California’s Net Metering at a Crossroads

May 17th, 2012 by Zachary Shahan



There’s a big net metering controversy/conflict in California at the moment, but a conclusion seems to be near. Susan just wrote on this a bit yesterday, and now we’ve got a wonderful, exclusive guest post from Ben Higgins, Director of Government Affairs, Mainstream Energy Corp./REC Solar/AEE Solar, to share with you. As Higgins shows below, net metering is a huge policy supporting decentralized, consumer-owned solar power. But on to the show, here’s his guest post:

By Ben Higgins, Director of Government Affairs, Mainstream Energy Corp./REC Solar/AEE Solar

The vast majority of people who purchase solar for their home or business in the U.S. participate in “net metering,” an arrangement with a utility whereby producers of electricity are credited for the full retail value of any electricity produced, but not used at the time of generation. These bill credits can then be used to offset usage when the solar system isn’t generating electricity. Net metering allows businesses and homeowners to more effectively manage electricity production and consumption, and significantly reduce energy costs.

Virtually every state in the nation has adopted net metering, making it one of the most prevalent and powerful drivers of small-scale solar generation. In fact, while other solar market mechanisms – feed-in-tariffs and renewable energy certificates (RECs) come to mind – attract much of the industry’s attention, net metering has arguably been the policy foundation of the customer-sited solar industry. In California, which is still the top solar state by a wide margin, more than 110,000 homes, businesses, schools, farms, and other facilities use net metering. Only a slight fraction of solar system owners are not using net metering.

Net metering, however, is at a tipping point. Even despite the 25,000+ jobs created by the solar industry in California, the more than $10 billion in investment in the state, and the fact that direct incentives have plunged to all-time lows while the rate of solar installations continues to climb, net metering has now come under fire from utilities, which have proposed significant new fees on new and existing net metered customers.

This conflict over net metering will soon come to a head in the Golden State. Nearly a year ago, the Interstate Renewable Energy Council filed a motion requesting that the California Public Utilities Commission (CPUC) review the methodology by which the state’s cap on the total amount of allowable net metered capacity is calculated. This cap – written in law as 5% of “aggregate customer peak demand” – could be reached in much of the state as soon as mid-2013, making this a critical issue for California’s solar installers, manufacturers, and investors.

After receiving input from stakeholders, CPUC President Michael Peevey issued his findings last month. In short, the Commission found that the state’s investor-owned utilities have been using an overly restrictive approach which halves the amount of solar that can be net metered, and is contrary to both the letter and intent of the law.

The CPUC could vote as soon as May 24th to compel California’s utilities to use the correct calculation, which would provide thousands of additional homes and businesses the benefits of net metering. Success in this area would give policymakers and the industry significant additional time to conduct studies and address perceived issues of cost shift in both regulatory and legislative arenas, before the cap is reached next year.

This is, without question, one of solar’s biggest issues for 2012. More than 50,000 Californians have weighed in and everyone with a stake in solar should be watching closely. While presuming the outcome is always risky, I’m optimistic that the CPUC will do the right thing, and allow small-scale solar to continue to grow, build, hire, and invest in California.

Image: rooftop solar panels via Shutterstock









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