Net metering (or net energy metering, NEM) allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly important with renewable energy sources like wind and solar, which are non-dispatchable (when not coupled to storage). Monthly net metering allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. Annual net metering rolls over a net kilowatt credit to the following month, allowing solar power that was generated in July to be used in December, or wind power from March in August.
Net metering policies can vary significantly by country and by state or province: if net metering is available, if and how long banked credits can be retained, and how much the credits are worth (retail/wholesale). Most net metering laws involve monthly roll over of kWh credits, a small monthly connection fee, require monthly payment of deficits (i.e. normal electric bill), and annual settlement of any residual credit. Unlike a feed-in tariff (FIT), which requires two meters, net metering uses a single, bi-directional meter and can measure current flowing in two directions. Net metering can be implemented solely as an accounting procedure, and requires no special metering, or even any prior arrangement or notification.
Net metering is an enabling policy designed to foster private investment in renewable energy.
Net metering originated in the United States, where small wind turbines and solar panels were connected to the electrical grid, and consumers wanted to be able to use the electricity generated at a different time or date from when it was generated. Minnesota is commonly cited as passing the first net metering law, in 1983, and allowed anyone generating less than 40 kW to either roll over any kilowatt credit to the next month, or be paid for the excess. In 2000 this was amended to compensation "at the average retail utility energy rate." This is the simplest and most general interpretation of net metering, and in addition allows small producers to sell electricity at the retail rate.
Utilities in Idaho adopted net metering in 1980, and in Arizona in 1981. Massachusetts adopted net metering in 1982. By 1998, 22 states or utilities therein had adopted net metering. Two California utilities initially adopted a monthly "net metering" charge, which included a "standby charge," until the PUC banned such charges. In 2005, all U.S. utilities were required to offer net metering "upon request." Excess generation is not addressed. As of 2018 43 U.S. states have adopted net metering, as well as utilities in 3 of the remaining states, leaving only 4 states without any established procedures for implementing net metering. However, a 2017 study showed that only 3% of U.S. utilities offer full retail compensation for net metering with the remainder offering less than retail rates, having credit expire annually, or some form of indefinite rollover.
Net metering was slow to be adopted in Europe, especially in the United Kingdom, because of confusion over how to address the value added tax (VAT). Only one utility company in Great Britain offers net metering.
The United Kingdom government is reluctant to introduce the net metering principle because of complications in paying and refunding the value added tax that is payable on electricity, but pilot projects are underway in some areas.
In Canada, some provinces have net metering programs.
In the Philippines, Net Metering scheme is governed by Republic Act 9513 (Renewable Energy Act of 2008) and it's implementing rules and regulation (IRR). The implementing body is the Energy Regulatory Commission (ERC) in consultation with the National Renewable Energy Board (NREB). Unfortunately, the scheme is not a true net metering scheme but in reality a net billing scheme. As the Dept of Energy's Net Metering guidelines say, "
“Net-metering allows customers of Distribution Utilities (DUs) to install an on-site Renewable Energy (RE) facility not exceeding 100 kilowatts (kW) in capacity so they can generate electricity for their own use. Any electricity generated that is not consumed by the customer is automatically exported to the DU’s distribution system. The DU then gives a peso credit for the excess electricity received equivalent to the DU’s blended generation cost, excluding other generation adjustments, and deducts the credits earned to the customer’s electric bill.” 
Thus Philippine consumers who generate their own electricity and sell their surplus to the utility are paid what is called the "generation cost" which is often less than 50% of the retail price of electricity.
Net metering is controversial as it affects different interests on the grid. A report prepared by Peter Kind of Energy Infrastructure Advocates for the trade association Edison Electric Institute stated that distributed generation systems, like rooftop solar, present unique challenges to the future of electric utilities. Utilities in the United States have led a largely unsuccessful campaign to eliminate net metering
Small scale viewpointEdit
Renewable advocates point out that while distributed solar and other energy efficiency measures do pose a challenge to electric utilities' existing business model, the benefits of distributed generation outweigh the costs, and those benefits are shared by all ratepayers. Grid benefits of private distributed solar investment include reduced need for centralizing power plants and reduced strain on the utility grid. They also point out that, as a cornerstone policy enabling the growth of rooftop solar, net metering creates a host of societal benefits for all ratepayers that are generally not accounted for by the utility analysis, including: public health benefits, employment and downstream economic effects, market price impacts, grid security benefits, and water savings.
An independent report conducted by the consulting firm Crossborder Energy found that the benefits of California's net metering program outweigh the costs to ratepayers. Those net benefits will amount to more than US$92 million annually upon the completion of the current net metering program.
A 2012 report on the cost of net metering in the State of California, commissioned by the California Public Utilities Commission (CPUC), showed that those customers without distributed generation systems will pay US$287 in additional costs to use and maintain the grid every year by 2020. The report also showed the net cost will amount to US$1.1 billion by 2020. Notably, the same report found that solar customers do pay more on their power bills than what it costs the utility to serve them (Table 5, page 10: average 103% of their cost of service across the three major utilities in 2011).
Large scale viewpointEdit
Many electric utilities state that owners of generation systems do not pay the full cost of service to use the grid, thus shifting their share of the cost onto customers without distributed generation systems. Most owners of rooftop solar or other types of distributed generation systems still rely on the grid to receive electricity from utilities at night or when their systems cannot generate sufficient power.
A 2014 report funded by the Institute for Electric Innovation claims that net metering in California produces excessively large subsidies for typical residential rooftop solar PV facilities. These subsidies must then be paid for by other residential customers, most of whom are less affluent than the rooftop solar PV customers. In addition, the report points out that most of these large subsidies go to the solar leasing companies, which accounted for about 75 percent of the solar PV facilities installed in 2013. The report concludes that changes are needed in California, ranging from the adoption of retail tariffs that are more cost-reflective to replacing net metering with a separate "Buy All - Sell All" arrangement that requires all rooftop solar PV customers to buy all of their consumed energy under the existing retail tariffs and separately sell all of their onsite generation to their distribution utilities at the utilities' respective avoided costs.
