How should we think about net metering? Is it regressive? Does it matter?
Isn't the question about net metering not whether it is regressive, but whether than regressivity is important?
So far on EnergyTradeoffs.com we have talked with a number of experts about distributed solar power and net metering, and whether net metering is fair or wise as a policy. Despite the way the issue is covered in the popular press, there seems to be some agreement that net metering shifts out-of-pocket grid costs from the relatively well off to the less well-off. See e.g., Scott Burger ( https://www.energytradeoffs.com/2019/10/16/scott-burger-how-to-value-distributed-resources /) and Victoria Mandell ( https://www.energytradeoffs.com/2019/06/19/victoria-mandell/ ).
In one of the articles we discussed with William Boyd, he disputes the idea that we should see rooftop solar as a form of virtuous disruption of the status quo, arguing that net metering is really “just another effort to shift the system of [embedded] entitlements ... to favor a particular set of technologies and actors.”
But how much does regressivity matter? Shelley Welton says that because of low adoption rates for rooftop solar, the $ transfer from non-adopters to adopters of solar is very small: https://www.energytradeoffs.com/2019/05/12/huio/ . Michael Wara thinks that people would still support policies to subsidize rooftop solar, even if they understood them: https://www.energytradeoffs.com/2019/05/12/michael_wara/
My bias: I tend to wonder why we would want to transition to clean energy sources using options that are 3x or 4x as expensive as utility-scale equivalents. I worry about what all the rooftop solar in southern California does to the business case for utility-scale solar.
What am I missing? How should policymakers think about this issue?S
My concern about net metering has changed. It never ceases to amaze me what I learn as I try to teach. I went back to basics in preparing a lecture and pointed out that one's electric bill is calculated from an algorithm to which the input is a very accurate measurement of an assumed fraction of the electricity used. This is due to the fact that for about 75 years the electricity meter was an electromechanical device that only measured the component of the current that is in phase with the voltage. The size of that component is a time dependent function of the items that constitute the load in a home, factory, or business.
Of course, today the preponderance of electricity is measured with electronic meters, so the actual usage can be measured. But once an algorithm is enshrined in regulation and/or law, it becomes too difficult to change. It is easier to program the electronic meters so they provide the same approximate estimate of usage as the electromechanical meters did. And that is what we do across the US.
The algorithms have both commonality and differences across jurisdictions as they have all been built over time to reflect both the state of technology and local public policy goals. Like archaeological sites, they reflect the struggles of the past. In addition, they provide one more shock absorber against change. Consequently it is often difficult to add to the algorithm, or its input, in a simple way to accommodate technology change. This fact has been made apparent through examples like roof-top solar, electric transit buses, and the production of hydrogen.
I was in a meeting a couple of weeks ago in which a member on the fuel cell truck industry was complaining about electricity rate structures to DOE, saying he had to shop rate structures to determine plant locations. Michael Berube, the Acting Deputy Assistant Secretary for Transportation in DOE's Office of Energy Efficiency and Renewable Energy replied there was nothing DOE could do about rate structures.
I talked with him after the session about how DOE could be the catalyst for change by spotlighting current algorithms that are likely outdated and by providing guidance for best practices for change at the local and State level. It's nice to run into a like-minded geek. The deeper I got into the topic, the more interested he became. The upshot is that there is an anticipated solicitation from DOE that could probably include such a study.
So, while all information available to me suggests that net metering is regressive, I care a lot less. We need a general solution to a largely obsolete metering approach. It will be difficult because there are companies helping customers exploit obsolete portions of the algorithm for profit. They will lobby eloquently to maintain their business. But for the first time in decades there is the slightest glimmer of hope for a better answer.
Another twist to consider: Community Solar Gardens. Colorado's answer to questions about rooftop solar regressivity has been to pass legislation encouraging the development of solar gardens. These are solar arrays of up to 5 MW (although the PUC has the option to expand this to 10 MW beginning in 2023). Colorado residents can purchase subscriptions regardless of their proximity to the arrays. Customers' share may not exceed 120% of their total electricity consumption. Customers receive a credit on their electricity bill for their share of the energy generated. They also pay a small fee to cover the utility's additional distribution system costs. 5% of each system is reserved for low-income customers.
If this truly allows lower-income customers to participate in distributed generation just like their more affluent peers, it addresses some of the distributional concerns around net metering. Because these arrays are larger, they also dispel some of the concerns about utility-scale vs. distributed-scale generation. But the arrays are still smaller than the most efficient utility-scale systems. Moreover, because solar gardens rely on the same net metering scheme as rooftop solar, they don't address concerns about accurate pricing or cost-shifting between distributed generation customers (which now includes solar garden customers) and ratepayers who do not subscribe to such programs.
Perhaps most worryingly, developers have had trouble securing low-income customer participation in solar gardens at significant rates. Let's face it: few people at any income level have the information, time or interest to manage electricity consumption in this way or the risk tolerance for shifting away from a relatively stable electricity billing system. I myself don't have enough roof space to make solar at home worthwhile, but I have not looked into purchasing energy from one of these solar gardens (maybe I will after writing this post, but I also need to finish a draft paper, hold student meetings, cook dinner, attend a parent/teacher conference . . . you get the idea).
Ms. Jacobs has highlighted what I believe to be a critical factor - the person in the system. Thank you.
We have developed an exquisitely complex billing system for electricity that balances technical, public policy and and political goals. The complexity is hidden. Most have forgotten, or never knew, that we don't equitably pay for the electricity we use, but it is generally perceived as being close enough. The genius of the current system, however, is simplicity; if we use more electricity, we pay more. The system addresses the complexity. The consumer sees simplicity.
But even our simple system leaves some folks behind. My wife spends an inordinate amount of her volunteer time helping people dig themselves out of the hole they created by too fuzzy of an understanding of the correlation between what they do in their apartment and their electric bill. And my grandfather, bless his soul, decided when he was 98 that he had paid for electricity since it was available on his street and the power company did not need any more of his money. So he stopped paying until we discovered it an paid for him. Every utility in the country has hundreds to thousands of these cases annually, even with our simple system. In fact, one of the components in most electric bills generates revenue to address and compensate for these types of issues.
Now we are making the situation more complex. The then Boulder, CO, utility put in a smart grid system that became a nationally recognized disaster. Having hundreds of colleagues in Boulder, it became clear to me that the education was ineffective and the cost-benefit ratio for participation was unfavorable for an individual. And the folks I dealt with generally had Ph.D.s in technical fields and wanted the program to succeed initially. But they gave up because it was not worth it.
Now, in many areas, we are establishing "solar gardens", where the participants must see a favorable cost-benefit ratio with tolerable risk for a new approach before they will participate. By the system we establish by which to participate, we are generally pre-selecting participants. The challenge is to how to simplify the decision process so that benefits are more widely available across income classes and folks with busy lives.
As a technologist, I am waiting patiently for the public policy community to make progress in equitable and inclusive solar simplicity.