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Whither Net Metering?

Paul Kando

Massachusetts has a booming solar market with 1,241megawatts of solar installations and 15,095 solar jobs. Jobs-shedding Maine has less than 25 MW installed solar and only 300 solar jobs. It is against this backdrop that one must evaluate the Maine Public Utilities Commission’s (PUC) recently proposed ruling, which would gradually phase out net metering. Under net metering rules utilities credit solar power generators for kilowatt-hours supplied to the power grid. In the US 47 states and the District of Columbia have net metering programs. The PUC’s move is rationalized as “protecting other rate payers” from having to cover the fixed costs of the power grid that solar panel owners supposedly fail to pay for.

Solar generation vs Electricity Cost
photo credit: Tom Millhoff

However, the claim that net metering shifts the cost of grid services to non-solar customers is not supported by facts: The Maine PUC’s own 2015 Value of Solar study set the worth of electricity generated by solar PV in Maine at 33¢/kWh. Solar power generating consumers contribute more value to the power grid than they receive in return. Each solar kWh generated contributes 10.9¢ to the power grid and everyone connected to it. Furthermore, merely converting from burning fuels to combustion-free solar power reduces energy demand by as much as one-third, thanks to increased system efficiencies and the elimination of the stack-losses of combustion.

If utilities are concerned about distributed solar power displacing demand for their electricity, declining revenues, solar’s impact on the fixed costs of the power grid, and that grid becoming an energy storage service for distributed power for which they aren't compensated, eliminating net metering will not provide them relief. Only adapting 19th century utility business models to the 21st century will do that. That outdated model treats energy as just another traded commodity. Solar energy doesn’t fit that mold. Unlike other forms of energy, after the initial investment in the technology has been made, solar electricity is free and particularly available at peak demand times when electricity from other sources commands a premium price.

The roughly $6 Billion ($4,511 per Mainer) we collectively spend each year on fossil fuels makes no economic sense: it permanently leaves the state’s economy. Meanwhile climate change threatens the future of our children and grandchildren. Net metering encourages and enables private investments in renewable energy production that would otherwise not be made. These investments reduce fossil fuel reliance and benefit a growing solar industry with a proven track record of creating well-paying, non-exportable jobs. Thus, beyond all its direct benefits to the power grid, net metering is also key to unlocking this economic resource.

The PUC recently held a public hearing on its proposal (Docket 2016-00222). Written comments are accepted until November 2 and I encourage you submit your own. Notice that the proposed ruling also has some beneficial components. But this is no time to phase out net metering. Let’s focus, instead, on policies that promote a collaborative model between consumers, communities and utilities. Allowing our utilities to renewably generate their own power would be a step in the right direction.