How much do you owe the entity that manages your grid if you generate your electricity by capturing sunlight hitting your property?
As utility companies move to reduce policies that make rooftop solar cost-effective and appealing to many homeowners, this question is causing conflict in several states. The nonprofit Environment America Research & Policy Center recently published a study that highlighted examples of utility corporations and interest groups working to lower the rate at which rooftop solar owners can sell their power back to the grid.
This fight would have the most impact in California, where rooftop solar panels are installed on over a million houses and businesses. Investor-owned utilities Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric are lobbying state regulators to increase monthly rates for solar panel owners while reducing compensation for generating electricity for the grid. Solar supporters call the levies a profit grab that would hinder the shift to renewable energy, while utilities argue that they are required to keep electricity rates from rising for people who do not have solar panels.
The policy of net metering, which is in existence in 40 states, Washington, DC, and several US territories, is at the center of the dispute. On a bright summer day, for example, when someone with solar panels on their roof produces more power than they can consume, the surplus is effectively sold to their neighbors, resulting in a credit to their utility bill. In certain jurisdictions, that credit may be saved and used later in the year to offset utility bills when solar panels aren’t producing as much electricity, such as during the winter.
Generous net metering rules are believed to be a major reason for the broad adoption of rooftop solar in California. The charity Solar Rights Alliance’s executive director, Dave Rosenfeld, describes it as “the basis of California solar.” Rosenfeld predicts that if utility company plans are approved, the cost of rooftop solar for households will treble. The California Public Utilities Commission, which regulates utilities in the state, is currently updating its net metering laws, and utility firms have submitted suggestions for review.
Solar owners, according to utility providers, aren’t paying their fair part for utilizing the grid since net metering credits reduce monthly bills, which means less money goes toward maintaining infrastructure like power lines. Utility firms claim that this causes them to hike power costs for people who do not have solar panels.
However, according to Rosenfeld, utilities are motivated more by profit than by justice. Investor-owned monopoly utilities, such as those in California, frequently get a guaranteed set rate of return on their capital investments from the state. That implies they generate a steady profit on every dollar spent on long-distance power lines or power plants. Home solar minimizes the requirement for capital investments while also preventing utilities from making a profit.
Whatever the motives, the campaign against rooftop solar might stymie attempts to reduce carbon emissions from energy production.
Though larger-scale renewable energy installations will be required to supply the majority of demand in a clean energy-powered economy, rooftop solar can help accelerate the transition and bring additional advantages. Bronte Payne, the head of Environment America’s solar programs, says, “Rooftop solar gives so many benefits, including clean power.” It doesn’t take up extra open space because it can be installed on people’s rooftops, and it will help to build a more resilient grid,” she says, noting that rooftop solar reduces the need for new transmission lines and other electricity infrastructure, potentially lowering utility customers’ electricity costs.
That isn’t to say that homeowners that save money on utilities by installing solar panels won’t have an adverse effect on their neighbors. “If you are compensated 100% for all the power you create, regardless of when you generate it during the year… you might have a zero electricity bill, even if you are heavily reliant on the grid. You’re relying on the utilities to turn on and off the lights, and [utilities] are on the hook to fund that,” says Ashley Langer, an energy economist at the University of Arizona. “What this implies is that anybody without solar will have higher power bills.” When you’re connected to the grid, utilities offer power to fill in the gaps when the sun isn’t shining.
The extent to which rooftop solar impacts energy pricing is determined by the number of rooftops equipped with panels in a specific state. According to a 2017 study by Lawrence Berkeley National Laboratory researcher Galen Barbose, net metering has a minimal influence on energy costs in most states, and that other variables, such as rising capital expenses, are more likely to boost rates. Even improving energy efficiency can put customers at risk; as appliances and households get more energy-efficient, they consume less electricity and earn less income for utilities (unfortunately, what’s good for the environment doesn’t always align with utility business strategies). However, in areas like California and Hawaii, where a sizable percentage of the population has solar panels on their roofs, the loss of utility earnings may be sufficient to raise rates.
Langer believes there is a way to resolve the problem by establishing tariffs that cover the cost of utilizing the grid while yet allowing some form of net metering to encourage rooftop solar installation. “I believe it is critical to get the incentives right for both the utility and the household,” she adds. “Households produce clean power, not pollution-producing electricity, thus they should be compensated.”
