Much of a financial incentive for installing solar panels would be eliminated in the coming years under a bill passed Monday by the Indiana Senate.
The measure passed 39-9 Monday and goes to the House for consideration.
Solar panel owners who feed surplus energy to the power grid are currently compensated at a retail market rate that helps pay off their investments. Utility companies say the rate of compensation offered through net metering is more than it costs the utilities to produce the same amount of energy.
Solar energy proponents say the current rate is needed in order to break even during the useful life of a solar panel system.
Sen. Brandt Hershman's bill would drastically reduce that rate in five years, although it would grandfather in current solar panel owners for 30 years.
Hershman said concern over compensation rates will be moot as the cost and efficiency of the technology improves.
Solar energy accounts for less than 1 percent of Indiana's power, but it could threaten power company profits if its popularity continues to grow.
Hershman was accused of using inaccuracies to sell his bill to lawmakers.