There is considerable confusion between the terms "net metering" and "feed-in tariff." In general there are three types of compensation for local, distributed generation:
- Feed-in tariff (FIT)
- Which is generally above retail, and reduces to retail as the percentage of adopters increases.
- Net metering
- Which is always at retail, and which is not technically compensation, although it may become compensation if there is excess generation and payments are allowed by the utility.
- Power purchase agreement
- Compensation which is generally below retail, also known as a "Standard Offer Program," and can be above retail, particularly in the case of solar, which tends to be generated close to peak demand.
Net metering only requires one meter. A feed-in tariff requires two.
Time of use meteringEdit
Time of use (TOU) net metering employs a smart (electric) meter that is programmed to determine electricity usage any time during the day. Time-of-use allows utility rates and charges to be assessed based on when the electricity was used (i.e., day/night and seasonal rates). Typically the generation cost of electricity is highest during the daytime peak usage period, and lowest at night. Time of use metering is a significant issue for renewable-energy sources, since, for example, solar power systems tend to produce energy during the daytime peak-price period, and produce little or no power during the night period, when price is low. Italy has installed so many photovoltaic cells that peak prices no longer are during the day, but are instead in the evening. TOU net metering affects the apparent cost of net metering to a utility.
Market rate net meteringEdit
In market rate net metering systems the user's energy use is priced dynamically according to some function of wholesale electric prices. The users' meters are programmed remotely to calculate the value and are read remotely. Net metering applies such variable pricing to excess power produced by a qualifying system.
Market rate metering systems were implemented in California starting in 2006, and under the terms of California's net metering rules will be applicable to qualifying photovoltaic and wind systems. Under California law the payback for surplus electricity sent to the grid must be equal to the (variable, in this case) price charged at that time.
Net metering enables small systems to result in zero annual net cost to the consumer provided that the consumer is able to shift demand loads to a lower price time, such as by chilling water at a low cost time for later use in air conditioning, or by charging a battery electric vehicle during off-peak times, while the electricity generated at peak demand time can be sent to the grid rather than used locally (see Vehicle-to-grid). No credit is given for annual surplus production.
Excess generation is a separate issue from net metering, but it is normally dealt with in the same rules, because it can arise. If local generation offsets a portion of the demand, net metering is not used. If local generation exceeds demand some of the time, for example during the day, net metering is used. If local generation exceeds demand for the billing cycle, best practices calls for a perpetual roll over of the kilowatt credits, although some regions have considered having any kilowatt credits expire after 36 months. The normal definition of excess generation is annually, although the term is equally applicable monthly. The treatment of annual excess generation (and monthly) ranges from lost, to compensation at avoided cost, to compensation at retail rate. Left over kilowatt credits upon termination of service would ideally be paid at retail rate, from the consumer standpoint, and lost, from the utility standpoint, with avoided cost a minimum compromise. Some regions allow optional payment for excess annual generation, which allows perpetual roll over or payment, at the customers choice. Both wind and solar are inherently seasonal, and it is highly likely to use up a surplus later, unless more solar panels or a larger wind turbine have been installed than needed.
Net metering systems can have energy storage integrated, to store some of the power locally (i.e. from the renewable energy source connected to the system) rather than selling everything back to the mains electricity grid. Often, the batteries used are industrial deep cycle batteries as these last for 10 to 20 years. Lead-acid batteries are often also still used, but last much less long (5 years or so). Lithium-ion batteries are sometimes also used, but too have a relatively short lifespan. Finally, nickel-iron batteries last the longest with a lifespan of up to 40 years. A 2017 study of solar panels with battery storage indicated an 8 to 14 percent extra consumption of electricity from charging and discharging batteries.
Adoption by countryEdit
In some Australian states, the "feed-in tariff" is actually net metering, except that it pays monthly for net generation at a higher rate than retail, with Environment Victoria Campaigns Director Mark Wakeham calling it a "fake feed-in tariff." A feed-in tariff requires a separate meter, and pays for all local generation at a preferential rate, while net metering requires only one meter. The financial differences are very substantial.
In Victoria, from 2009, householders were paid 60 cents for every excess kilowatt hour of energy fed back into the state electricity grid. This was around three times the retail price for electricity at that time. However, subsequent state governments reduced the feed-in in several updates, until in 2016 the feed-in is as low as 5 cents per kilowatt hour.
In Queensland starting in 2008, the Solar Bonus Scheme pays 44 cents for every excess kilowatt hour of energy fed back into the state electricity grid. This is around three times the current retail price for electricity. However, from 2012, the Queensland feed in tariff has been reduced to 6-10 cents per kilowatt hour depending on which electricity retailer the customer has signed up with.
Ontario allows net metering for up to 500 kW, however credits can only be carried for 12 consecutive months. Should a consumer establish a credit where they generate more than they consume for 8 months and use up the credits in the 10th month, then the 12-month period begins again from the date that the next credit is shown on an invoice. Any unused credits remaining at the end of 12 consecutive months of a consumer being in a credit situation are cleared at the end of that billing.
Areas of British Columbia serviced by BC Hydro are allowed net metering for up to 50 kW. At each annual anniversary the customer was paid 8.16 cents per KWh, if there is a net export of power after each 12-month period, which was increased to 9.99 cents/kWh, effective June 1, 2012. Systems over 50 kW are covered under the Standing Offer Program. FortisBC which serves an area in South Central BC also allows net-metering for up to 50 kW. Customers are paid their existing retail rate for any net energy they produce. The City of New Westminster, which has its own electrical utility, also allows net metering .
SaskPower allows net metering for installations up to 100 kW. Credits from excess generated power can be carried over until the customer's annual anniversary date, at which time any excess credits are lost.
In Nova Scotia, in 2015, 43 residences and businesses began using solar panels for electricity. By 2017, the number was up to 133. These customers’ solar systems are net metered. The excess power produced by the solar panels is sold back from the homeowner to Nova Scotia Power at the same rate that the utility sells it to its customers. “The downside for Nova Scotia Power is that it must maintain the capacity to produce electricity even when it’s not sunny.”
