A new analysis from the Brookings Institution shows that net metering benefits both solar customers and non-solar customers alike.
Net metering – the policy that allows homeowners with solar panel systems to sell their excess electricity back to their utilities – has recently been a contentious issue in a small number of states, most notably in Nevada.
The rationale for the Public Utility Commission in Nevada to eliminate favorable net metering rules was that solar customers were shifting the costs associated with maintaining the grid to their neighbors that didn’t have solar.
On the contrary, the Brookings report shows that net metering actually provides a $36 million benefit to ALL ratepayers in Nevada. This is done through the added benefits of reduced infrastructure repair and environmental compliance costs. Homeowners with solar also help reduce the amount of future electric capacity investment that utilities must make.
In fact, the Brookings study also highlighted previous studies that all showed a net benefit for net metering. For example, the Environment America Research and Policy Center reviewed 11 net metering studies and found that the average “value of solar” was 17 cents per kilowatt hour compared to the nation’s average of 12 cents per kilowatt hour.
These findings do not come as a surprise to those in the solar industry and those who could take an objective viewpoint. It was abundantly clear that the whole “cost shifting” argument against net metering was simply utilities’ best shot at fighting competition. The Brookings analysis and others to surely come out will show how very illegitimate these arguments were.
The truth of the matter is quite obvious; residential solar power represents a significant threat to utilities’ traditional business model. Continued deployment of distributed solar power in the form of residential rooftop solar could put a serious dent in the profit margins of energy companies everywhere.
Ways that both utilities and ratepayers can benefit from the continued use of net metering was also mentioned by the study. However, the specifics of potential solutions have yet to be worked out. What is clear is that residential solar power is not going anywhere. Utilities must find a way to incorporate more renewable energy from its customers while updating the grid at the same time.
As recently mentioned in other posts, utilities will also see less revenue as energy storage systems will get deployed in much larger numbers in the coming years. Challenges for the traditional electric utility model will continue to mount as homeowners and business owners alike begin to opt for power ownership instead of renting in perpetuity.