The Future of Net Metering


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A growing number of utilities are calling for reform or abolition of net metering. They call it a “free ride” to use utility wires and not pay for the service. IREC, along with other non-profits and the solar industry, know net metering can be fair and balanced. It provides benefits that outweigh utility costs in most cases, particularly by deferring new utility construction. It's a hot button topic. A rundown of what's happening in key states, including a deeper analysis of the issue and insight into how to achieve a fair valuation of all of net metering's benefits, was covered by Jason to standing-room crowds

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The Future of Net Metering

  1. 1. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. The Future of Net Metering Solar Power International Chicago, IL Jason B. Keyes October 22 & 23, 2013
  2. 2. Definition Net metering is a billing mechanism that credits solar system owners for electricity exported onto the electricity grid. Under the simplest implementation of net metering, a utility customer’s billing meter runs backward as solar electricity is generated and exported to the electricity grid and forward as electricity is consumed from the grid.
  3. 3. Courtesy SolarCity Net metering includes this . . .
  4. 4. Courtesy SolarCity and this . . .
  5. 5. and, in some sense, even this (Nellis AFB)
  6. 6. Key Parameters •  Facility Size •  Program Cap •  Fees •  Third Party Ownership •  And – sunshine, utility rates, incentives, interconnection procedures
  7. 7. Net Metering Facility Size Caps / July 2013 43 states, U.S. Territories State Policy Voluntary Utility Program(s) only + Washington DC & 4 territories have adopted a net metering policy.
  8. 8. Net Metering Program Caps (percent of utility peak demand) DC   <  1  %   <  3  %    ≥5%   <  5  %   Unlimited  
  9. 9. Retail Power Purchase Agreements RI: May be limited to certain sectors UT: Limited to certain sectors AZ: Limited to certain sectors Authorized by state or otherwise currently in use (see notes on following slide) Currently under judicial or other form of legal review Apparently disallowed by state or otherwise restricted by legal barriers Status unknown or undetermined September 2013
  10. 10. 2013 Net Metering Grades ( DC A B C D F N/A
  11. 11. Obstacles to NEM Program Expansion •  Concerns about cost –  Utility claims of cost shifting to non-NEM customers –  Competing valuation studies •  Concerns about safety and reliability –  Shift discussion to interconnection procedures –  NEM is just a billing arrangement
  12. 12. Net metering is a “disruptive challenge” that is leading to “declining utility revenues, increasing costs and lower profitability potential” that must be addressed. Edison Electric Institute
  13. 13. Next Steps •  Valuation Studies –  See IREC’s new “Regulator’s Guidebook” ( –  Need to validate NEM cost-effectiveness –  Need to include all benefits •  Rate Design –  Action shifting to rate design in utility rate cases –  Need to be involved in each major case – huge cost •  Alternative Models –  Value of Solar Tariff, Feed-in Tariff, shared solar
  14. 14. Next Steps Valuation Studies
  15. 15. Valuation Highlights •  Energy value – natural gas not burned •  Capacity value – natural gas plant not needed •  Line losses – megawatts not lost on T&D lines •  Utility environmental – avoided compliance costs •  Ancillary benefits – grid support •  Market price impacts •  Societal benefits – jobs, health and environmental
  16. 16. Avoided capacity costs visualized
  17. 17. WA: Docket UE-131883 has info on an upcoming workshop to discuss costs and benefits of DG NV: PUC opened docket 13-07010 to consider costs and benefits of NEM MN: 2013 legislation required development of a VOST MI: VOST issues have appeared in RPS proceedings VT: 2012 legislation directed the VT PSB to complete an evaluation of NEM OR: PUC recently held a workshop to discuss solar rates in docket UM 1452 NC: In docket No. E-100 Sub 136, NCUC is examining avoided cost methodology CA: 2012 legislation required a CPUC study of costs and benefits of NEM SC: PSC considering a NEM docket that addresses cost issues AZ: ACC considering APS NEM proposal and cost/benefit studies HI: NEM cost benefit analysis funded by NARUC due out shortly CO: PUC considering Xcel cost/benefit study of NEM TX: Austin Energy developed a VOST in 2012; San Antonio’s CPS will be replacing NEM with a SunCredit tariff LA: In docket R-31417 PSC staff proposed to value NEM exports at avoided cost. FL and TN: TVA and other utilities considering VOST approach
  18. 18. THANKS to our generous sponsors for the 2013 3iForum and 3iAwards
  19. 19. Thank You Jason B. Keyes