Denmark established net-metering for privately owned PV systems in mid-1998 for a pilot-period of four years. In 2002 the net-metering scheme was extended another four years up to end of 2006. Net-metering has proved to be a cheap, easy to administer and effective way of stimulating the deployment of PV in Denmark; however the relative short time window of the arrangement has so far prevented it from reaching its full potential. During the political negotiations in the fall of 2005 the net-metering for privately owned PV systems was made permanent.
Slovenia has annual net-metering since January 2016 for up to 11 kVA. In a calendar year up to 10 MVA can be installed in the country.
In 2010, Spain, net-metering has been proposed by the Asociación de la Industria Fotovoltaica (ASIF) to promote renewable electricity, without requiring additional economic support, but net-metering for privately owned systems is not yet established.
Some form of net metering is now proposed by Électricité de France. According to their website, energy produced by home-owners is bought at a higher price than what is charged as consumers. Hence, some recommend to sell all energy produced, and buy back all energy needed at a lower price. The price has been fixed for 20 years by the government.
Indian states of Karnataka, and Andhra Pradesh have started implementation of net metering, and the policy has been announced by the respective state electricity boards in 2014. Feasibility study will be done by the electricity boards, and after inspection the meters will be replaced by bidirectional ones and will be installed. Applications are taken up for up to 30% of the distribution transformer capacity on a first-come, first-served basis and technical feasibility.
Since September 2015 Maharashtra state (MERC) has released the Net Metering policy and consumers have started installation of Solar Rooftop Grid Tie Netmetering systems. Refer : http://www.mahadiscom.com/SolarRoofTopNetMetering.shtm MERC Policy allows upto 40% transformer capacity to be on Solar net metering.
The various DISCOMs in Maharashtra namely MSEDCL, Tata, Reliance and Torrent Power are expected to support Net Metering.
As of now MSEDCL does not use the TOD (Time Of The Day differential) charging tariffs for residential consumers and net metering. So Export and Import units considered at par for calculating Net Units and bill amount.
Net metering was pioneered in the United States as a way to allow solar and wind to provide electricity whenever available and allow use of that electricity whenever it was needed, beginning with utilities in Idaho in 1980, and in Arizona in 1981. In 1983, Minnesota passed the first state net metering law. As of March 2015, 44 states and Washington, D.C. have developed mandatory net metering rules for at least some utilities. However, although the states rules are clear few utilities actually compensate at full retail rates.
Net metering policies are determined by states, which have set policies varying on a number of key dimensions. The Energy Policy Act of 2005 required state electricity regulators to "consider" (but not necessarily implement) rules that mandate public electric utilities make available upon request net metering to their customers. Several legislative bills have been proposed to institute a federal standard limit on net metering. They range from H.R. 729, which sets a net metering cap at 2% of forecasted aggregate customer peak demand, to H.R. 1945 which has no aggregate cap, but does limit residential users to 10 kW, a low limit compared to many states, such as New Mexico, with an 80,000 kW limit, or states such as Arizona, Colorado, New Jersey, and Ohio which limit as a percentage of load.
Arizona, California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and West Virginia are considered the most favorable states for net metering, as they are the only states to receive an "A" rating from Freeing the Grid in 2015.
Regulators in multiple states are acting as "referees" in debates between utility companies and advocates of distributed resources, such as solar panel arrays. In 2016 the National Association of Regulatory Utility Commissioners (NARUC) published the Manual on Distributed Energy Resources Compensation as a way to help states decide on rate structures dealing with homes and businesses that generate their own power and send excess power back to the electric grid. The intention behind the manual is to "provide a consistent framework for evaluating rate design decisions in the age of distributed energy resources." The president of NARUC, when he commissioned the manual, said his instructions to the committee writing the manual were to write a "practical, expert and most importantly ideologically neutral guide that offers advice" to states. A draft of the manual was released in July, which generated more than 70 public comments from stakeholder groups. Those comments were reviewed, and the final version of the manual was designed. The updated manual covers various issues that state regulators have been struggling with including net metering, the value of solar energy, and cost shifting from DER to non-DER customers. DER is being integrated into the national grid at a rapid pace, and the system of electricity generation, delivery, and utilization are constantly changing with new technology.
The Edison Electric Institute and the Solar Energy Industries Association both supported the manual. However, the main point of contention between utility companies and the solar industry is the question of whether distributed generation systems represent cost shift from those with the systems (people with solar panels) to those without them (everyone else who uses electricity).
Phil Moeller of the Edison Electric Institute said, "We want to DER [distributed energy resources] but we want to make sure the rate structure is right to minimize cost shifts." Moeller is a former member of the Federal Energy Regulatory Commission (FERC), a federal government regulatory agency. Sean Gallaher of the Solar Energy Industries Association said, "There seems to be an assumption that revenue erosion from DER results in an inadequacy of cost recovery for the utility and therefore a shift of costs to non-participating customers. You can't just assume that."
Home-based net metering in the United States "had extremely low adoption rates" as of 2017, with the leader, California, having a 0.77% adoption rate.
