What is Net Energy Metering and Why Should I Care?
For the past 3 years in a row more solar energy has been added to the U.S. electrical grid than any other form of energy – more than wind, coal and natural gas. Last year solar power generated over $33 Billion in private investment into the U.S. economy. This growing industry now employs over 250,000 Americans, and is forecasted to employ a workforce of over 1 Million by the end of the decade.
The environmental benefits are profound, albeit sometimes abstract. But the benefit of solar power to the U.S. economy is tangible and hard to deny. And much of this growth has relied on a system little known outside energy circles: Net Energy Metering (NEM). Perhaps you’ve heard of it, probably you haven’t, but the existence of a thriving residential solar market in the U.S. owes a lot to this, and similar programs.
If you’ve gone solar, you’re likely relying on NEM to make financial sense of your investment. If you’re thinking about solar, Net Metering is a good start to answering the age old question: “how does solar work?”
Bear with me, as I think a brief description is in order. To state the hopefully obvious, solar panels are only going to produce power when the sun is up. But you use power both day and night. During the day your solar panels will typically produce more energy than you need. That extra power has to go somewhere…you’ll use as much as you need and then the extra power will flow out of your house and back to the utility, spinning your utility meter backward. Without net metering, that extra power you’ve produced would be a gift back to your utility. With net metering, however, the utility is required to credit you for whatever extra power you send them. You’ll build a bank of those credits and then at night, when your system is not producing power, you’ll use up your banked credits instead of having to buy more power from the utility.
So, there you have it. Net Metering. An incredible system, that along with incentives like the solar investment tax credit, encouraged nearly 800,000 Americans to adopt solar power last year alone.
Unfortunately, there is a Net Metering fight raging – for the most part quietly – across the nation. Waged by electric utilities against their customers; specifically, they’re customers who want to go solar. Many of these same utilities are racing to suck up government incentives by building massive solar farms. But in the meantime, they don’t want any additional incentive for their customers to switch to solar power. And it makes sense: they’re monopolies, they like being monopolies, and they don’t want you and I building power plants on our roofs. They’re kids who’ve had all the toys for the last 140 years and they don’t want to share.
California, the state that really kicked off the solar energy boom in the U.S., is now facing proposed updates to their net metering program which threaten to increase the cost of owning and operating a home solar system. The changes, proposed by the investor-owned utilities in California, are expected to cut the California solar market in half within one year if passed. These proposed changes could cut the value of solar credits by 75% and increase the cost of owning a solar system by $100 per month. California, the state with the largest solar industry, will wait for a final decision on net metering rules later this summer. Existing customers will be grandfathered in under the old rules but any new customers will have a much lower financial incentive to go solar. But despite the efforts of the utilities armed with deep pockets, there is some hope that public desire for solar is strong enough to prevent the backslide.
A win was had earlier this year in the net metering fight. In Florida, Governor Ron DeSantis broke rank with his republican legislature to veto a utility-sponsored net metering bill that would have made home solar much more expensive for customers and crippled the home solar industry in Florida. DeSantis made the decision to support Florida energy customers for two reasons: 1) people want net metering, with polls showing that 86% of Floridians opposed the utility-sponsored law; and 2) solar power has been a boon for Florida’s economy, with over 12,000 Floridians employed in solar and over $12 Billion of solar investments made into the state so far.
While not available in all states – there are many places where net metering never got off the ground – millions of Americans do have access. The adoption of solar is critical to our efforts to strengthen our economy, improve our health and reduce the impacts of climate change. We’re still in our early stages of transitioning to a clean power grid, and incentives such as net metering, the solar investment tax credit and local rebates are all designed to reward early adopters. One home going solar might feel like a drop in the bucket, but it’s one way in which individuals can act to help solve our collective problems. And in the meantime, if you have access to a net metering program, save thousands of dollars on your own cost of power.