Changes to solar net metering policies are being studied or have been enacted in more than half of the states in this nation, states the N.C. Clean Energy Technology Center’s latest “50 States of Solar” report. The NC Clean Energy Technology Center is a UNC System-chartered Public Service Center administered by the College of Engineering at North Carolina State University.
Not surprising, “Rate design, net metering, and distributed solar ownership are among the most contentious ongoing renewable energy policy issues,” states this report.
Specifically, regulators or legislators in 19 states either have considered or decided on changes to their solar net-metering policies in this year’s third quarter. Twelve more states are conducting a solar-valuation or net-metering study.
Net metering for solar has been a very successful fiscal platform for electricity consumers supporting renewable energy. Utilities in most states consider traditional net metering programs as an unfair economic hardship, especially so when it is time to report financial results to shareholders.
Utilities in several states are approaching or have already hit their previously established net metering caps, which has spurred a review of existing policies. Some states are expanding the policy, while others, such as California and Nevada, are considering a successor tariff. Hawaii recently became the first state in the nation to end its solar net-metering program.
In defense of this change, the Hawaii PUC wrote, “Hawaii is at a critical juncture in pursuit of achieving a 100 percent renewable portfolio standard in the electric power sector,” the PUC said. “Extraordinary high retail electricity prices, combined with dramatic cost declines in renewable energy and storage technologies, have combined to transform the competitive landscape facing the state’s electric utilities.”
“This has been another incredible year of growth in distributed solar thanks to rapidly falling costs and policies like net metering,” said Benjamin Inskeep, energy policy analyst at the Center. “However, some states are tapping on the brakes for solar by undermining this key policy or adding new fees and charges on solar customers. This comes at a time when federal incentives for solar are set to expire at the end of next year, while fossil fuel subsidies remain in place. These types of policy changes could hold back the spread of clean, locally produced energy.”
Last quarter, 26 utilities in 18 states had ongoing or decided rate cases in which the utility proposed to increase customers’ fixed charges by at least 10 percent. The average fixed-charge increase in these 26 instances was 70 percent.
“In general, fixed charges that apply to all residential customers are a blunt instrument,” said Inskeep. “While it’s understandable for the utility to want to guarantee some revenue, [fixed charges] can be regressive in terms of harming low-income users that tend to be lower energy users, while also disincentivizing solar and efficiency.”
Fourteen utilities in 10 states (some of which have also proposed fixed-charge increases) had pending or decided proposals for adding new charges specifically on net-metered solar customers last quarter.
As of Q3, states with pending utility proposals for new residential demand charges include Arizona, California, Kansas, Oklahoma and Texas.
“Utilities are waking up to the potential threat that distributed solar has on their existing business model,” said Inskeep. The responses to date have been varied, which has led to “a mess” of solar policies around the county.
In addition to restructuring policies, some utilities are getting into the solar business, making a more appealing business model for clean energy. Utilities in Arizona, Georgia and Texas have developed programs to own or operate distributed PV assets. In New York, Con Edison has proposed a residential solar and storage program as one of its demonstration projects under the REV proceeding.
The “50 States of Solar” report was produced in partnership with Meister Consultants Group.
Image via The 50 States of Solar report
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