Maybe the electric utilities are right, for a change. Maybe
net-metering—the ability to run your kilowatt-hour meter backwards, with solar
panels on your roof or a windmill in your backyard–is not the best policy for
America, or for Americans.
But the utilities’ populist appeal to fairness and equality
is disingenuous. When did electric utilities ever care about justice–or the
poor?
If they are right about net-metering, it’s for all the wrong
reasons.
They want to stop solar photovoltaics (solar PV) now. They
want to put it in the grave before it takes even more market share from their
comfy business. Climate change and future generations be damned.
The utilities are under threat as never before. They see
what’s happened in Germany, where utility profits are plummeting as Germans
take more and more control of their own electricity generation. Utility
companies will be ruined if they let that happen here. So now’s the time to
kill net-metering and with it rooftop solar PV while they still can.
Maybe we should let them.
I can hear the howls of derision from the usual suspects:
the solar PV industry, the solar leasing companies, and their sycophants in the
advocacy community.
Yes, we should fight a rearguard action to keep the
utilities and their legions of attorneys fully engaged. In the meantime, while
the utilities are busy snuffing out net-metering, we can bypass them altogether
and implement a far superior policy that will put a lot more solar on people’s
roofs—solar that people can own themselves, independent of the banking industry
offering them deals “to good to be true.”
After all, one of America’s most revolutionary energy
policies was introduced in 1978 when the utilities were too busy trying to kill
another competing industry to notice as the Public Utilities Regulatory Policy
Act (PURPA) passed Congress.
PURPA allowed independently-owned renewable generators to be
connected to the grid. Suddenly, the grid was no longer the utility industry’s
sole domain. PURPA said you could connect your solar PV system to the grid, but
it didn’t spell out how much you would get paid for your electricity.
PURPA laid the foundation for what came next—a policy that
not only allowed you to connect to the grid, but that also set the price, a
“tariff” in utility jargon, that you would be paid for the electricity you fed
into the grid—feed-in tariffs, or FITs.
Feed-in tariffs are the alternative to net-metering and
their time has come. FITs have been likened to PURPA on steroids and they are
as American as apple pie. It was a crude feed-in tariff that launched renewable
energy in California during the early 1980s. In that program, you could connect
your biomass, wind, or solar plant to the grid, get paid a fixed-price for ten
years, and then get paid a floating price for another twenty. And it
worked—spectacularly. For two decades following that first feed-in tariff, the
Golden State generated about 2 percent of its electricity from wind energy
alone.
Since then, Europeans picked up the renewable energy torch,
particularly in Denmark, where last year the Danes generated 43 percent of their
electricity from biomass and wind energy, and in Germany.
Germans don’t use net-metering, and yet last year they
produced one-fifth of their electricity from wind, solar, and biogas. No, the
Germans use feed-in tariffs. They saw what we accomplished decades ago then set
out to adapt and refine the concept. The result is a modern system of feed-in
tariffs that has catapulted Germany to the front ranks of renewable energy
development—rooftop solar PV included.
Numerous other countries around the world have followed
suit, adopting feed-in tariffs of their own making. In fact, more countries use
feed-in tariffs than use net-metering.
Most significantly, more renewable energy—by far–has been
developed with feed-in tariffs than has been installed through net-metering.
The International Energy Agency found in a recent study that
only 2 percent of solar PV worldwide was installed primarily through
net-metering. The numbers are just as lopsided for wind energy, biogas, and
other renewables.
What sets modern feed-in tariffs apart from those developed
in California during the early 1980s—and from net-metering–is that the price
paid for electricity from different renewable sources differs as well.
In the old California system, a wind farm was paid the same
price as a biomass plant or a solar plant, even though they were quite
different from one another. The same is true today with net-metering. Each
technology that runs the kilowatt-hour meter backwards is effectively paid the
same price, the retail price of electricity, regardless of how much the
electricity actually cost to produce.