(% of peak)
|Alabama||no limit||100||yes, can be indefinitely||varies|
|Alaska||1.5||25||yes, indefinitely||retail rate|
|Arizona||no limit||125% of load||yes, avoided-cost at end of billing year||avoided cost|
|Arkansas||no limit||25/300||yes, until end of billing year||retail rate|
|California||5||1,000||yes, can be indefinitely||varies|
|Colorado||no limit||120% of load or 10/25*||yes, indefinitely||varies*|
|Connecticut||no limit||2,000||yes, avoided-cost at end of billing year||retail rate|
|Delaware||5||25/500 or 2,000*||yes, indefinitely||retail rate|
|District of Columbia||no limit||1,000||yes, indefinitely||retail rate|
|Florida||no limit||2,000||yes, avoided-cost at end of billing year||retail rate|
|Hawaii||none ||50 or 100*||yes, until end of billing year||none|
|Idaho||0.1||25 or 25/100*||no||retail rate or avoided-cost*|
|Illinois||1||40||yes, until end of billing year||retail rate|
|Indiana||1||1000||yes, indefinitely||retail rate|
|Iowa||no limit||500||yes, indefinitely||retail rate|
|Kansas||1||25/200||yes, until end of billing year||retail rate|
|Kentucky||1||30||yes, indefinitely||retail rate|
|Louisiana||no limit||25/300||yes, indefinitely||avoided cost|
|Maine||no limit||100 or 660*||yes, until end of billing year||retail rate|
|Maryland||1500 MW||2,000||yes, until end of billing year||retail rate|
|Massachusetts**||6 peak demand
4 private 5 public
|60, 1,000 or 2,000||varies||varies|
|Michigan||0.75||150||yes, indefinitely||partial retail rate|
|Minnesota||no limit||40||no||retail rate|
|Mississippi||N/A||N/A||N/A||wholesale rate plus 2.5 cents per kwh standard, plus an additional 2.0 cents for low income customers |
|Missouri||5||100||yes, until end of billing year||avoided-cost|
|Montana||no limit||50||yes, until end of billing year||retail rate|
|Nebraska||1||25||yes, until end of billing year||avoided-cost|
|Nevada||3||1,000||yes, indefinitely||retail rate|
|New Hampshire||1||100||yes, indefinitely||avoided-cost|
|New Jersey||no limit||previous years consumption||yes, avoided-cost at end of billing year||retail rate|
|New Mexico||no limit||80,000||if under US$50||avoided-cost|
|New York||1 or 0.3 (wind)||10 to 2,000 or peak load||varies||avoided-cost or retail rate|
|North Carolina||no limit||1000||yes, until summer billing season||retail rate|
|North Dakota||no limit||100||no||avoided-cost|
|Ohio||no limit||no explicit limit||yes, until end of billing year||generation rate|
|Oklahoma||no limit||100 or 25,000/year||no||avoided-cost, but utility not required to purchase|
|Oregon||0.5 or no limit*||10/25 or 25/2,000*||yes, until end of billing year*||varies|
|Pennsylvania||no limit||50/3,000 or 5,000||yes, until end of billing year.||"price-to-compare" (generation and transmission cost)|
|Rhode Island||2||1,650 for most, 2250 or 3500*||optional||slightly less than retail rate|
|South Carolina||0.2||20/100||yes, until summer billing season||time-of-rate use or less|
|Texas***||no limit||20 or 25||no||varies|
|Utah||varies*||25/2,000 or 10*||varies - credits expire annually with the March billing*||avoided-cost or retail rate*|
|Vermont||15||250||yes, accumulated up to 12 months, rolling||retail rate|
|Virginia||1||10/500||yes, avoided-cost option at end of billing year||retail rate|
|Washington||0.5||100||yes, until end of billing year||retail rate|
|West Virginia||0.1||25||yes, up to twelve months||retail rate|
|Wisconsin||no limit||20||no||retail rate for renewables, avoided-cost for non-renewables|
|Wyoming||no limit||25||yes, avoided-cost at end of billing year||retail rate|
Note: Some additional minor variations not listed in this table may apply. N/A = Not available. Lost = Excess electricity credit or credit not claimed is granted to utility. Retail rate = Final sale price of electricity. Avoided-cost = "Wholesale" price of electricity (cost to the utility).
* = Depending on utility.
** = Massachusetts distinguishes policies for different "classes" of systems.
*** = Only available to customers of Austin Energy, CPS Energy, or Green Mountain Energy (Green Mountain Energy is not a utility but a retail electric provider; according to www.powertochoose.com).
In 2016, the Arkansas state legislature enacted Act 827, which directed the Arkansas Public Service Commission to review changes to the state's net metering system. In March 2017, regulators decided to "grandfather existing solar customers into retail net metering rates for the next 20 years." Another decision made by the commission would allow the original net metering rates to stay with the home if it is sold. According to Utility Dive, "There are relatively few solar customers in Arkansas, and advocates worry changes in the next part of the proceeding could slow the market's growth if regulators make too deep a cut to remuneration rates."
In Arkansas, early in 2017 state regulators voted to grandfather existing solar customers into the current retail net metering rate until 2037. The Arkansas Public Service Commission convened a working group to look at the costs and benefits of net metering; the working group was split along ideological lines and each of two subgroups submitted its own set of recommendations instead of a having a unified position. The first subgroup, composed of conservation and advanced energy groups, wanted no changes to the state's net metering rates. The second subgroup, made up of public utilities, wanted to have an embedded cost service approach that would determine the costs and benefits associated with that metering. Entergy was a part of the second subgroup and said "the current net-metering policy that credits excess generation at the full retail rate must be changed for new net-metering customers."
That second group "argued that crediting net-metering customers for costs that are not avoided 'means that the electric utility does not recover its entire cost of providing service to each net-metering customer, net of quantifiable benefits.'"
In late 2015, three utilities in California proposed alternative methods of compensation to solar users for the excess energy recycled back to the grid. This follows new regulatory decisions on solar net metering policies. In December 2015, a policy that would protect retail net metering for rooftop solar consumers was proposed by the California Public Utilities Commission (CPUC). When asked for their commentary, the utilities responded with lower remuneration rates for solar consumers in exchange for contributing to grid upkeep costs.
In an attempt to establish fairness and balance between solar installers and utilities, the CPUC proposed to continue with retail rate net metering with minimal changes for rooftop solar customers in California. According to the Los Angeles Times, solar energy supporters rallied at a hearing at CPUC vowing to "gut" net metering and complicate newly proposed utility policies. California utilities were dissatisfied with the proposal. According to San Diego Gas & Electric, the proposal did not address the "growing cost burden" on their customers, which is estimated at $100 per month or, collectively, $160 million per year.
A proposal set forth by the utilities offered to charge both residential and commercial net metering customers their "otherwise applicable rate" for the kWh's of electricity used from the grid. A fixed export compensation rate for exported energy over a 10-year period would also be imposed. The export rate would amount to $0.15/kWh for installations until the distributed power exceeded 7% of the utility's customer demand. Subsequently, the rate would fall to $0.13/kWh.
