The Brookings Institute is out with a new report showing that residential solar net-metering is a net benefit. The report comes as utilities are pushing back against an incentive for homeowners that choose to go solar that helps them control their energy costs while providing clean energy to the grid.
Net-metering allows residents and small businesses with solar panels to sell or be credited for excess power their system generates to the grid. The DC-based think tank often takes a conservative bent on policies so it’s positive review of net metering might come as a surprise to some. But Brookings’ research shows that regulators in a growing number of states, among them Vermont, Nevada, Minnesota and Maine, find that rooftop solar has a net benefit and doesn’t cost consumers more.
“One of the most exciting infrastructure developments within metropolitan America, the installation of over a million solar photovoltaic (PV) systems in recent years, represents nothing less than a breakthrough for urban sustainability—and the climate,” wrote Brookings’ Mark Muro and Devashree Saha. “Residential solar installations surged by 66 percent between 2014 and 2015 helping to ensure that solar accounted for 30 percent of all new U.S. electric generating capacity. And for that matter, recent analyses conclude that the cost of residential solar is often comparable to the average price of power on the utility grid, a threshold known as grid parity.”
Despite the success of rooftop solar, however, it poses challenges to utilities on multiple fronts. Utilities have to higher prices for rooftop solar than they do for utility-scale solar as well as baseload energy from hydropower and natural gas. In addition utilities have to manage electricity flowing in multiple directions on the grid, when it was designed to accommodate moving electricity from a central generating power plant to substations and then to homes and businesses. End result some utilities say they have to charge consumers more for electricity because of net-metering.
“In this respect, the solar boom has prompted significant debates in states like New York and California about the best rates and policies to ensure that state utility rules and rates provide a way for distributed solar to flourish even as utilities are rewarded for meeting customer demands,” wrote Muro and Saha. They said this starting to lead to dialog and creating new policy and rate designs to placate both utilities and consumers with solar power.
Elsewhere, as in Nevada, utilities have successfully reduced or eliminated net-metering, prompting solar installers—and the jobs they created—to move away. “The result: New residential solar installation permits plunged 92 percent in Nevada in the first quarter of 2016,” Muro and Saha said.
“All of which highlights a burning question for the present and future of rooftop solar: Does net metering really represent a net cost shift from solar-owning households to others? Or does it in fact contribute net benefits to the grid, utilities, and other ratepayer groups when all costs and benefits are factored in?,” Muro and Saha queried. “It’s getting clearer…net metering—contra the Nevada decision—frequently benefits all ratepayers when all costs and benefits are accounted for, which is a finding state public utility commissions, or PUCs, need to take seriously as the fight over net metering rages in states like Arizona, California, and Nevada.”
To help utilities better recognize the benefits rooftop solar and net metering, Muro and Saha made some recommendations. “Utilities, most notably, have the opportunity to adjust their existing business models by themselves owning and operating distributed PV assets,” they said. Utilities could sell or lease rooftop solar to homeowners as long as they allow other companies to compete. “In this regard, utilities have an advantage over third-party installers currently dominating the residential rooftop solar industry due to their proprietary system knowledge, brand recognition, and an existing relationship with their customers.” They also recommended that utilities can invest in a more digital and distributed power grid that enables better interaction.Tweet