In the modern or “advanced” system like that used in
Ontario, Canada, wind energy is paid one price and rooftop solar another. Each
technology is paid a price that reflects the average cost of generating
electricity with that technology.
This approach decouples the price paid for renewable energy
from both the wholesale and retail prices of electricity. Feed-in laws
essentially bypass all the ideological theory and arcane mumbo-jumbo that
obscure electricity rate-setting in the US.
For each technology and each application, prices are
determined so as to provide a fair and reasonable rate of return. This enables
anyone—anyone who wants to invest in building the infrastructure that will
power America in the 21st century–to profit from renewable energy.
It is this simple idea—to pay a fair price for renewable
energy—that has enabled German citizens to build and own nearly half of all the
wind turbines, solar PV, and biogas plants in the country. Individual German
citizens—not their utility companies–have invested more than $100 billion in
renewable energy. They have done so because they are paid a fair price for
their electricity and because they can install the size, type, and amount of
renewables that is the most economic for them and the best fit for their
communities.
Net-metering served a useful purpose in the dark days of the
Reagan-Bush-Clinton era. Net-metering then was a call to arms for hobbyists and
guerrilla solar activists out to prove a point–solar works, your meter will run
backwards, and the lights will stay on.
But net-metering was never intended to be a policy for the
industrial development of renewable energy. It alone can’t do that. Retail
electricity prices in North America are simply too low to make rooftop solar
PV, for example, profitable without hefty subsidies.
Why run your kilowatt-hour meter backwards at 10 cents per
kilowatt-hour when it costs you 20 cents to 30 cents per kilowatt-hour to
generate it with solar PV? Without federal or state subsidies, net-metering
seldom makes any economic sense, even today with the rapidly falling cost of
solar PV.
Net-metering was an appealing policy at one time, because it
gave politicians the perfect cover for appearing to take action on the public’s
demand for renewable energy, while doing nothing of substance to threaten
entrenched electric utilities’ political and economic power.
Thus, politicians would typically set a low limit on the
amount of renewables that could be installed in a region under
net-metering—often just a few percent. They certainly wouldn’t set the limit at
anything like what the Germans (5 percent solar PV) or Italians (7 percent
solar PV) have already accomplished.
Moreover, they typically also limit the size of any
individual installation, often a paltry 10 kilowatts, and sometimes—when
they’re generous–up to 2 megawatts. (We certainly wouldn’t want to rock the
utility’s boat, now, would we?)
Worst of all, net-metering limits renewable development to
an existing “meter”. This precludes “greenfield” sites that don’t already serve
a utility customer, a further restriction on who can use net-metering and how
big a renewable project they can build.
With all the restrictions on net-metering, many Americans
are prohibited from installing and owning their own solar, wind, or biogas
power plants where they want to and of the size that works best for them.
Net-metering locks out apartment-dwellers and renters from participating in the
renewable energy revolution.
Net-metering is not–nor can it ever be–a comprehensive
renewable energy policy. If we take climate change seriously, net-metering
simply won’t get us where we want to go: massive amounts of renewables in the
ground, and quickly. Net-metering will never give us “plus energy” houses or
“plus energy” buildings, because we often literally have to give our surplus
electricity to the utility company for free. How fair is that?
Yes, net-metering has served a purpose. And yes, we should
not abandon it without a strong comprehensive renewable energy policy to
replace it.
But the time has come from Americans to break free of the
straight jacket imposed by net-metering. It is time to liberate Americans from
the tyranny of utility-company control of our lives and from the politicians
and regulators who serve these companies. It is time to free Americans of all
walks of life–from rich to poor, from conservative to liberal, from rural to
urban—to produce renewably generated electricity when they want, where they
want, and in the amount they want—and to do so for a profit. What could be more
American?
As the late German politician Hermann Scheer, one of the
co-founders of Germany’s modern system of advanced renewable tariffs,
frequently said, the time for half-measures–for timid responses–is past. There
is no time to lose.
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