Throughout 2017, California implemented "Net Metering 2.0" where the compensation to solar customers is close to retail rates. The policy also moved time of use (TOU) rates for residential customers. Additionally, the rates were updated to reflect "conditions on California's grid."
The California Public Utilities Commission (CPUC) approved new TOU rates for San Diego Gas & Electric Company and moved the start of the peak period to 4 pm (four hours later than it was prior to the change). The Solar Energy Industries Association believes the new peak rates are too late in the day.
In October 2017, CPUC extended the grandfathering period for many distributed PV systems to the old rates and eliminated completion deadlines for "qualifying PV systems." Grandfathered rates will last five years for residential customers and 10 years for other customers.
In early 2016, lawmakers in Florida, with encouragement from both houses, voted to put Amendment 4 on the ballot. In a state that is presently faced with various renewable energy issues, the idea of terminating personal property taxes on solar panels was widely supported. One of the sponsors of the bill backing Amendment 4, state Senator Jeff Brandes (R), said that the decision will aid in the development of renewable and solar energy statewide and lead to the creation of thousands of job opportunities.
On August 30, 2016, a proposition that will dispose of property taxes on both commercial and industrial solar panels was approved by Florida voters. The initiative to revitalize renewable energy efforts garnered overwhelming bipartisan support. According to Florida Politics, on August 30, 2016, Amendment 4 accumulated almost 75 percent of the votes cast, surpassing the 60 percent minimum required. The ongoing debate regarding solar energy remains a major issue, with utility-supported policies expected to face scrutiny and resistance.
The Hawaii Public Utilities Commission eliminated retail net metering in 2015. When it did so, it replaced net metering with a "Customer Grid Supply" (CGS) and a "Customer Self Supply" (CSS) option. Since the elimination of net metering in 2015, Hawaii regulators have capped the number of solar customers who can send their excess energy back into the grid. Those customers are in the CGS program. Other customers in the CSS option use residential energy storage instead of sending their energy back into the grid.
Approximately 1,400 people in Idaho are enrolled in net metering. Most of these customers use of rooftop solar systems. Idaho Power says that the current net metering system was not created to account for homeowners who installed their own solar panels, and as such, traditional power customers are "being forced to make up any budget shortfalls."
In 2017 Idaho Power requested to create a new class of customers starting January 1, 2018. By doing so, Idaho Power could introduce possible rate hikes for that new class of customers, more than what they currently pay to access the state's power grid and buy electricity when their own solar panels are not producing electricity. The Idaho Public Utilities Commission said that it will hold a hearing in March 2018 before coming to a decision on Idaho Power's request.
In February 2017, the state Senate approved by a vote of 39-9 Senate Bill 309 which would roll back net metering in Indiana. The bill "would ultimately reduce the rate paid to net metering customers from the retail rate to the utility's marginal cost, plus 25%." People who already use solar power with net metering would be grandfathered for ten years at the current rate. The Sierra Club's "Beyond Coal" campaign ran a radio ad campaign to oppose the bill.
As of 2018, a new net metering law is "limiting net metering benefits, but anyone with solar panels installed before January 1, 2018, was able to secure the credit for 30 years. After this date, the credit will be secure for 15 years."
As of January 2018, dozens of homeowner associations across central Indiana put up barriers to residential solar installations, according to the Indianapolis Star. "With hundreds of Homeowners Associations across just Central Indiana, a review suggests that as many as half don't allow panels at all while the others have weak or limiting language that leaves architectural review committees to make decisions devoid of objective criteria."
In early 2018, a bill was proposed in the Kentucky Legislature that could dramatically alter net metering within the state. House Bill 227 would reduce the credit that rooftop solar owners receive when they send electricity back to the grid by as much as 65 percent.
HB 227 is moving across the legislature. Tyler White, the president of the Kentucky Coal Association, who supports the bill, has said that net metering is paramount to a renewable energy subsidy. The reason is because only some people (those without solar) pay to maintain the electric grid, while others (those with solar power systems) do not, despite the fact that everyone uses the grid. According to White, "Germany has spent hundreds of billions of dollars on solar and wind, yet they provide only 3 percent of its total energy. The average German pays 3 times more for electricity than the average American." In Kentucky, there are more than 2.2 million utility customers; there are less than 1,000 private net metered customers, and half of them are located in Lexington and Louisville. White argues that a vote in favor of HB 227 is "a vote to make sure the people of Eastern Kentucky are not paying more on their utility bills to fund the growth of private solar for the wealthy in Lexington and Louisville."
By March 2018, Kentucky legislators "continue to wrestle over a plan to sharply reduce the amount utilities pay customers who sell excess solar power to their local utilities." The bill was approved by the House Natural Resources and Energy Committee but has not yet been debated on or voted on in the Kentucky House of Representatives. According to Daily Energy Insider, "A major question is whether, under the state’s current net metering law, the vast majority of ratepayers are subsidizing the cost of maintaining the regional grid for the relatively few customers with solar energy systems who are connected to it."
In Kentucky, homeowners who have rooftop solar sell their surplus electricity back to utility companies at the retail rate (the rate the utility charges the customer, not the rate the utility purchases electricity).
In Maine, the two major issues regarding retail rates and net metering programs were how to deal with CMP reaching 1 percent of peak load net metering cap and the real value of solar. The Alliance for Solar Choice stated that it would prefer to see net metering kept intact until the policy produces solar growth.
In 2016, solar companies and major utility companies came to a legislative agreement over net metering issues. The two sides said that their deal might increase solar power in Maine "tenfold in five years." In response, several national solar companies paid for lobbyists to travel to Maine and attempt to persuade state legislators to stop the deal. The legislation would replace net metering with a concept referred to as "next metering." Under next metering, regulators would set the rates that utilities pay residential solar customers for the customers' excess energy. (Under normal net metering, utilities would pay the wholesale rate). The legislation includes a grandfather clause for existing solar customers.
