If you’ve been tracking the solar industry lately, you’ve probably read about net metering—it’s getting a lot of press. But the old adage that ‘any press is good press’ isn’t true in this case: net metering is coming under attack in many states across the country. If you breathe the air and/or pay an electricity bill, you should care about solar-friendly policies like net metering.

Before exploring why, let’s review the basics. Net metering allows electricity customers to meet their electricity needs with an on-site electricity source, usually solar; customers receive compensation for the electricity they don’t use that funnels back onto the grid. Net metering means that people pay for the “net” energy they consume—the energy purchased from their electricity company minus the energy their electricity company buys from them.

Net metering is a simple way to compensate solar users for the myriad of benefits that come from increasing solar’s penetration onto the grid.  It’s pretty intuitive why solar has clean air benefits, but there are important cost and grid reliability benefits too. That’s because our peak energy use tends to overlap with peak solar output. When solar hits the grid, it reduces peak demand, and electricity providers (and by extension, ratepayers) spend less money on costly peak power sources.  Consistent solar power over time increases grid reliability and resilience, and introduces a more diverse and home-grown power source into the mix.  Reductions in peak demand help reduce the need for new
(and sometimes dirty) fossil fuel power plants.

Lots of studies highlight the benefits of solar for everyone—not only those with solar on their property. See this recent article from the Institute for Energy Economics and Financial Analysis as a recent example. States across the country in which independent net metering studies have been carried out—including Vermont and Mississippi—indicate that net metering produces a net benefit to all ratepayers. In fact, a recent report from Environment America reviewed 11 net metering studies, eight of which showed the value solar customers provide to the grid exceeded the retail cost of electricity. In other words, solar panel owners are likely being underpaid through net metering, rather than receiving subsidies.

Net metering is administered in most U.S. states, but not everyone buys its positive impact. The recent affront on net metering tends to show up as: 1) adding a fixed or variable usage charge to the accounts of net metering customers, 2) reducing the compensation structure for customers who send solar electricity back to the grid, and/or 3) setting low state-wide net metering caps that can’t be exceeded. Below are a few examples:

  • – Two large Arizona utilities, Tucson Electric Power and Arizona Public Service, have proposed production fees for net metering customers.
  • – Colorado’s largest rural electric co-op proposed halving the reimbursement paid to net metering customers.
  • – In Massachusetts and Nevada, many regions are hitting against state-wide net metering caps that jeopardize solar development. A compromise is coming together in Nevada, but we’re still waiting on Massachusetts.
  • – A bill passed through the Minnesota legislature would have imposed higher fees for some net metering customers. The Governor vetoed the bill, but more discussions will likely play out in the coming weeks.
  • – In Ohio, regulators are considering limitations to the state’s net metering rules.
  • – A bill passed by the Washington State House would effectively eliminate net metering.

 

This may not paint a pretty picture, but don’t get the wrong impression—net metering won’t disappear any time soon.  The policy exists in most states, and over a third of states receive an “A” net metering grade, according to “Freeing the Grid.”

Here at Standard Solar, we’ve seen firsthand how net metering policies influence projects. In Maryland, a state with strong net metering policies, we estimate that as many as half of our public sector projects were economical because of net metering. Take Pocomoke City as an example. Net metering made solar development possible not only for the city, but also for several nonprofit organizations that participate in the city’s solar network. The solar array at Pocomoke City offsets 2,067 metric tons of carbon dioxide a year, which is equal to the annual carbon sequestered by a 1,639 acre forest.

So, where do we go from here? Our challenge will be to educate legislators and state utility commissions on the benefits of fair net metering policies, and to ensure that these policies adequately compensate solar customers for their contributions to the electricity grid. We need more “A” grades—especially in states where solar potential hasn’t caught up with solar installs. This will benefit all of us.