It's called "net metering." That's when homeowners who put solar panels on their rooftops can sell extra energy they don't use back to utilities.
It’s considered a huge selling point for new solar installations. But across the country, utilities have been fighting to limit or dismantle state net metering laws.
In Pennsylvania, the Public Utility Commission recently made some much-anticipated changes to the state’s net metering policies. Kara Holsopple of The Allegheny Front spoke with Stephen Lacey, the senior editor at GreenTech Media and co-host of theirEnergy Gang podcast, to get the lowdown on the commission’s decision.
The Allegheny Front: The Public Utility Commission is calling its decision a “compromise.” Essentially it still allows rooftop solar owners to sell extra energy back to the utilities at a retail price, and at a higher percentage than the utilities wanted. But there’s a limit. So what kind of limit are we talking about?
Stephen Lacey: Well, the limit really means a homeowner can’t just set up a large power plant in their backyard and get compensated at the retail rate. It sets a limit at 200 percent of historical consumption, and when you look at other states, this is actually a very good compromise. Delaware has a 110 percent limit. And New Jersey has a limit where you cannot exceed a customer’s annual energy usage.
AF: Two hundred percent is more than the 110 percent that was proposed in Pennsylvania, and yet some solar advocates are not happy with this number. Isn’t this good news for rooftop solar?
SL: I think it is very good news for rooftop solar. Of course, advocates are going to want more. They want as much access to the grid as possible. The utilities claim that they have to pay for upkeep on the grid and that there should be limits on how much they compensate those solar generators and how much goes on the grid. Clearly, we need to find a compromise. Again, when you compare it to other states, particularly Nevada, which has completely dismantled retail net metering, I think solar advocates should feel good that the utility commission didn’t completely dismantle the law or go along with exactly what the utilities wanted.
AF: And net metering has become a really intense issue for the renewable sector across the country, right?
SL: There are skirmishes around net metering all around the country. So the solar industry is tracking how these battles play out state by state, because retail net metering is — many solar advocates say — the bedrock of good solar policy. So when you change retail net metering and devalue solar, you fundamentally change the economics of the system, and you could potentially dismantle a market overnight.
AF: So how much do these net-metering limits really hurt the rooftop solar industry or affect people’s decisions to install solar?
SL: It really depends on the decision. So again, Nevada decided to slash retail net-metering rates down to the wholesale rate over a three-year period. And it also added more monthly fixed charges to people who are hosting solar on their rooftops. So this completely decimated the solar industry. The economics of solar just do not work right now in that state, and solar companies have pulled out. But in states like Maryland or New Jersey and now Pennsylvania, you’ve seen compromises that still maintain the retail rate for net-metered solar electricity but also set some sort of reasonable cap.
AF: So what’s the trend with these decisions when it comes to net metering? Is it more favorable to the solar industry or to the utilities?
SL: Overall, the trend is pretty good for the solar industry. You have a couple unique states, like Arizona and Nevada, which have drastically cut net-metering rates. The state of California recently upheld retail net metering, and California represents more than 50 percent of installations in the U.S. So this is a pretty big deal. Overall, when you look at the dozens of cases across the country, regulatory commissions and legislatures are looking at studying the benefits of solar and the cost of solar on the grid, rather than making sweeping changes to retail net-metering rates. So they’re choosing to delay their decisions and explore the economic consequences rather than making rash decisions right away. And I think that’s a hopeful sign for the solar industry in general.
AF: So this decision shouldn’t inhibit the industry from growing here.
SL: No, I don’t think it will. I think what Pennsylvania did here was pretty fair and within the boundaries of what many in the solar industry consider fair when you look at the spectrum of decisions across the United States. When we look at the economics here, I don’t think this is going to drastically impact the solar industry in Pennsylvania. I think you’re still going to see steady growth.
This report is from The Allegheny Front, an award-winning public radio program covering environmental issues in Pennsylvania.