Maine is considering changing its net metering energy billing rules. On September 13, 2016, the Maine Public Utilities Commission proposed a new rule, and then held a public hearing on October 17. The proposal would consider changing net metering billing rules and is expected to be completed in early 2017.
In the Maine legislature, Assistant Majority Leader Sara Gideon (D-Freeport) introduced a new bill to increase Maine's solar industry tenfold and implement a market-based program, replacing the current net metering policy. In 2015-2016 in Maine, a collective group of environmentalists, consumer representatives, installers of solar power, and utilities proposed a bill in the state legislature suggesting the replacement of net metering with a market-based "pay for production" program. One provision of the bill proposes that Central Maine Power (CMP) and Emera, Maine's two main utilities, establish long-term contracts with utility developers and solar owners allowing them to purchase solar power generation. Subsequently, they would bid the generation into New England electricity markets. This arrangement could last existing net metering customers up to 12 years. A competitively set regulated price would be paid by the aggregators in order to compensate for owner costs. In turn, the utility aggregators would capitalize on the return on sales.
In March 2017, state legislators in both the Maine state House and Senate began writing legislation that would preserve retail net metering. The bills would make it temporary in the short term. In early 2017, the Maine Public Utilities Commission approved new limits that will eventually phase out net metering, beginning in 2018. The House bill would "fully save retail net metering." A group called the Maine Environmental Priorities Coalition supports the legislation. The Senate bill would reinstate net metering while regulators examine "how advanced metering can help better determine the costs and benefits of rooftop solar." The solar industry is supporting that bill. In February 2017, a group called the Natural Resources Council of Maine "vowed to continue fighting new net metering restrictions."
In December 2017, the Maine Public Utilities Commission voted to delay implementing the state's new solar rules, which would phase down the net metering compensation for rooftop solar customers. Net metering supporters, led by the Conservation Law Foundation, filed a lawsuit to overturn the PUC's decision. The Maine Supreme Judicial Court is set to hear arguments in the case on December 13, 2017.
The Maine legislature tried to reverse the course set by the PUC by passing a bill to roll back the PUC's decision to phase down net metering. The bill passed the legislature but was vetoed by Governor Paul LePage.
In January 2018, the Massachusetts Department of Public Utilities (DPU) approved demand charges for Eversource utility's net metering customers. DPU also got rid of optional time-of-use rates for residential customers. Among renewable and clean energy advocates, demand charges are "very controversial." DPU's decision has set the stage for intense debate over rate design. Eversource had argued it faced "displaced distribution revenues" of more than $8 million per year that should be collected from net-metered customers. The DPU agreed, saying "the companies have demonstrated a cost shift from net metering to non-net metering customers by identifying costs directly imposed by net metering facilities on the distribution system."
As of January 2018, Michigan plans to change its net metering program. The plans have been met with resistance from solar advocates who worry that the new program will "slow the rooftop industry to a crawl in the state." The Michigan Public Service Commission reported that the amount of installed solar grew from 361 MW at the end of 2015 to 580 MW in 2016. It projects that when the 2017 numbers are in, that number will grow to 1.2 GW. Currently, utilities pay the retail rate back to Michigan's solar customers for excess electricity that they generate and sell back to the grid.
In the spring of 2016, the city of Mt. Vernon, Missouri created a local net metering program. The local board of aldermen passed a measure on May 16, 2016 that allows for residents and businesses to apply to "generate their own electricity while staying connected to the Mt. Vernon power grid." The board took up the issue after city residents asked about regulations regarding hooking up their own solar panels. The town's program would allow net metering, but consumers must pay for their own equipment including a bi-directional meter. Participants would pay for power from the city at the regular rate that any other city consumer would pay. Participants who create excess power would receive a credit on their utility bill, equal to what the city pays for the electricity at a wholesale rate from the distributor Empire.
In 2017, a bill was proposed in the state House (House Bill 340) that would give utility companies permission to increase fixed charges for rooftop solar customers by up to 75 percent. The bill also would allow the Missouri Public Service Commission to require solar customers to maintain a "reasonable amount of liability insurance coverage or other equivalent respecting the installation and operation of the qualified electric energy generation unit."
According to Utility Dive, the debate "mirrors net metering issues taken up in other states."
In January 2017, the Energy and Technology Interim Committee (ETIC) in the Montana legislature passed HB 52, a bill which grandfathers net metering rates to solar customers. The bill passed with unanimous support. The bill was supported by NorthWestern Energy; however, a second bill did not have as much success. Bill HB 34 would have raised the net metering cap from 50 kW to 250 kW for government buildings.
As of February 2017, the net metering policy in Montana gives credits on energy bills for energy produced that flows back to the grid for customers with wind, solar, or hydropower systems. The credits given to customers are equivalent to the retail rate of electricity.
There are at least two bills in the state legislature that would change that rate. Senate Bill 7, sponsored by Sen. Pat Connell (R-Hamilton) would ban net metering customers from being subsidized other customers of the utility company. Senate Bill 78, sponsored by Sen. Keith Regier (R-Kalispell) would require the Montana Public Service Commission to create a separate rate class for net metering customers by January 1, 2018. Under the bill, power produced by net metering customers would be valued at the wholesale rate and net metering customers to pay a monthly service charge to help pay for the fixed costs of the public utility's operation.
In Nebraska, "customer-owned renewable energy generation" can be included under the state's net metering system. However, energy generated by the customer much reach a minimum of 25 kilowatts. The energy can be generated from a variety of renewable sources including solar, wind, and hydro.
The state of Nevada implemented net metering in 1997. Up until 2016, utility companies in Nevada paid the retail electricity rate to net metering consumers. Nevada's utilities pay net metering customers an average of $623 per year in southern Nevada and $471 per year in northern Nevada. (The major utility company in Nevada is NV Energy.)
The Nevada legislature passed legislation in 2015 that required the Nevada Public Utilities Commission to study the electric rate structure and come up with ways to shift costs. In December 2015, the commission updated the regulations so that utility companies would pay the wholesale rate to net metering consumers.
