This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

10,192 Members

Post

As Net Metering Battles Move to Small Markets, Solar Energy Advocates Claim Early Victories

Net Metering Battle

The debate over how to value distributed solar is not new. Utilities and solar advocates have been negotiating changes to net metering in California, the leading U.S. solar market, for years.

Consequently, proposed changes to solar crediting policies have spread quickly to other leading states where utilities are starting to deal with a lot more solar on the grid.

But something curious is happening in the industry as 2014 unfolds: states like Kansas, Louisiana and Utah — all of which have extremely small solar markets — are also considering changes to net metering.

So why are lawmakers and utilities worried about the policy if it’s had virtually no impact on ratepayers in these states?

The answer is a mix of local free-market politics and an industry-wide push from utilities worried about declining revenues. In the fall of last year, the Edison Electric Institute, a utility trade group, partnered with the American Legislative Exchange Council (ALEC), a conservative business lobbying group, to help promote “model” legislation that would require net metering customers to pay fixed charges.

It’s also economics. Even in states with very little PV installed, the price of electricity from solar is becoming increasingly competitive with grid-based electricity (thanks to incentives and policies like net metering), and new markets are opening up where they previously didn’t exist. Some utilities are trying to get out in front of the trend by investing in solar themselves, but others are working on regulatory changes that could stop early growth before it takes off.

There are currently twenty-two states where net metering changes are being discussed. That’s just over half of the 43 states with net metering currently in place. Many of the efforts to revisit the policy have been well underway for some time, or were expected this year because solar development is increasing at a fast enough rate for utilities to take notice. Those include Arizona, Colorado, Hawaii and Massachusetts.

However, a number of tiny markets have also made their way onto the list. Utah, Idaho, Iowa, Kansas, Louisiana, Nevada and Washington state are all considering regulatory or legislative changes to residential solar policies. None of these states are in the top ten solar markets, and some of them are so small they are barely tracked by the industry.

In Kansas, for example, where utilities are promoting a bill that would reduce net metering payments to below retail rate, KCP&L reported that it added only seven residential solar customers under its net metering program in all of 2013 (PDF). In total, the utility has 29 residential customers and 13 commercial customers who have qualified for net metering since 2008, representing 407 kilowatts of PV capacity. Compared to KCP&L’s 6.6 gigawatts of total conventional generation, solar doesn’t even register in its energy mix.

The move beyond traditionally solar-heavy states shows how far the battle lines have spread across the country, influenced by the utility industry’s increasingly coordinated effort to get out ahead of solar’s expansion.

It would be wrong to call the current situation an all-out war. It’s more like a chess match that has solar advocates shadowing utilities and offering counter-moves to neutralize their efforts. And if this year’s results are any indication, the solar industry may still be in a strategically good position, even with limited resources to cover every market.

In Washington state, three pieces of legislation that would have added fixed charges to net metering customers and prevented third parties from competing with utilities fizzled out earlier this month. The solar industry said those efforts were inspired by ALEC’s pre-written bills on net metering.

In Utah, a bill supported by utility Rocky Mountain Power that would have required regulators to impose a “reasonable fee” on net metering customers was successfully changed by solar advocates, and adapted to form a process for studying the value of solar on the state’s grid.

And in Louisiana, where utilities were looking to lower net metering rates or kill the policy altogether, regulators agreed to an evaluation of the costs and benefits of solar as part of a consideration to lift the current 0.5 percent cap on net metered systems.

Influenced by local activists (including some Tea Partiers), overwhelming public support for solar choice and a seeming willingness to approach the issue objectively, regulators and some lawmakers are consistently opting for an evaluation process, rather than immediately making changes to net metering.

“In smaller states, they’re still at the point where they are considering a cost benefit analysis,” said Annie Lappé, deputy director of the Vote Solar Initiative. “In most cases, these commissions are deciding to undertake the studies.”

Assuming regulators remain open to independent studies, the process could, in theory, result in fairer treatment of solar.

That’s what happened in the up-and-coming solar market of Minnesota. Last year, the state created a process for determining a “value of solar” tariff that would calculate the appropriate rate utilities should pay solar customers based on their generation mix, the environmental attributes and the technology’s ability to offset more expensive forms of generation. A week ago, the Minnesota Public Utilities Commission voted in favor of establishing the tariff, which could actually be higher than current retail rates in some service territories.

