Net Metering - Why The Battle?

Thu, 2012-08-23 01:54

If you read Net Metering At Legislative Crossroads, you are aware that net metering has proven to be an important policy in the advancement of renewable energy and has also become a divisive issue in the U.S. As many states quickly approach the regulatory cap on the number of systems eligible, the debate over how much financial assistance to provide for solar power is heating up. Pun intended.

Who are the players, and what are the concerns?

Utilities: The Bottom Line  While solar power-producing customers help utilities to satisfy energy demand, these customers also present a financial challenge. More customers producing their own power translate to a shrinking customer base for the utility. Net metering adds a subsequent financial burden, as utilities are also paying these customers for the power they generate.

To understand the financial impact of net metering that is causing concern for utilities, it is important to understand the basics of the utility’s billing structure. A utility bill has a fixed component to cover costs of transmission infrastructure and electricity generation. Customers who generate enough energy to support their household or business typically pay little or no utility bills and are therefore not contributing to the fixed costs of grid maintenance.

Utilities further complain that the rates paid to power producers do not account for the costs of storing and delivering the power produced by solar customers. These costs are subsequently passed to other utility customers in the form of surcharges.

Solar Customers: Payback Time  It’s clear that net metering boosts the financial benefits of an investment in solar power. Without net metering solar power could still exist, and translate to cost savings, but the payback period would be decidedly longer. Payback period is defined as the amount of time it will take for the savings from a solar system to return the up-front equipment investment. Customers will be forced to re-evaluate the amount of money they are willing invest for a long-term payoff.

Renewable Energy Developers: Survival  Net metering encourages rooftop installations by making solar a more financially appealing and viable alternative. The policy was designed to spark the growth of renewable energy, and it has done just that. Now the question becomes whether or not the solar industry can survive, and thrive, without continued support of such generous financial incentives.

Consumer Advocates: Fairness  Are regular utility customers subsidizing the solar customers? Are solar customers using the grid to store power without paying to maintain it? These are the questions being asked by consumer advocates who are in the unusual position of siding with the utilities, rather then challenging them. Concerns over the fairness of net metering policies center around the claim that solar panel installation is not an option for low-income customers. Yet these customers will pay higher rates in the form of surcharges to cover grid maintenance fees that are lost from customers using solar.

State Regulators: Cost Benefit Analysis  State regulators must weigh the societal benefits of renewable energy development against the challenge of spreading costs in the most equitable way possible. While several states begin wrangling with this issue, California continues to be a state to watch. In May, California nearly doubled the amount of solar capacity eligible for net metering, and at the same time introduced legislation to study the costs and benefits of the policy. Stay tuned.

Conclusion  In case you missed it, the debate is all about money - who should pay, who should profit, and how much is fair for each? It’s no secret that there is still much work to be done in the advancement of renewable power. But, it’s no longer a question of “if” renewable power goals can be achieved. It’s a question of “how quickly “ solar can be grown to meet those goals. Legislative changes, grid infrastructure, financial incentives, innovation, and education will all play a role. An end to net metering will not mean an end to solar, but the policy is a game changer worthy of attention. Next up – where do we go from here? What are possible solutions and alternatives that may be proposed as states reach the regulatory caps on net metering policies? If you are interested in learning more about solar power and how you can play a role in the advancement of solar as a renewable power source, visit Everblue’s Solar Training Courses. Learn the basics of solar design, installation and sales.

By Amy Malloy

Forward to a Friend

Related Blogs

Request Information

This question is for testing whether you are a human visitor and to prevent automated spam submissions.