17 April 2012
Forget bankruptcies and Chinese PV modules. One of the biggest issues facing the solar industry sits inside the box: a net meter.
While some form of net metering exists or has been proposed in several other countries, including Canada, Australia, France, Italy, Denmark and Germany, net metering is more prevalent in the US, and reflects a different approach to solar.
While some form of net metering exists or has been proposed in several other countries, it is more prevalent in the US.
“In the US, the overwhelming majority of solar systems are intended to offset on- site electric load. In many European counties (Germany is the classic example), even small-scale solar systems are utilized as in-front-of-the-meter generation resources, where little or no on-site load is required,” said Ben Higgins, Mainstream Energy’s Director of Government Affairs..
As of March, 43 US states plus the District of Columbia and Puerto Rico have net metering programs in place, allowing residential and commercial customers who offset their electric use through rooftop solar panels to run their electricity meter backward if they generate more power than they use.
“Because there is no wide adoption of feed-in-tariffs in the US, being able to offset your energy usage is really the only way to generate a return on your solar investment,” says Schott Solar President and CEO Tom Hecht. “It is a pretty basic and fair concept: if you generate your own electricity, you should be able apply that generation against what may be more expensive electricity from the local utility. Without net metering, there would be a lot less distributed generation.”
But the issue is increasingly coming under attack from utilities, which argue net metering customers aren’t paying their fair share and, more pointedly, allege poor households that can’t afford to install solar are financing wealthy customers’ PV panels. Plus, net metering caps limit the number of customers who can financially benefit from installing solar systems.
Protecting and encouraging net metering is a key policy priority of the SEIA in 2012.
Protecting and encouraging net metering is a key policy priority of the Solar Energy Industries Association (SEIA) in 2012, says Carrie Cullen Hitt, SEIA’s Vice President of State Affairs. “We are very active in California where net metering is front and center,” she says. “We’re working to increase the cap in Massachusetts. In Louisiana, an ongoing contested proceeding just started, and this state is important because it’s in the southeast, where widespread net metering is not in place. In Texas a utility has proposed a fixed charge for net metering customers, which is important because it could be precedent-setting for surrounding areas.”
The main focus, however, remains California, where the net metering program is capped at 5% of a utility’s peak demand. Solar industry execs say California will hit this cap in 2013 unless law markers make changes to raise or abolish it.
Aside from it being the largest solar market in the US, “California is where the future happens first,” said Higgins. “So as we engage in this debate in California, it will inevitably bleed into other states.”
Net metering is working in California. The average cost of public sector or commercial solar systems has dropped more than 40% and residential prices have fallen more than 25% since January 2007. It’s saving the state money: public agencies and schools will save $4 billion in electricity costs over the next 30 years using net metering, according to SEIA. And despite utility companies’ claims, it’s not a program that only benefits the rich. The recent PVSolar Report found that nearly two-thirds of California home solar installations in 2009, 2010 and 2011 were in zip codes with median annual household incomes of less than $85,000 and not in the wealthiest areas of the state. Plus, according to a California Public Utilities Cost Benefit Analysis of Pacific Gas & Electric customers, net metering does not shift the cost to non-net metering customers.
What can the solar industry do to encourage net metering? Plenty.
Net metering is necessary for the industry, it is fair, and it is a net positive for the utilities.
“First, we need to work with the utilities to educate them on the advantages of distributed generation from both a grid standpoint and from a business opportunity standpoint,” Schott Solar’s Hecht says. “We believe the utilities have a lot to gain on both levels from distributed solar generation. As well, the solar industry needs to ensure that all stakeholders are aware of the issue, and that solar market participants are reaching out to the wider industry to make sure our positions are heard. At the end of the day, net metering is necessary for the industry, it is fair, and it is a net positive for the utilities.”
Written by Jessica Lyons Hardcastle, News Editor, Solar Novus Today