What Does the Future Hold for Net Metering?

 

Although incentivizing homeowners to purchase solar doesn’t seem like a controversial topic, several counterarguments have emerged—including one against net metering. As a popular incentive program for those using residential solar, net metering credits homeowners for any extra energy they don’t use in a month as that energy is used to power other homes. The issue with this credit system is that grid energy doesn’t cost the utility a fixed rate. Energy may cost less or more at any given point depending on a number of factors, including the demand and the market cost of energy in that area at that time. Pricing systems need to become a lot more complex to account for these fluctuations.

 

At UGE, our stance has always been fully supportive of clean energy and believe that solar households should be rewarded for switching to renewable energy sources. Unfortunately, because that opinion isn’t shared by everyone, we have to ask what the future holds for the net metering incentive program. Will it be struck down completely? Replaced with revised program rate structures? Today, we analyze what we know about net metering to predict the outcome for this much-belabored incentive program.

 

 

Struggles Between Utilities and Solar Advocates will Continue for Now

In 2015, when MIT released a massive interdisciplinary study to evaluate the state of solar, they addressed whether or not solar subsidies were really as beneficial—or harmful—as each side of the argument claimed. In their findings, utilities did charge non-solar households with some additional costs on their electrical bills to cover grid infrastructure and maintenance, charges that were largely avoided by solar households due to the savings from net metering programs. However, the authors note that these kinds of solar incentives also provide a much-needed incentive to overcome the financial barriers to solar, and that more access to solar is necessary to capture the current forward momentum of renewable energy. Therefore, they recommend changes to existing grids, allowing utilities to charge prices that more closely reflect the actual time-of-use pricing and causation of rates.

Those findings however, have not stopped the two sides from bickering. In the first quarter of 2017, there were more than 134 policy actions directed at solar subsidies, so net metering is very much still being hashed out in state legislatures. For the meantime, homeowners can expect the pressure on existing rate structures to continue, with legislation flying back and forth—and more complicated policies and caps implemented in their wake.

 

Nevada and New York Set the Precedent for Revised Net Metering Incentives

Although net metering roll-backs have been popular, if Nevada’s story is any indicator, then compromises between the two sides are indeed possible. In 2015, the Nevada State Public Utilities Commission voted to eliminate incentive rates—even those that were grandfathered into net metering programs. The new rules were considered so calamitous to the Nevada solar industry that major players like Sunrun and Tesla immediately pulled out of the state.

That set off a huge backlash, and several months after the initial vote, regulators agreed to restore net metering for existing solar customers. And just recently, at the beginning of June 2017, the Nevada legislature voted to reinstate its net metering program at greatly revised rates.

New York has also reached a compromise between solar advocates and utility representatives. New rate structures for the Empire State work with existing net metering rules, but they factor in things like the real-time value of generated solar energy to get a more accurate estimation of its worth. This concept is known as the value of distributed energy resources, or VDER, and it will likely be replicated by many states, depending on how successful the New York program is.

What we find most interesting about these rate changes, is that they may fuel some changes to solar system manufacturing and installation. Since solar energy systems in the Empire State make their owners more money during peak usage hours with VDER, systems are being designed to capture the most sunlight during peak electricity hour times, rather than the most total sunlight in a day. That may have huge implications for solar systems down the line. Meanwhile, you can expect many reactive regulations to be replaced with gentler revisions to program caps and rate structures.

 

But Solar Storage Incentives May Eventually Replace Net Metering

There’s another reason for the turning tide toward solar subsidies- solar + storage. In Hawaii, for instance, where net metering programs were also nixed, multiple bills have been introduced to transfer incentives to homeowners who added storage to their solar energy systems. At least five other states have also toyed with the idea of introducing solar storage incentive programs—many as a companion to heavily revised net metering scale backs.

It is only with recent technological advancements that residential solar storage has finally seemed like a commercially viable reality. Distributed solar makes sense from an infrastructure standpoint; allowing homeowners to produce and store energy would drastically reduce power plant operational costs. With so many states turning an eye to these kinds of reward structures, it’s certainly a real possibility.

In the end, the only real certainty in the future of net metering is that of constant flux. Incentive programs will continue to be debated, but they’re not disappearing and homeowners who choose to install solar will be richly rewarded!

 

7/24/2017

Written By: Erin Vaughan

Erin Vaughan is a blogger, gardener and aspiring homeowner.  She currently resides in Austin, TX where she writes full time for Modernize, with the goal of empowering homeowners with the expert guidance and educational tools they need to take on big home projects with confidence.