The group Greenpeace and Senator Harry Reid, the Democratic leader in the U.S. Senate, expressed opposition to the commission's ruling. On February 8, 2016, during a commission hearing, three individuals with guns attempted to enter the hearing. Security guards turned them back. The individuals said they would return to the next commission hearing and would be armed.
On December 22, 2016, the Nevada Public Utilities Commission unanimously decided to eliminate the previous rate structure that went into effect in 2015, which contributed to the collapse of Nevada's rooftop solar industry. The decision allows the state's solar market to be restored. The ruling determined that the rate would decrease from 11 cents per kilowatt-hour to 2.6 cents, while the monthly service fee increase from $12.75 to $38.51.
In June 2017, the legislature approved several bills intended to "advance access to clean energy, including measures aimed at boosting the value of rooftop solar, while increasing the state's renewable energy goals." According to Utility DIVE, "Clean energy advocates are hailing several pieces of legislation that will help turn around Nevada's image as being unfriendly to renewable energy."
The state Senate unanimously approved AB405. If signed into law, AB405 would increase restoring net metering rates paid by utility companies to rooftop solar companies; the rate utilities would have to pay to buy back energy would be close to the "retail rate" that customers pay utilities, instead of the wholesale rate that utility companies pay to get electricity.
Vote Solar, a lobbying group started in 2002 and funded by the solar industry, lobbied Governor Brian Sandoval to pass the legislation. (Vote Solar describes itself as an organization that "has been working to make solar affordable and accessible to more Americans. We work at the state level all across the country to support the policies and programs needed to repower our grid with clean energy").
Sunrun and SolarCity, companies that install rooftop solar panel, both left the state after the Nevada Public Utilities Commission 2015 decision. However, both companies will return after AB405 is signed into law.
In many states, such as New Hampshire, solar companies and utility companies are coming to the negotiation table with compromises over net metering rates. In New Hampshire, proposals put forth by both the solar companies and the utility companies in March 2017 mostly found a lot of common ground.
Both the utility companies and solar companies in New Hampshire filed proposals regarding a settlement over how customers will be compensated in the future over distributed solar systems. The proposals include compensation rate changes for rooftop solar owners, establish time-of-use rate pilot projects, and continue non-bypassable charges for solar customers. Solar companies proposed to cut the distribution credit by half in 2019; utility companies proposed to eliminate the credit completely.
Under the original policy, rooftop solar customers could net credits annually at the retail rate which is $.17 per kilowatt hour in New Hampshire. Customers could "bank them" and use them later. Utilities propose to eliminate this provision, instead crediting customers for the excess energy they generate, along with a transmission credit.
In March 2018 the New Hampshire Senate passed a bill that would let larger electric generators get compensated for the excess power they feed into the electric grid above what the owners use. Under the current law, generators of up to 1 megawatt are eligible for net metering. The Senate proposal would raise the cap to allow projects of up to 5 megawatts. "While net metering legislation often focuses on homeowners’ rooftop solar installations, this bill is intended to provide an incentive for developers to install bigger systems, projects that could serve communities and large companies. It also would encompass some small-scale hydropower projects that already exist in the state."
In 2018, two candidates running for the Democratic nomination for governor, Molly Kelly and Steve Marchand, "talk[ed] about an energy policy issue that rarely makes national headlines: net metering. It's a state program that lets electric ratepayers generate their own power, and put it back into the grid in exchange for lower energy costs." Kelly was the original architect of New Hampshire's net metering law, which some municipalities such as Nashua hoped would expand, under a bill that saw bipartisan support during the 2018 legislative session. Governor Chris Sununu vetoed that bill. However, the legislature may try to override the veto.
In June 2017, the North Carolina House of Representatives took action on a bill, HB589. First, the bill would try to create a process for competitive bidding among solar developers. Second, it would create a solar leasing program.
The bill passed by a vote of 108-11. As of June 8, the state Senate was expected to consider the bill the following week, but the bill, according to news reports, would face a harder time getting passed in the state Senate. Gov. Roy Cooper has said he supports the legislation.
According to Utility DIVE, "The legislation proposes a competitive bidding process for independent solar developers that lawmakers say will help keep costs down by using market-driven solutions to develop renewable projects. The bill would also create a Green Source Rider Program to allows large utility customers to take control of their energy purchasing."
The federal Public Utility Regulatory Policies Act makes it mandatory for utility companies to purchase renewable energy from independent power developers. HB589 would allow utility companies to work with state regulators to propose a program that would "procure renewable energy at a competitive rate." Utility companies would then be allowed to compete and bid against third-party energy developers. Duke Energy proposed a measure in 2016 that is similar to the bill (the North Carolina Utilities Commission rejected a similar measure in 2014).
Additionally, the bill would create a program for solar panel leasing. The intent is to create a competitive market to install renewable energy and encourage the installation of more rooftop and other solar energy projects. Utility companies will be allowed to propose changes to net metering rates after the completion of a cost and benefits analysis. Existing solar customers would be grandfathered under the original rates until January 2027.
Recently, it has become a popular trend for utilities in several states to dramatically increase their consumers' fixed charges in order to account for the cost-shift created by the growing number of net metering customers who do not cover their share of grid upkeep costs, which, subsequently, places the burden onto non-solar panel customers. The average increase of fixed charges is estimated at 20 percent.
In Ohio, American Electric Power (AEP) proposed to more than double its fixed charges from $8.40 per month to $18.40 per month, affecting nearly 1.5 million customers in order to accommodate for the increase costs due to net metering.
AEP was under investigation by the Public Utilities Commission of Ohio (PUCO) for allegedly double-charging their customers a total of $120 million to supposedly cover fuel costs for one of their power plants in Lawerenceburg, Indiana and for two other power plants operated by Ohio Valley Electric Corp. The double-charge would have affected 67 percent or 1 million customers who had opted out of an alternate supplier. In 2014, PUCO enlisted an outside firm to conduct an audit focusing on their consumers' charges. The findings concluded that the customers were indeed overpaying. At the same time, AEP was being reimbursed for their fuel costs twice in a period from 2013-2015.