Utilities may not like paying even more for solar, but they will have an option of crediting customers under net metering or the new tariff. And regulators can feel comfortable knowing a rigorous analysis was tied to the rate structure.

“We’ll be watching closely to see how it’s being used,” said Lappé.

At the moment, Minnesota — and “value of solar” pioneer Austin, Texas — are outliers in the net metering conflict. It’s possible that smaller states could follow Arizona’s lead and impose fixed charges on net metering customers. But as leading states like California and Colorado start undertaking their own comprehensive studies on solar’s true worth, states with smaller markets are considering the same process. And that in itself is a small victory for the solar industry.

“We have a consistent message in every state: if you actually look at the full value of solar, we’re sure that regulators will see the benefit,” said Lappé.

Photo Credit: Net Metering Battles/shutterstock

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

Stephen Lacey's picture

Thank Stephen for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

John NIchols's picture
John NIchols on Mar 27, 2014 6:29 pm GMT

Steve,

The comment in the parentheses falsifies your statement.

“Even in states with very little PV installed, the price of electricity from solar is becoming increasingly competitive with grid-based electricity (thanks to incentives and policies like net metering)”.

Why don’t you just stop repeating false information, and skip the parentheses?

The solar capacity factor in “sunny” Washington State, (see the movie, “Twilight”, to understand the sarcasm, if you have never visited Washington) is probably less than 15%. A the capacity factor for a new combined cycle natural gas plant is close to 90% – and costs a lot less per megawatt of generation. A a side benefit, it runs regardless of the weather.

The “up-and-coming solar market of Minnesota”. Now, this sentence is really grasping for straws. When they get around to determining the subsidies for solar, they better calculate the cost of snow sweepers. Then, they can call it a jobs bill, instead of a subsidy.

This article is really about early rent-seekers being forced out of the states with better capacity factors; generally, moving to states with worse capacity factors, populated with the same sort of ignorant legislators, who subsidized them in the better capacity states. Of course, any state will do, you just need ignorant legislators. There are plenty of them to go around.

Now that some people have wised-up, and understand the problems associated with intermittent, non-dispatchable solar energy, the subsidy gravy train is ending.

Let’s see what the 2014 mid-terms bring. My guess is cloudy weather for solar. Followed by a solar industry death rattle.

After all, these discussions have nothing to do with thermodynamics. They are all about politics, because the science rarely makes any sense.

Nathan Wilson's picture
Nathan Wilson on Mar 27, 2014 8:38 pm GMT

We used to have a renewable vision based on sound engineering (build CSP plants with thermal storage in the desert southwest, supplement with wind power from the central plains, and use redundant HVDC lines to transmit the power to the rest of the nation).

But like the nuclear vision which is also based on sound engineering, it failed to win popular support.  So now the green movement offers us only the rooftop solar vision, which we know is many miracles away from being able to rid the world of fossil fuel use, and is destiny to drive up energy costs for the majority of us, using ever more complicated and deceptive pricing/subsidy/cost-shifting schemes.

The green movement has truly lost its way.

Bas Gresnigt's picture
Bas Gresnigt on Mar 29, 2014 5:43 pm GMT

Despite massive government research spending, we are still stuck with the same old reactor designs that were around >50years ago. Nearly the same yield, etc.
PWR, BWR, MSR, LFTR, (Fast) Breeder, etc. designs were around in the sixties.
Only now, we know better how dangerous those are.

Solar went from 2% yield in ~1970 to standard ~18% now. Yield improves ~0.5%/year.
With the perspective of improving towards 40%.
Price per produced MWh going down with ~8%/year.

Similar with wind and storage.

Government should spend far more money into that, so development speeds up.
That brings a real return for our tax-money.

Nathan Wilson's picture
Nathan Wilson on Mar 29, 2014 8:30 pm GMT

The renewable industry faces constants battles to preserve the government subsidies that keep them alive.  In 2012, the US wind industry lost a major battle, and subsequently wind turbine installations dropped by 90% for 2013 compared to 2012 (see AWEA) before starting to recover as their subsidy was temporarily restored.

