach for many residential customers. 

So, you’re considering solar panels …

MLGW argues that the area’s low rate of adoption is due to the overall cost of a solar system, the utility’s relatively low rates for electricity and Memphis getting less sunshine than other parts of the country. 

But Jacob blames TVA’s lack of net metering, in part, for the area’s slow adoption of solar. 

When local residents are installing solar panels, they generally try to design a system that will supply just enough power for their typical use, since any excess energy will be sold to TVA below the retail price. But power use fluctuates, and there are times when systems will generate more electricity than they’re consuming. In those moments, net metering would allow customers’ meters to “run backward” as they contribute to the grid.

TVA doesn’t allow its local power companies, such as MLGW, to purchase power from anyone except them — including customers with solar panels. That’s why MLGW customers have to install two meters for solar power: One records the excess power they generate and sell directly back to TVA; the other allows MLGW to determine how much power the house is using from the local utility grid. 

MLGW eyeing solar power, battery storage to meet energy demand

Next year MLGW will look at the feasibility of generating its own solar power locally. 

But Jacob sees utility-scale solar and small-scale solar as complementary resources. 

“They serve a different purpose, and (the Southern Alliance for Clean Energy) wants to see a thriving market for solar across all those different market segments,” he said.