By Stephen Knowlton
I believe that net metering incentives going forward could be productively recast to instead promote the storage of solar energy by batteries or other means.
Washington Electric has recently reached the milestone of registering its 1,000th net metering member. That means that nearly 10% of WEC’s members have solar net metering arrays, and they produce roughly 10% of the electricity consumed by WEC’s members.
In the mid-1990’s, the Vermont legislature created a net metering law to promote the use of solar electric panels at homes and small businesses. One purpose of the law was to allow people to produce their own renewable power in their backyards or on their rooftops and thus reduce their use of electricity that maybe comes from fossil fuels. Of course, anybody can buy and put up a solar panel to produce electricity when the sun is shining, and pair it with a battery to store what they don’t use right away. Most home solar arrays produce more electricity when the sun’s shining than the house uses, and they send the excess electricity out to the grid. The big incentive of net metering is that net meterers by law receive a generous credit for the power that they send out to the grid. They effectively recoup this credit when they use power from the grid when the sun isn’t shining, like in the evening or on rainy, cloudy days. This lucrative financial incentive has spurred the purchase and installation of residential scale arrays, and the number of arrays grew exponentially over the next two decades. As intended, these incentives provided the young Vermont solar industry the means and opportunity to improve their technical and business practices and bring down the cost of solar to the buyer, which they have done successfully. This has led to the development of a skilled and efficient industry that is crucial for integrating solar into our region’s renewable electric energy portfolio.
WEC had welcomed the growth of net metering, and was consistently among the first of Vermont utilities to hit the limits set by the legislature for the number of net metering facilities in their territory. While the above-market credits provided by the net metering process transfers costs of operating the utility from the net meterer to other ratepaying members, the effect on WEC’s average ratepayer was minimal due to the small fraction of WEC members who participated in the net metering program over its first two decades. The legislature has since removed any limits on the number of net metering facilities in the state, and net metering has continued to grow to this day. This means the cost of subsidizing net metering by the average ratepayer is also continuing to rise.
As WEC proceeded toward the milestone of hosting 1,000 net metering facilities, it also reached a different milestone: by 2014, WEC and two other Vermont utilities were recognized by the state’s Department of Public Service to be 100% renewable. Every kilowatt hour purchased for sale to their customers comes from certified renewable sources. Other utilities are following suit, and all Vermont utilities must soon be 100% renewable by law. So there is no longer much of a benefit to incentivize net metered solar to obtain renewable power, as it is more expensive than other renewable resources including solar that utilities may choose to purchase. People may net meter to save money in the long run and because they want to produce some of the electricity they use, but it unfortunately is one of the least cost-effective ways to address Vermont’s climate plan according to Vermont’s Public Utility Commission.
As a result, WEC has had a complicated relationship with net metering. Solar arrays are excellent sources of clean electricity, which WEC supports. Since solar arrays cannot produce power constantly or dependably, they require other technologies like batteries to make them serve as reliable providers of electricity, which is important as solar continues to grow in the state. Any utility that purchases significant amounts of solar power as part of its portfolio must plan for this. I don’t think It was intended that the incentive to build up a fledgling solar industry via net metering would continue as an expensive subsidy now that the solar industry is mature. But it is, and it comes not only at a growing cost to the ratepayer, but also at a cost to progress toward less expensive renewables and as an impediment to promoting beneficial electrification because it unnecessarily raises the cost of electricity for all.
In my opinion, Vermont’s solar installation industry, thanks to net metering, has graduated from the era when solar was expensive to install. As suggested by WEC’s milestone of a hefty 10% market penetration, the solar industry can be expected to stand more on their own without the same incentives from 30 years ago.
I believe that most people who’ve put up net metered solar arrays over the past years have done it with the best intention to provide themselves with clean electricity in addition to saving money on their electricity bills. I believe the solar industry is far more capable and efficient now, thanks to subsidization by the ratepayer. Nonetheless, the world has moved on. I believe that net metering incentives going forward could be productively recast to instead promote the storage of solar energy by batteries or other means. This would make solar power a more dependable, flexible, cheaper, and equitable resource. That’s what I’d like to see by the time WEC reaches the milestone of having 20% of its power come from solar.