||| May 23, 2016
Rooftop solar: Net metering is a net benefit
By: Mark Muro and Devashree Saha
Rooftop solar is booming in U.S. cities.
One of the most exciting infrastructure developments within metropolitan America, the installation of over a million solar photovoltaic (PV) systems in recent years, represents nothing less than a breakthrough for urban sustainability — and the climate.
Prices for solar panels have fallen dramatically. Residential solar installations surged by 66 percent between 2014 and 2015 helping to ensure that solar accounted for 30 percent of all new U.S. electric generating capacity. And for that matter, recent analyses conclude that the cost of residential solar is often comparable to the average price of power on the utility grid, a threshold known as grid parity.
So, what’s not to like? Rooftop solar is a total winner, right?
Well, not quite: The spread of rooftop solar has raised tricky issues for utilities and the public utilities commissions (PUCs) that regulate them.
Specifically, the proliferation of rooftop solar installations is challenging the traditional utility business model by altering the relationship of household and utility—and not just by reducing electricity sales. In this respect, the solar boom has prompted significant debates in states like New York and California about the best rates and policies to ensure that state utility rules and rates provide a way for distributed solar to flourish even as utilities are rewarded for meeting customer demands. Increasingly, this ferment is leading to thoughtful dialogues aimed at devising new forms of policy and rate design that can—as in New York—encourage distributed energy resources (DERs) while allowing for distribution utilities to adapt to the new era.
However, in some states, the ferment has prompted a cruder set of backlashes. Most pointedly, some utilities contend that the “net-metering” fees paid to homeowners with rooftop installations for excess solar power they send back to the grid unfairly transfer costs to the utilities and their non-solar customers.
And so in a number of states, utility interests have sought to persuade state regulators to roll back net-metering provisions, arguing they are a net cost to the overall electricity system. Most glaringly, the local utility in Nevada successfully wielded the cost-shift theory last winter to get the Nevada Public Utilities Commission to drastically curtail the state’s net-metering payments, prompting Solar City, Sunrun, and Vivint Solar—the state’s three largest providers of rooftop panels—to leave the Nevada market entirely. The result: New residential solar installation permits plunged 92 percent in Nevada in the first quarter of 2016.
Full story here ... http://www.brookings.edu/research/papers/2016/05/23-rooftop-solar-net-metering-muro-saha