Legislatures and utility commissions across the country are discussing reforms to existing solar policies prompted by strong solar market growth.
Legislatures and utility commissions across the country are actively discussing changes to existing solar policies. The declining installed costs of solar have led to significant market growth and prompted conversations about altering existing incentive programs. Net metering policies have been a central focus of these debates.
Why debate these policies now?
In general, net metering customers are able to apply credits for excess generation to their utility bills, which reduces the volumetric or variable portion of their bills. Traditionally, volumetric rates are used to recover volumetric costs (e.g. electricity supply) as well as portion of a utility’s fixed costs (e.g. transmission assets). Of the utilities surveyed by Utility Dive, 68% indicate stagnant load growth. As the number of solar net metering customers increases, the debate has centered around how to balance the benefits these customer provide and costs these customers incur.
For a more detailed discussion of these issues, please reference our report co-authored with the North Carolina Clean Technology Center for the Solar Outreach Partnership entitled: Rethinking Standby and Fixed Cost Charges: Regulatory & Rate Design Pathways to Deeper Solar PV Cost Reductions.
How are states addressing this issue?
Utilities and public utilities commissions are just beginning this conversation in many states. A holistic solution to address declining usage across customer classes and the benefits of distributed resources and efficiency programs will require comprehensive reforms.
Currently, each state is approaching this issue differently, in part due to their differing stages of solar market development. As a follow-up to the Solar Outreach Partnership report on fixed charges, Meister Consultants Group contributed to a new quarterly update series entitled The 50 States of Solar, which was released this month by our partners at the North Carolina Clean Technology Center. This report showcases the diversity of discussions around the country during Q1 2015, and provides a high-level overview of the evolving debates concerning distributed solar. We intend to continue to provide updates and briefings on the state of solar policy in the United States to remain engaged with these dialogues as they evolve throughout the country.
The Top Five Solar Policy Developments of Q3 2015
- Utility-led rooftop solar expands
Utilities are exploring new business models by owning and operating distributed PV assets. Programs developed across the country over the last quarter include in Arizona, Georgia and Texas. In New York, Con Edison proposed a residential solar and storage program as one of its demonstration projects as part of the REV proceeding, where systems will be owned and financed by the utility’s unregulated subsidiary.
- The uncertain future of net metering in California
California received proposals from its IOUs and other stakeholders on future net metering tariffs in Q3 2015. Proposals included buy-all, sell-all options for customers, new charges and fees, and reduced compensation for net excess generation
- Utilities propose residential fixed charge increases
Utilities across the country continue to propose substantial increases in residential fixed customer charges. Fixed charge increases remain the most frequent proposed policy change impacting the residential solar value proposition in Q3.
- Residential demand charges gain momentum
In response to growing interest in distributed generation, a number of utilities have proposed new rate structures which would subject residential customers with solar to demand charges, which
are based on peak energy usage over a billing period. These charges have traditionally been included only for some non-residential customers. States with pending utility proposals in Q3 for new residential demand charges include Arizona, California, Kansas, Oklahoma, and Texas.
- Nevada hits net metering cap
In August 2015, Nevada reached its 235 MW net metering cap. Revised net metering tariffs were to take effect after the cap was reached. Until the Public Utilities Commission approves
revised tariffs, new systems are being net metered under existing policies. NV Energy’s proposed successor tariffs feature a new rate class for net metering customers with both time-of-use (TOU) and demand charges.