Handling Rooftop Solar—The Sun Sets on Net Metering

October 2, 2014

The use of residential rooftop solar panels has grown rapidly in the United States over the last decade. Increasing the cost of solar; but utility companies’ concerns have grown contemporaneous to the fledgling industry’s success. The most recent debate in the long line of battles deals with the “net metering” practice used in around 40 states. To understand the argument, it is necessary to understand a little bit more about solar power generally.
For the sake of simplicity, a photovoltaic solar system converts sunlight to electricity. When sun shines on a system’s panels, the system produces a certain amount of electricity. When the sun does not shine on a system’s panels, it does not. Even with this oversimplification, one glaring problem arises when such a system is used on a residential dwelling: houses still use power when the sun isn’t shining. The equally obvious solution to this problem is batteries. Isn’t it? Well, no. Battery banks for solar systems are prohibitively expensive. For instance, car batteries (which are already painfully overpriced) do not work for solar systems because they become damaged when drained below a particular level. The types of batteries that do work for solar systems can easily double the cost of the entire project.
So, if batteries are out of the question, how can rooftop solar be thriving? The real answer is “net metering.” In order to incentivize rooftop solar, states adopted rules requiring utility companies to compensate customers for the power generated by their rooftop solar systems. Every unit of energy produced by a rooftop solar system that is not used by the home is instead sold to the utility company for the retail price of electricity. To properly account for electricity being sold, as well as bought, by solar pioneers, utility companies install two-way meters. These meters merely keep track of the difference between electric energy taken from the grid and energy given to the grid, thus the name: “net metering.”
As the percentage of rooftop-solar-owning utilities costumers has increased, utilities companies have become more concerned with the effects of net metering. Although the phrasing often changes, their fears can be summed-up by a simple hypothetical question: Under the current net-metering regime, what happens when three-quarters of a utilities company’s customers live in net-zero energy homes? In contemplating this question, it is necessary to break all electricity down into two categories. All electricity must be generated either during the day or at night. Similarly, all electricity must be used either during the day or at night. Because most rooftop solar systems do not have batteries, and electrical grids do not have the means to store energy, electricity must be used at practically the same time it is created or it is wasted.
In the hypothetical, it is obvious that all of the electricity generated by rooftop solar is created, and must be used, during the daytime. Furthermore, presuming the solar-generating customers also use some power at night, the total power generated by solar during the day must be more than the daytime energy needed by the solar-generating customers. Assuming the customers consume the same amount of electricity during the day as they do at night, the hypothetical utility company has 150% of the power it needs during the day generated entirely by rooftop solar. However, with no means of storing the energy, the extra 50% that is generated during the day is entirely wasted, but still must be credited to the solar-generating customer as if it were useful. In reality, people typically consume more electricity during the day than they do at night and it is unlikely that half of electricity users will go solar in the very near future. But, the example does illustrate the risks of a entering the future relying on system that assumes all electricity has the same value despite the obvious frailties of this assumption.

The traditional view of electricity as a portable, simply-priced entity must be reformed.

Some people have recommended fluctuating electricity costs based on variables that create price-incentives for positive social policies. Others have advocated leaving the current system in place for a few years because the benefits of incentivizing solar power outweigh the current harm being done by the regulations. Regardless of which approach is taken, net metering must eventually be replaced in order for the United States to realize a sustainable green future.