By Andrew Sendy, CEO of SolarReviews.com
If a state’s has net-metering programs that compensate its customers for the excess electricity their solar array produces and exports back to the grid—and there’s a good chance they do, given that 43 states and the District of Columbia currently have them—you will often hear utilities make an argument when they decide they want to dismantle them.Specifically, they try to label the customer, as a solar consumer, a mooch that lives off their fellow hard-working ratepayers. Their argument goes something like this:
Solar consumers produce their own solar power on-site, meaning that they are not using their distribution and transmission systems (aka “the grid”). Therefore, the argument goes, they are not paying their fair share of upkeep of the grid. And since they aren’t paying for it, someone else obviously has to—and so they claim those costs shift to non-solar customers.
[To see if a state has net metering, check out SolarReview’s guide by clicking here.]
But is that really true? That’s what this article will explore.
Is It A Really Complicated Question?
Turns out, it really isn’t. Sixteen state-level studies, according to the Solar Energy Industries Association, have disproven the cost-shift argument. And the definitive national study, done by the well-respected solar research laboratory, the Lawrence Berkeley National Lab, has found an even more specific repudiation of the utilities’ argument.
Berkeley found that most states—all but three, in fact—have a negligible solar power cost shift at all. Why? Because most states have solar penetration levels far below 10%. Until you hit that level of penetration (i.e., the total amount of solar electricity capacity installed), there’s no cost shift at all.
Perhaps even more surprisingly, even at penetration levels of 10% or higher, the “shift” is only 5/1,000 of a cent per kilowatt-hour. Ultimately, even at high rates of solar penetration, the effects on the bills of non-solar consumers are infinitesimal.
“If the goal is to keep prices low, there are other pieces of the puzzle that affect rates far more than net metering,” Galen L. Barbose, a research scientist at Lawrence Berkeley National Laboratory (LBNL) noted –echoing a study by LBNL which put this in context. “Carbon pricing, operating outdated plants—those are the issues utilities and regulators should be focused on.”
Furthermore, the argument doesn’t take into account the benefits of having more solar on the grid brings, including peak-shaving (the easing of grid strain during periods of high electricity use), utilities’ avoided costs (the more solar on the grid, the fewer expensive traditional power plants they have to build) and, naturally, the environmental benefits.
One study in Maine, in fact, showed that solar consumers would actually save other ratepayers $750 million over 20 years.
Clearly, solar consumers aren’t a problem. So what on Earth is really going on?
So Why Do Utilities Make This Argument?
Herein lies the crucial question: If the “cost-shift” argument is so blatantly false, why do utilities keep making it? And how can solar consumers fight it?
As been discussed elsewhere, it’s one of the oddest industry relationships we’ve ever encountered. After all, solar does need utility support from time to time, and utility customers want solar. At the same time, however, that symbiotic relationship is constantly being challenged by the competing economic models. The more customer-sited solar there is, the fewer customers are feeding the utilities’ coffers and keeping their investors’ dividends high.
Given this (friendly?) competition/rivalry, it’s no wonder the utilities still make the argument, is it? It’s a way to split solar users from non-solar users in a way that allows them to keep their monopoly, centralized electricity distribution model in place (the old divide and conquer model used with such success in the old British Empire).
And with the overall number of solar consumers still relatively small in most utilities’ customer base, it’s hard to debunk this myth that comes back from the dead as often as Chucky the Killer Doll. In fact, not even most solar consumers know this argument is a myth.
But, armed with knowledge (and a handy link to the Berkeley study), customers can make sure their utility is never again able to use this argument to dismantle the most-effective incentive to encourage solar adoption.
And consumers can stop feeling guilty. They are not only not mooching off their neighbors, but they’re improving the grid and its reliability for everyone.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
Exactley. Its,all about Greed. Solar is fine if the Utility owns and,sells the clean power at a 50% make up since it’s clean. But if you own and,save from it they think its,bad.
Let’s put the two pieces of this puzzle together and make a correct statement for the utility company: private solar penetration increases the cost to regular customers *to keep shareholder returns stable.*
OK … but the PUC’s job is to keep the utility solvent, not profitable.
Under a power purchase agreement (PPA) between SolarReserve and NV Energy, all power generated by the Crescent Dunes project in the next 25 years will be sold to Nevada Power Company for $0.135 per kilowatt-hour. It pays now grandfathered residential customers $0.9 – $0.11/ kWh for excess power generated – “now grandfathered” after voter outrage forced changes to PUC net-metering rate decisions. The infinitesimally smaller impact residential solar will impact NVE’s bottom line hardly helps their argument.
The fact that the Lawrence Berkeley study says there is no impact for low penetrations of solar should trigger the question, “Is there really no impact or is the impact just so small at low penetrations that is it doesn’t affect anything?” Take with that, that once penetration goes up and the utility then tries to change the rate to a more equitable rate, they’ll be lambasted for it. You have to look at it from a building-block level to see what’s fair. Saying solar customers generate their own power and don’t use the grid simply isn’t true. They use the grid as their own private battery…put into it during the day, take from it at night…all at a net. Problem is that taking at night, that’s the grid cost the utility is recovering by buying excess at avoided cost.
I’m guessing you didn’t read it.
“Perhaps even more surprisingly, even at penetration levels of 10% or higher, the “shift” is only 5/1,000 of a cent per kilowatt-hour. Ultimately, even at high rates of solar penetration, the effects on the bills of non-solar consumers are infinitesimal.”
Firstly in my area we only have one choice of energy providers for this public service and if investors take a hit, well I give two figs about that.
Second, the utility is taking my excess generation and selling it to my neighbors at rental with no generation cost and fewer line losses.
Third, if they were so concerned about equitably sharing the cost of maintaining the grid then why hasn’t the base rate been higher and the KWH rate lower, short answer they made more money that way.
Power company’s still can make money here they just have to adapt. They keep pushing and when my grandfather time is up in 10 years I’ll be off grid with Likely cheap batteries.
there is an easy solution for the utilities, lower rates. lower rates make home solar less attractive.
But nooo must make the shareholders mo money.
I paid ~8cents/Kwh in texas and pay ~14cents in Florida, why?
oh and the company i worked for paid ~3cents/Kwh in texas.