The solar industry is similarly dependent on policy support, however the annual output of US installed base of solar generation is an order of magnitude smaller than the 4% of US electricity that the wind industry produces.  So these victories are “early” in that the solar industry has not delivered much electricity yet

These are not “decisive” victories: the whole solar industry could die in 2016 when the federal 30% investment tax credit expires, or the rest of the nation could learn the dirty little secret that solar giants California and Arizona already know (the cost of solar power can be slashed 50% simply by putting the panels at utility-scale facilities instead distributing them on residential rooftops, see SEIA). 

Nathan Wilson's picture
Nathan Wilson on Mar 29, 2014 5:26 pm GMT

Solar versus Big Oil?  Why? Their markets do not overlap at all.  Hydrogen from nuclear power is a threat to Big Oil, but the gullible renewable movement is content to pretend that food-to-fuel might work someday (algae is the anchor of the seafood chain, so that counts as food too).

Solar versus Big Coal?  No way, as demonstrated by Germany, coal and solar can work together to take market share from safe, clean nuclear power.  As soon as the sun goes down, coal has the grid to itself.  The US natural gas industry likes to claim that only they can supply the fast ramping dispatchable power needed by a renewable-rich grid, but those clever German coal companies are managing to stay in the game and thrive alongside German solar (when I refer to German coal, I of course mean lignite, the dirtiest source of energy there is).

Bas Gresnigt's picture
Bas Gresnigt on Mar 29, 2014 5:50 pm GMT

Nathan,Your sound engineering ideas are gradually superseded by smart engineering ideas: rooftop solar + storage + wind turbines. More simple and becoming cheaper and cheaper and cheaper.

Bas Gresnigt's picture
Bas Gresnigt on Mar 29, 2014 6:04 pm GMT

@Nathan,
…Hydrogen from nuclear power is a threat to Big Oil...”
Why?
Nuclear power is around since half a century and it did not happen. Nuclear only became more expensive. A trend that continues.

If you compare the costs of the new nuclear plant at Hinkley (UK), with Solar+storage+wind than it is clear that nuclear generated electricity cost two times more.
Taking into account the long term price decreases, only solar will become such a threat to big oil.

And indeed, substantial pilot plants converting electricity into gas and/or care fuel did start in Germany.  Those may take off substantial in ~2025, when the need for storage becomes more urgent. 

Robert Bernal's picture
Robert Bernal on Mar 30, 2014 5:15 am GMT

It’s all the hype that prevented humanity from already solving what would not have been the excess CO2 problem. Simply stated, the least expensive, most abundant source was in the awesome development of closed cycle nuclear, but politics (and now their buddies, the solar and wind industries) has waged an effective battle by use of what the public wants to hear: “warm fuzzy words” (and fear) instead of actual science.

Now, we are already on the path of fossil fueled depletion into the overheated biosphere because of such public disinterests about their very energy sources… I mean baseload, electric car charging at night, type of energy sources.

Nathan Wilson's picture
Nathan Wilson on Mar 31, 2014 12:27 am GMT

Once again, the Hinkley Point nuclear addition actually proves that nuclear in the UK today is cheaper than solar and wind, even before storage is added (and storage is never used at large scale with PV or wind, because the combination is not cost effective), see this recent government study from the UK.  And please do not use the Hinkley contract to predict the future cost of nuclear power, since the only valid comparison would be between future new-build plants (today’s high cost off-shore wind farms will still exist 20 years from now, same as today’s nuclear plants).

You are welcome to continue predicting dramatic cost reductions for solar and wind, but remember that new-build nuclear is guaranteed to come down in price too, if we continue to build plants (China proves this as they have tried a few prototypes and have chosen to continue their build up).   I would not recommend holding your breath waiting for cheap storage however, as the cost gap is very large, and the build rate for batteries (lead-acid and advanced lithium-ion) is very large already (hundreds of millions of cells per year).

Also, don’t expect the environmental movement to continue to support large scale batteries.  We have not yet had the discussion of how much toxic waste is produced during the battery life cycle, nor have we talked about where that waste goes (the issues will change with every new battery technology).

Bas Gresnigt's picture
Bas Gresnigt on Mar 31, 2014 7:22 am GMT

That report is produced by UK government to support it’s pro-nuclear policy.
Even if you use present market prices wind+solar show to be substantial cheaper already!

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »