It seems almost every week a new report comes out touting the growth of renewable electricity, especially wind and solar. Whether it is new milestones in installed generation capacity or low prices sold into the electricity markets, wind and solar are the certain future of electricity generation. But the future prospects of truly clean energy depend on a variety of government policies that have incentivized that growth. Net metering is one of those policies—which is why it has come under attack.
Net metering is a billing arrangement in which the owner of a rooftop solar system can send electricity they don't use back into the grid, and receive credit for it on their bill. While there is no national net metering policy, net metering programs have traditionally paid the owners the "retail" electricity rate. In other words, the owners have gotten a one-for-one credit for each kilowatt-hour of electricity sent into the grid.
Because the upfront costs of installing rooftop solar are in many cases prohibitive, net metering allows a homeowner to recoup the cost of installing the system over several years. This has made installing rooftop systems more affordable; the system essentially pays for itself. It's clear that net metering is fueling the growth of rooftop solar: While there were fewer than 100,000 net metering customers in the United States in 2009, by July 2015 there where more than 750,000. This growth follows a pattern similar to the growth of PV solar installations, with residential rooftop solar installations increasing by 66 percent from 2014 to 2015.
But the success of net metering in expanding solar installation has made it a target for opponents of renewable energy. As The Los Angeles Times reported in 2014, utilities and various organizations backed by the Koch Brothers allied to undermine net metering laws. There are several ways they can try to do this: states can switch from having homeowners credited at the retail rate of electricity to a lower rate, surcharges can be placed on homeowners with solar, the statewide program cap on net metering can be lowered, or net metering can be repealed outright.
In 2013, Arizona implemented a $5 surcharge on the electricity bills of households with rooftop solar panels. ALEC's support was reportedly crucial to the passage of the surcharge. Initially, the state utility Arizona Public Service Company, allied with "secret donors and operatives with ties to ALEC and the Kochs," pushed for a surcharge of $50 to $100 a month. The utility also contributed funding to two nonprofit organizations that supported implementing the surcharge. According to a spokesman for the utility, the funding was directed to the nonprofits through Sean Noble. Sean Noble, according to a report by ProPublica, has been "the Dark Money Man" for the Koch Brothers. In February 2015, the Salt River Project in Arizona approved a $50 per month surcharge for customers with distributed solar.
The rhetoric used by net metering opponents is misleading. ALEC maintains it is opposed to “all mandates and subsidies,” while utilities claim their concern is that net metering shifts costs for maintaining the grid to customers that do not have distributed solar. The Edison Electric Institute, the power industry trade group, has claimed that there are “unreasonable cost shifts.” But EEI’s own report – “Disruptive Challenges” – reveals their real concerns. In that report, they claim that net metering puts “a squeeze on profitability,” and they go further and warn that if net metering is not undermined “it may be too late to repair the utility business model.” The attack on net metering is clearly both a defense of the profits of utilities and an attempt to halt the transition to renewables.
Because of the controversy over net metering ginned up by ALEC, utilities, and the fossil fuel cartel, even supporters of renewable energy have begun to undermine net metering. Just this spring in Maine, a bill was advanced that would have ended the state’s net metering program. It’s a complicated story, but basically the state ran up against its self-imposed cap on net metering, which under current law triggered a review of the program by the Public Utility Commission (PUC). Fearful of what the PUC might do, and amidst the confusion about net metering sown by renewable energy’s opponents, green groups and legislators sought to create a new, untested market-based system to replace the tried-and-tested net metering. In a case of politics making strange bedfellows, national solar rooftop installers Sunrun and SolarCity joined with Republicans in Maine’s legislature to kill the bill after it was vetoed by Governor Paul LePage. Instead of seeking to replace net metering with some new system, the legislature could have lifted the cap on the program and allowed it to continue to grow—which is what they should have done.
A well-structured net metering program is essential to the continued growth of rooftop solar. But in order for the program to work, it must be designed in a way that actually reduces the costs to owners and makes rooftop solar cost effective. Net metering programs should credit customers at retail electricity rates, and should not impose surcharges that undercut their effectiveness. And at the same time, states should remove the caps that limit the expansion of net metering programs.