The Office of the Ohio Consumer's Council, under the auditor's advice, requested AEP to disclose additional records, which was, in turn, denied by a PUCO administrative law judge, who agreed with AEP's stance that their confidentiality be protected until the audit process was resolved. Pablo Vegas, the president and chief operating officer of AEP Ohio, insisted at the time that rates are based on actual costs of system operations, solidifying the company's claim that no deceptive action had taken place.
A ruling by PUCO in November 2017 reduced the amount of credit a customer could receive for excess electricity sold back into the grid. This reduction in credit applies to people whose systems generate enough electricity to offset all of their use, and still have some electricity left over. On January 10, 2018, PUCO held public oral arguments on the issue. Utilities and opponents are "digging in against each other over proposed changes", and the issue looks likely to head to the state Supreme Court. One of the more contentious sections limits the part of a customer's bill that can be offset by solar panel generation.
In a statewide poll of Republican or independents who also say they are conservative, the Ohio Conservative Energy Forum found in 2018 that 87 percent support net metering.
In South Carolina, residential solar can make up two percent of the energy each utility sells, according to a law passed in 2014. Solar developers and solar advocate special interests argue that the cap stifles further residential solar development in the state. In June 2018, South Carolina lawmakers declined to remove limits on solar in the state during reconciliation of the state's annual budget bill. Developers and renewable advocates criticized state legislators for cutting the proposal from the budget bill. Major utilities in South Carolina are expected to meet the net metering cap this year.
The state of Utah offers tax credit for customers of residential solar panels. In February 2017, there was a compromise in the state legislature to phase out the solar tax credit by the year 2021 by limiting how much of a tax credit each person can get. The bill, House Bill 23, was signed in March 2017 by Utah's governor Gary Herbert. In Utah, before the legislation takes effect, rooftop solar customers can claim $2,000 in tax credits. That amount will be reduced by $400 each year starting in 2018 until it is down to zero. Regarding the passage and signing of House Bill 23, the solar industry didn't fight it.
Tax credits currently cost the state of Utah $6 million per year. This is due to the growth in residential installations. Rooftop solar customers can currently get $2,000 in tax credits on their state income tax return. If the bill is passed into law, that amount will be reduced by $400 per year starting in 2018. The solar power industry doesn't like the bill; however, they did not contest it.
The largest threat to solar power in Utah is rate design and changes to net metering. However, in the last week of August 2017, Utah Governor Gary Herbert's office announced that stakeholders reached a compromise in Utah's net metering debate. The compromise allows Rocky Mountain Power's current solar customers, as well as those who submit their solar application through November 15, 2017, to continue receiving the "retail rate" credits (when their solar power systems generate excess electricity and send it back to the grid) until 2035. The compromise also implements a 3-year transition that gives export credits to rooftop solar customers. During that time, Rocky Mountain Power must study a "new method of compensation after a value of solar study concludes." Over a dozen entities signed onto the agreement, including Rocky Mountain Power, Vivint Solar, Utah Clean Energy, the Utah Solar Energy Association, and the Utah Division of Public Utilities.
The plan would "decrease the value of credits customers receive from the utility in exchange for excess power their panels generate." Rocky Mountain Power decided to grandfather existing net metering customers until the year 2035.
In October 2017 solar panel installer SolarCity reached a settlement with the Vermont Department of Public Service over improperly filed contracts. The Vermont Public Utility Commission (VPUC) investigated SolarCity's business practices in September 2017. VPUC said SolarCity failed to file registrations with state regulators. The company will spend $200,000 "to address net-metering contracts and registrations for about 134 customers" under the settlement.
Vermont changed its net metering program. The new rules "encourage community solar projects and help ratepayers, who subsidize the above market rates utilities are required to pay for power generated under the program."
Net purchase and saleEdit
Net purchase and sale is a different method of providing power to the electricity grid that does not offer the price symmetry of net metering, making this system a lot less profitable for home users of small renewable electricity systems.
Under this arrangement, two uni-directional meters are installed—one records electricity drawn from the grid, and the other records excess electricity generated and fed back into the grid. The user pays retail rate for the electricity they use, and the power provider purchases their excess generation at its avoided cost (wholesale rate). There may be a significant difference between the retail rate the user pays and the power provider's avoided cost.
Germany, Spain, Ontario (Canada), some states in the USA, and other countries, on the other hand, have adopted a price schedule, or feed-in tariff (FIT), whereby customers get paid for any electricity they generate from renewable energy on their premises. The actual electricity being generated is counted on a separate meter, not just the surplus they feed back to the grid. In Germany, for the solar power generated, a feed-in tariff is being paid in order to boost solar power (figure from 2009). Germany once paid several times the retail rate for solar but has successfully reduced the rates drastically while actual installation of solar has grown exponentially at the same time due to installed cost reductions. Wind energy, in contrast, only receives around a half of the domestic retail rate, because the German system pays what each source costs (including a reasonable profit margin).
Sources that produce direct current, such as solar panels must be coupled with an electrical inverter to convert the output to alternating current, for use with conventional appliances. The phase of the outgoing power must be synchronized with the grid, and a mechanism must be included to disconnect the feed in the event of grid failure. This is for safety – for example, workers repairing downed power lines must be protected from "downstream" sources, in addition to being disconnected from the main "upstream" distribution grid. Note: A small generator simply lacks the power to energize a loaded line. This can only happen if the line is isolated from other loads, and is extremely unlikely. Solar inverters are designed for safety – while one inverter could not energize a line, a thousand might. In addition, all electrical workers should treat every line as though it was live, even when they know it should be safe.
Solar Guerrilla (or the guerrilla solar movement) is a term originated by Home Power Magazine and is applied to someone who connects solar panels without permission or notification and uses monthly net metering without regard for law.
- Electric bills contain a connection fee and an energy fee based on the number of kilowatt hours used that month. When no kilowatt hours are used the monthly connection fee is still paid. When the meter turns backwards for the month, the negative kilowatt reading is rolled over to the next month.
- Net energy metering uses bi-directional meter
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