Net metering, considered by many to be a great benefit to residential solar energy users and utilities alike, is now the subject of much controversy. According to the US Energy Department, net metering is instituted in 43 states, the District of Columbia and 4 territories. Several countries have adopted some form of net metering including Brazil, Denmark, Italy, and it is proposed in France and Spain.
Net metering is basically a billing mechanism. The way it works is that when a utility customer’s solar panels produce more electricity than the home is using, the electricity meter spins backward and the utility will give the customer credit for the energy the homeowner is sending to the grid. In states with net metering programs, residential solar has taken a leap forward. In California, for example, the amount of solar installed each year from 2010 to 2012 increased by 160%, according to the Solar Energy Industries Association.
A 2013 study shows that net metering delivers a benefit of more than $92 million per year to non-solar ratepayers.
The billing arrangement was seemingly straightforward until utilities started pushing back, beginning to charge fees to solar users. Utilities are concerned about the increase in residential solar energy generation, even though it still makes up a very small portion of the overall power generation in the country--about one quarter of 1%, according to the Energy Information Administration. But it’s the fact that it’s increasing at a steady pace that has utilities worried. In California, Arizona, North Carolina and Colorado, all strong US solar markets, utilities recently submitted plans to cut credits and raise fees for solar customers.
From the utility’s standpoint
Why do utilities seem to "not play nice" with solar? One way that utilities look at net metering is that they’ve invested in transmission and generation but they’re losing out on that investment with more and more solar producers feeding into the grid. Don Brandt, Chairman and CEO of Arizona Public Service (APS) said in a news release, "As a national leader in utility-scale solar, we believe APS can help make Arizona the solar capital of America. One of our responsibilities is to make sure the infrastructure is in place to support a future of rapidly increasing solar adoption."
Solar customers who have installed solar to cut costs or have fixed-rate electricity for the long term are now faced with fees they hadn’t factored into the investment.
In a recent blog post by Helen Burt, Pacific Gas & Electric’s (PG&E) Chief Customer Officer, she said "When customers install solar and use Net Energy Metering, they avoid paying their fair share of the electricity grid that they use at night."
Regulations exist that prohibit commercial and industrial customers from generating their own energy, but for homeowners it’s largely unregulated and utilities have no control of what goes on "behind the meter," as David Field, CEO of One Roof Energy put it. So from the utility’s standpoint, if more and more homes are generating their own power, eventually they will have far fewer customers but must maintain the same infrastructure for distribution. In addition, utilities have seen less energy use among its current customers. Energy efficiency measures are having a real effect on electric bills—according to a June 2013 report by the Energy Information Administration (EIA) the average electricity demand in the US is expected to be down 4.5% during the summer of 2013 compared to last, while electricity costs are expected to rise 2.2%.
Solar customers respond
Not surprisingly new fees imposed by utilities have caused great concern for the solar industry. Solar customers who have installed solar to cut costs or have fixed-rate electricity for the long term are now faced with fees they hadn’t factored into the investment. Recently a lobbying group called The Alliance for Solar Choice (TASC) was launched and is made up of many of the leaders in the field of residential solar energy: SolarCity, Sungevity, Sunrun, Verengo. TASC will be announcing new alliance members in the near future who will assist with its grassroots lobbying efforts. Bryan Miller, Sunrun Vice President of Public Policy & Power Markets and President of TASC, said that "There’s a very small amount of political influence solar companies have fighting mammoth utilities." So TASC is leading a grassroots effort, getting homeowners with solar on their rooftops to speak up.
A protest held 21 August, organized by the Sierra Club at Southern California Edison
In Arizona a local lobbying group called TUSK (Tell Utilities Solar Won’t Be Killed), led by Barry Goldwater, Jr. is getting solar owners and advocates activated. There are 18,000 residential solar customers and 15,000 have already contacted the commission about what they see as the unfair solar tax levied by APS. These Arizona activists have good reason to think their efforts will pay off with an example set in Idaho. When the Idaho Power Company wanted to raise the cost of electricity for solar and wind customers and essentially quadruple the fee for renewables connecting to the grid, renewable energy users spoke up. In the end, the Idaho Public Utilities Commission sided in its ruling with the homeowners and small businesses that had installed renewable power.
Politics and policy
Most studies indicate that solar and other renewables are a benefit to utilities. The CA Crossborder Study, a 2013 study that evaluated the benefits and costs of net energy metering in California, for example shows that net metering delivers a benefit of more than $92 million per year to non-solar ratepayers. With solar being an obvious benefit to the environment and an excellent way for homeowners to hedge against electrical rate increases, "It’s time for an honest discussion," Field said. That discussion should include utilities, regulators, policy makers and end users of renewables. Field added that "In order to have that honest discussion you have to have all the facts." At this point each side is running competing commercials and blog posts, mudslinging with no clear solution in sight.
Solar industry leaders can help by pushing for a public debate.
What is needed is for regulators to step up and commission a cost-benefit analysis, and then determine how to address the issue when all the facts are on the table, Field said, adding that "You can’t win public opinion by poking each other in the eye." Solar industry leaders can help by pushing for a public debate.
When asked if we’ll still be having this same discussion a year from now or five years from now, TASC’s Miller said "It depends how the utilities approach the issue." He added that, "They’ve tried to change the rules in the middle of the game by implementing solar taxes. They’re trying to swap out net metering through hidden taxes."
The Vote Solar initiative teamed with the Interstate Renewable Energy Council, the North Carolina Solar Center, and Network for New Energy Choices, to develop a policy guide called Freeing the Grid to raise awareness of the issues and to encourage lawmakers and utility regulators to make net metering programs as "inclusive as possible and to ensure fair retail credit for power produced."
Written by Anne Fischer, Managing Editor, Solar Novus Today