Net Metering Caps - Now What?

Wed, 2012-10-03 08:27

As Net Metering policies reach maximums, policy makers are challenged to continue the growth of distributed solar in a way that is fair economically and productive environmentally. Utilities, regulators, and customers continue to debate the issue, while the future of solar hangs in the balance. If you read “Net Metering – Why The Battle?” you know that concerns over the policy are centered around fairness.

Even as states like California choose to extend policies, it is with the caveat that further cost benefit analysis is necessary, leaving the policy open for continued debate.

What does the future of net metering mean for the future of distributed solar? The answer to that question all depends on the viability of the options that are available to take the place of, or extend, the policy.

Off The Grid One option that is the greatest departure from current policy would be for customers to go ‘off-grid,’ without any type of net metering. An off-grid rooftop solar system is not connected to the grid, and excess power generated on site would not be fed back into the grid. The customer would essentially generate their own power, for their own use, separate from the utility.

The off-grid option presents some challenges. By choosing to go off-grid, customers must have a means to store the power that is produced but not used. Power is stored in batteries that require the commitment of more space, making them impractical for urban settings. Batteries typically contain toxic heavy metals and chemicals, which diminish the environmental benefits in the eyes of some. However, as energy storage technology improves, there is a chance that on-site, off-grid storage could become a viable option.

New Business Model A revised utility billing structure, as part of a new business model, could present a way for net metering to exist, in an altered capacity. The goal of a revised billing structure would be to strike a balance between costs and benefits of solar power generated by utility customers.

Rocky Mountain Institute recently collaborated with Pacific Gas and Electric (PG&E), California’s largest utility, to examine steps needed to adapt to a business environment characterized by new technology, energy efficiency, and a greater amount of customer-generated energy. The results of this collaboration were released in a report earlier this year titled, “Net Energy Metering, Zero Net Energy, and the Distributed Energy Resource Future: Adapting Electric Utility Business Models for the 21st Century.” The report acknowledges that “rate structures and incentives designed to stimulate the early adoption and scale-up of rooftop solar systems, electric vehicles, and other new technologies and design approaches will need to be modified over time, as adoption rates increase.”

It’s not clear how changes to the utility business model will play out, but change could come in the form of adjusted rates paid to customers who put power back into the grid. Rather than retail price, credits to customers may be adjusted to reflect their portion of fixed costs such as grid maintenance and transmission.

A Shift In Favor Of Other Policies A movement toward more feed-in tariffs as an alternative to net metering is also possible. Cooperation from utilities is still required in this scenario but the complicated billing issues are somewhat avoided. Feed-in tariffs require utilities to pay rates set by governing bodies, such as a public utilities commission. Long-term contracts are negotiated between the homeowner and utility and typically last 15-20 years. Feed-in tariffs are newer in the U.S. but are more commonly used in Europe. The guaranteed rates and long term contracts of feed-in tariffs may also help homeowners obtain financing for their solar system.

Until it’s less expensive to invest in renewables than it is to buy power from the utility, financial incentives will be necessary to support solar growth. As solar continues to face political and economic challenges, all eyes are on the utilities and state legislature to determine where to go from here.

To learn more about solar and working to grow this alternative energy source, check out Everblue’s Solar Training courses.

By Amy Malloy

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