Two new reports from California and Vermont show that net metering creates significant net benefits for consumers while strengthening one of the US solar market’s strongest drivers of new installations.
Net metering is essentially a guarantee that utilities will provide their customers a fair retail credit for excess electricity they generate that flows onto the grid instead of into their homes – essentially only billing them for their “net” energy use.
It’s an important affordability factor for owners of small solar installations, especially rooftop systems, which generally push 20-40% of their total output back onto the grid. 43 states have some kind of net metering policy, and even though they have been credited with driving a boom in rooftop solar installations, utilities generally oppose the policy by saying it drives up electricity bills.
$92 Million Annually for California
A new report finds California will soon see over $92 million in annual benefits to utility ratepayers. The Vote Solar report used an economic model approved by the California Public Utility Commission (CPUC) to evaluate the overall economic effect of net metering to ratepayers in Pacific Gas & Electric (PGE), Southern California Edison (SCE), and San Diego Gas & Electric (SDGE).
Turns out that by the time California’s net metering program is fully subscribed at its current cap of 5% non-peak load (around 5.2GW of solar), financial benefits will outweigh costs by $92.2 million every year. These benefits include reducing fossil fuel dependency, less required investments in transmission lines, cost savings from meeting emissions reductions and renewable energy requirements, among others.
Vote Solar’s findings are huge news, considering those three utilities have estimated solar will cost ratepayers $1.3 billion by the end of 2015. Surprisingly, the report claims the majority of solar net metering economic benefits go to ratepayers without rooftop solar, in the form of reduced system demand and overall costs.
Economic Benefits Spillover To Green Economy
“Net metering is doing what it was designed to do – accelerating solar adoption while reducing our dependence on dangerous fossil fuels and kick-starting one of the most promising job-creating industries of the 21st Century,” said Daniel Kammen of the University of California-Berkeley’s Energy and Resources Group.
California’s solar industry is booming, with 43,000 green jobs and $10 billion in private investment. Schools and public agencies will see an estimated $2.5 billion in direct savings through net-metered solar systems, and two-thirds of home solar installations now occur in low- and median-income areas.
Net Metering’s Outsized Effect In Vermont
But while solar net metering is shining brightly in the Golden State, it’s also creating rays of hope in an unlikely place – Vermont. Currently ranked 17th of all US states in installed solar capacity, net metering is driving rapid expansion of small-scale systems with a net-positive economic impact.
The Vermont Department of Public Service was tasked by the state legislature to conduct an evaluation of net metering policies across the state’s transmission system and retail electricity customers.
Small Solar = Big Benefits
Even with an average statewide solar incentive of 5.3 cents above residential retail electric rates, the report found net metering will deliver net benefits between 4.3- and 3.3-cents per kilowatt hour (kWh) generated by 4-kilowatt (kW) or 100kW net metered solar systems. Benefits include avoiding costs from transmission across the regional grid, reducing emissions, and lower required system investments.
While the state’s net metering program only produces 1% of all state annual energy demand, solar accounts for 88% of all qualified systems, and 85% of these solar installations are under 10kW — meaning small scale solar is becoming a big part of the Green Mmountain State’s energy system.
California Could Lead The Way
So if the benefits of solar net metering are clear — so are the imperatives for keeping this successful policy in place. Solar incentives are falling across California and its net metering program is scheduled to end in January 2015, and programs have been challenged by utilities in many other states.
Considering the ability of net metering to boost clean energy, save money, and reduce emissions, opposing the concept sure seems like a net loss.
Silvio is Principal at Marcacci Communications, a full-service clean energy public relations company based in Washington, D.C.