Solar power benefits more than just the environment.
Thanks to the one-two punch of decreased costs and increased efficiency, millions of Americans have also been able to reduce or even entirely eliminate their monthly energy bill by installing a simple rooftop solar system
But, while not having to rely on anyone else for power is definitely great for you, it’s not so great for the big utility companies.
So, it’s not surprising that they’ve been working overtime to eliminate perhaps the single most important policy responsible for the explosive growth of solar power, net metering.
What is net metering?
Net metering laws are administered at the state level and some version of net metering is currently the law of the land in 26 states, with Pennsylvania, thankfully, being one of them.
In states that have adopted net metering:
Any extra energy your panels produced gets sent back into the grid.
Your utility company has to reimburse you for it.
The precise rules differ from state to state. Some have only adopted weaker compensation known as avoided-cost net metering. That means that utility companies only have to reimburse their solar-powered customers at the rate it costs them to generate electricity, not at the higher rate they charge.
Fortunately, in Pennsylvania, all investor-owned utility companies are required to offer full-retail net metering; meaning consumers must be compensated at the same rate they’d pay for electricity.Why it's important
Even if your solar system does generate all the power you need, it’s pretty much guaranteed to do so by producing a surplus during the 5 hours a day of peak sunshine and a deficit the rest of the time.
By requiring the big utility companies to compensate you for any excess energy you send into the grid at the same rate they charge, net metering, in effect, lets you bank the surplus your panels will be producing during peak hours to use the rest of the time.
Absent net metering, virtually no rooftop solar systems would be able to generate enough power to meet household needs without a battery to store the excess generated during peak hours.
For many who would have saved money by going solar, the extra expense of a battery will increase the per-watt cost of solar energy to above what they’re currently paying.
So, by eliminating net metering, the big utility companies hope to shift the cost-benefit analysis of going solar in a way that puts energy independence financially out of reach for a huge chunk of their customers.
The state-by-state attack
Back in 2013, the big utility companies started lobbying individual state legislatures to enact policies that would increase the cost of rooftop solar.
By 2019, 46 states were considering rule changes that would make rooftop solar more expensive, with many focused on gutting existing net-metering requirements.
Just last year, utility companies successfully lobbied state legislatures in California, Florida, Indiana, Idaho, Michigan, and North Carolina to pass laws that would slash net metering compensation.
Not all these efforts were successful—in Florida, for example, the bill was vetoed by the governor.
But other states like California wound up drastically reducing the rate at which solar-equipped homes and businesses are compensated for the surplus power they generate.
Californians who install solar panels after April 15, 2023, will only be compensated at an "avoided cost rate," which will slash payments by around 75%.
While Californians who’ve already transitioned to solar are grandfathered under whatever compensation scheme was in effect when their system was installed, the proposed slashed compensation rates are bound to make it much less attractive to those who’ve yet to make the switch.
Analysts have warned that NEM 3.0 will cripple California’s burgeoning solar industry, with one grid expert going as far as to call it a “proposed dystopia.”
The future
Thankfully, state legislatures are generally reluctant to pull the rug out from under people who've already invested in solar.
So, it's pretty much standard operating procedure for net metering laws to grandfather anyone who's already gone solar under whatever compensation scheme was in effect when their system was installed.
Rooftop solar is enough of a threat to the big utility companies that their state-level attacks on net metering compensation are sure to continue.
Meaning that, if you're one of the many homeowners who's been postponing lowering your energy bills by going solar, you might want to get in now while the getting's still good.