This piece was originally published in the March 2016 issue of ei, the magazine of the electroindustry.
By Patrick Hughes, Senior Director, Government Relations and Strategic Initiatives, NEMA
The price of solar photovoltaic systems fell by more than 50 percent between 2009 and 2014, and annual solar installations in the U.S. increased by approximately 1,100 percent over the same time period.
This solar boom has been fueled by three primary drivers: falling equipment and installation costs, federal and state tax credits and rebates, and net metering. The third—net metering—allows utility customers in 45 states to sell excess solar power back to the utility at the retail rate.
This mechanism has come under scrutiny by a number of state utility regulators as they seek to adapt utility regulations to a more modern electric system. California, Nevada, and Hawaii are among the most recent states to reexamine their existing net metering policies.
On January 28, 2016, the California Public Utilities Commission voted 3–2 to uphold the state’s net-metering policy at the retail rate, at least until 2019. California did change the rules to allow for a one-time interconnection fee (approximately $75–$150); a minimum bill charge; “non-bypassable” charges of $0.020–$0.023/kilowatt-hour (kWh) to fund low-income, energy-efficiency, and other public-benefit programs; virtual net metering for residents of multifamily buildings; and mandatory time-of-use rates for new net-metering customers.
Existing net-metering customers can retain their current rate for 20 years from the date of their interconnection.
On October 12, 2015, Hawaii ended its net-metering program for new customers, although existing customers will retain their previous net-metering arrangement.
New solar customers now have two choices: self-supply or grid-supply. Under the self-supply option, residential and commercial customers will not be credited for exporting excess solar generation to the grid and will have minimum bills of $25 and $50, respectively. The grid-supply option will offer customers a fixed rate of $0.15–$0.28/kWh for generated electricity (residential retail rates in Hawaii averaged $0.37/kWh in 2014).
As solar costs continue to drop and behind-the-meter installations continue to rise, additional states are likely to revisit their net-metering rules in the coming months and years. How these rules are set will determine the number of solar installations and, by extension, the NEMA members’ products installed to support solar systems.
On December 22, 2015, the Public Utilities Commission of Nevada (PUCN) unanimously approved revised net-metering rules for new and—controversially—existing customers that would increase monthly charges from $12.75 to $17.90 in the first year and to $38.51 by 2020.
The new rules would also decrease the rate paid to net-metering customers from the retail rate to the wholesale rate (a reduction from $0.11 to $0.09/kWh, progressively falling to $0.026/kWh in 2020). This move prompted major solar installers SolarCity and Sunrun to announce that they were ending their operations in Nevada.
In late January, NV Energy (the largest electric utility in the state) announced that it would ask the PUCN to grandfather net-metering rates for existing solar customers, but at the time of writing, the PUCN was still evaluating whether or not to reconsider the new net-metering rules.