Net Metering has been a hot topic in California lately, and with good reason. As the nation’s largest solar market, the Golden State is a trendsetter, not to mention a bellwether for energy policy in other states.
How Net Energy Metering Works
If you’re already a solar user, then you’re probably well versed on the ins and outs of net metering, but just in case you’re new to solar, we’ll break it down for you.
When solar customers produce more energy than they use, net metering laws allow them to sell their excess electricity back to the utilities. Just as solar users can draw energy from the grid when production tapers off at night, they can also feed it back into the grid, where it can be sold to other customers by the utility.
California’s current net energy metering laws dictate that utilities pay their net-metered customers retail rates for the electricity they generate. At the end of each month, customers’ net energy consumption is tallied up, and they’re credited for the energy they’ve put back into the system at the same rates they pay for the power they’ve drawn from it.
To solar users, the current arrangement seems just, but many utilities say it allows solar users to unfairly sidestep the costs of maintaining the utility grid that provides them with electricity when solar production falls.
In rebuttal, solar advocates point out that net metering also benefits utilities, allowing them to purchase renewable energy to meet government RPS standards, reduce transmission losses, and forestall costly infrastructure upgrades.
Changes on the Horizon for California NEM
California’s current net metering policy will remain in effect until the 5% of utilities’ peak demand is met by distributed generation (such as rooftop solar). That checkpoint is expected to be reached before the end of Q1 in 2016.
When it is, a new net metering program will be put into play. Customers whose solar systems were brought online before the 5% cap is reached will be grandfathered into the old net metering program, but those who miss that deadline could end up with a very different net metering arrangement. The exact shape NEM 2.0 will take is not yet known, and is currently being debated.
What’s on the Line for Solar Customers?
The utilities have proposed deep cuts to the net energy metering program, including slashing NEM rates by as much as 90%. They’d also like to see the implementation of grid-use charges, system access fees, and time-of-use rates for electricity used at different times of day. Clearly, the success of the utility-backed proposals would be a major setback for the solar industry.
However, regulators have proposed a much more user-friendly net metering regime.
The proposal would grant utilities’ requests for interconnection fees and non-bypassable system access fees, but would retain retail compensation rates for energy sold back to utilities.
It would also extend net metering to solar projects in excess of 1 megawatt, which were previously excluded from taking advantage of the net metering system.
The proposal will be open for public comment until January 7th, and the California Public Utility commission may put it to a vote before the month is out.
Overall, NEM 2.0 Is a Win for Solar
Assuming the passage of the CPUC’s new net metering policy, solar energy will come out ahead. While solar advocates are none too pleased by the concessions the policy makes to utilities, the new arrangement will certainly be better for solar growth than the utility-backed alternative.
Of course, the best thing for potential solar adopters to do is to get grandfathered in to the existing net energy metering program. If you’ve been sitting on the fence about going solar in California, now is a great time to do it.
[Photo via: Cenergypower]