Net Metering’s Confusing Future
Michigan, according to the Traverse City Record Eagle, is one of the states in which changes in how utilities reimburse their customers for use of solar energy is causing concern. The story says that Governor Rick Snyder on December 21 signed The Clean and Renewable Energy and Energy Waste Reduction Act. The law allows compensation, according to an independent system operator paraphrased in the story, at “the cost of getting the next megawatt-hour of energy to or from a particular location with electrical grid congestion and losses as a factor.”
The difference between this and the retail rate customers now get for their solar initiatives is stark. The independent operator cited in the story cited a recent locational marginal price of 2.48 cents per kWh. The rate, the story says, is a problem:
That’s puny compared to the 13 cents per kilowatt-hour Brengman Brothers Crain Hill Vineyards gets for the excess energy its solar installation generates, Ed Brengman said. He and brother Robert opted to buy the panels, in part for the green energy and also because tax credits and net metering made it a smart business decision.
The problem here is obvious: People and companies made their investment decisions based on the higher payback. What will happen to those investments if their rate of compensation is slashed is an important question. This begs the question of the how a move to the less generous compensation structures will impact the solar industry as it moves forward.
Several states are adjusting how the regulate net metering. Late last month, Energy Manager Today’s Cheryl Kraften reported on the rather confusing situation in Arizona:
On the same date, December 20, that regulators in Arizona voted (Docket No.E-00000J-14-0023) to end retail rate net energy metering for rooftop solar customers and instead institute export rates, the Public Utilities Commission of Nevadaunanimously voted (Docket Nos. 16-06006, 16-06007, 16-06008, 16-06009) to “reopen on January 1 up to 6 MW of installed capacity of rooftop solar energy systems for existing and new customer-generators [of Sierra Pacific Power] under the prior net energy metering terms and rates in the service territory.”
Another example of a state with an uncertain net metering future is Montana. The Bozeman Daily Chronicle reported last week that efforts to raise the level of energy that can be used in net metering computations failed in the most recent legislative session. The story points out, though, that proponents haven’t given up and that similar initiatives are in the works.
Businesses like certainty. Those considering big solar investments are less likely to move forward until there is more clarity on the long-term future of net metering. Some might go forward even if the compensation limits are cut. But others, almost certainly, will bow out.
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