March 14, 2014
Solar power still accounts for only 1 percent of the U.S. electricity supply, but the industry is booming. Last year, the solar industry installed the equivalent of five new nuclear plants around the country.
Part of the reason for this boom is net metering, a mechanism for owners of solar panels to sell electricity back to the grid at retail rates. But the net metering system, still in its infancy, faces challenges from utilities and state governments. In Pennsylvania, the state’s Public Utilities Commission (PUC) is proposing new limits on net metering for Pennsylvania solar panel owners. Is the state trying to slow down solar?
Stephen Lacey, senior editor at Green Tech Media, says net metering is the ‘bedrock’ of residential solar because it allows for solar panels to pay for themselves quicker and to contribute to the overall electricity market. Pennsylvania is one of 43 states that allow net metering for solar users.
Lacey said the PUC was trying to clarify who qualifies for its net metering program. The PUC has proposed mandating that solar panels be on the property that is getting electricity from it, and not an adjacent area.
“They don’t want solar customers with a big system, that should probably get compensated at wholesale prices, rather than retail rates, to game the system,” Lacey says.
But solar advocates are worried this could place undue burdens on solar owners who might not be able to put a solar array on their roof, like a homeowner whose rooftop is covered in shade but who owns an adjacent field with plenty of sunlight.
The PUC also proposed a cap on the amount of credit customers can earn off their solar panels. The commission proposed net metering would be available for up to 110 percent of a solar user’s personal electric use. Other states have put reimbursal caps on solar payback—Nevada's is 150 percent, while Minnesota’s is 125 percent.
“This 110 percent is the lowest I’ve seen and I think the solar industry is worried that it puts solar at a disadvantage,” Lacey said.
Lacey said the Pennsylvania net metering rules are part of a wave of changes to solar policy being promoted by utilities and their allies, including the American Legislative Exchange Council (ALEC), a conservative and pro-business group. ALEC, which is supported in part by utilities, called solar users “free riders” on the grid, because they don’t pay for the hard costs associated with transporting electricity the way utilities do. The utility industry sees solar and other forms of “distributed” power as a disruptive force, Lacey says.
“The utility industry sees solar as cutting into their business model,” Lacey says. “When a person installs solar on that home, and gets credited for it, and the utility has to pay that person for the electricity, then that’s taking revenue away from the utility itself. That’s why around the country, you’re starting to see utilities attempt to change net metering laws not necessarily to kill solar but—in their eyes—to make it more fair.”
The PUC is accepting comments on its proposed net metering rules through March 20, 2014.