By Megan Bergeron
Net metering: The cost and lifespan of solar
Net metering is a utility billing mechanism available in most states. It offers a credit to residential and business customers who make excess electricity with their solar panel systems, and send that excess back to the grid.
Net metering was created in 1995 in California as a way to encourage individuals to invest in renewable energy –– an easy and transactional way, replicated around the country, that helps to build rooftop solar energy and batteries. Net metering works through a process of installing a two way meter that measures electrons flowing into and away from a building. As the energy goes back into the grid, one receives a credit on their electric bill that they generate from their system.
Without net metering, the rooftop solar industry dissipates and there would be no financial value or incentive to go to solar. With continued action and incentive for rooftop solar energy, batteries could be mainstream and affordable in ten years time.
In 2016, the Public Utility Commission and legislators decided that customers would be grandfathered in, or exempt, for 20 years. Since then there have been two major changes that transformed the course of net metering. First, a credit was put in place and discounted by two to three cents for public purpose programs. Second, there is a big mandatory time of use decision, but for electric companies it’s an option.
Net metering is seen as a threat to the utilities who aren’t making profits. The California Solar and Storage Association is pressuring the Public Utilities Commission to make significant changes to net metering. They are not opposed to changes in net metering but if they are gradual and reasonable they can both survive.
How does Rooftop Solar work and who does it work for
The solar photovoltaic cells are wired together and encased in glass. These cells utilize silica to generate electrons from a chemical reaction with photons from the sun. Those electrons are funneled down wires and then through an inverter so that they can be used by appliances inside the home. The silica cells ultimately generate what’s called “direct current” electricity, but most homes utilize what’s called “alternating current” –– so the inverter is what converts direct current to alternating current.
When the sun begins its rise in the sky every day, the minute the photons land on the surface of the photovoltaic module, the silica cells encased in glass, they start to generate electrons. Some distributed solar systems are put on trackers that follow the sun across the sky like a sunflower, generating more energy every hour as a result. The solar systems are warrantied to last at least 20 years, losing only the slightest amount of energy productivity over time. Shade affects energy production as does extreme heat and cold, but it is surprising how well solar works in all weather patterns. For example, Germany has similar weather to southern Alaska, yet is one of the biggest markets for solar.
Solar roofs cost around $3.50/watt today. That’s down from $15.00/watt when it first started for the California Solar and Storage Association in 2006. An average home installs at a 6,000 watt solar system, costing around $21,000 total. The federal government provides a 26 percent tax credit, lowering the cost to around $15,500 total. For most homes, the solar system can pay for itself under the current Net Metering program in seven to nine years. If the new utility bills go through, the solar investment consumers are making would never pay for itself for the vast majority of people. Hence, the death of the market and the regression back to when solar was only for the extremely wealthy.
Silica is one of the most abundant elements on Earth. Most solar panels are 100 percent recyclable once they’ve ended their lifespan. Even solar systems installed 20 years ago are still going strong. A 20-year-lifespan for solar is the minimum, not the maximum.
This is not a perfect system. In fact, there are important environmental justice issues related to rooftop solar that have yet to be mitigated. According to Capitol Weekly, the solar rooftops of wealthy customers are subsidized while customers without rooftop solar, who are disproportionately lower income residents and communities of color, who pick up their tab. Unfortunately for nine out of ten ratepayers, including those at the lower end of the economic ladder, when wealthier rooftop solar customers’ bills are reduced through lower energy usage and compensation for the energy they sell back to the grid, they are able to avoid those fixed costs, which then are shifted to customers who don’t have solar.
CARE customers, those within the lower economic strata, have seen a 13 percent increase in their utility bills according to the California Public Utilities Commission. That cost shift amounts to around a three billion dollar tab that the rest of us have to pick up.
Wealthy customers get compensated for the energy they sell back to the grid at a rate significantly higher than the actual value of their solar energy. In fact, the Natural Resources Defense Council has estimated that rooftop solar customers are compensated for their exported energy at a rate three to six times higher than the value of their solar.
Current bills: SB 100 and AB 1139 (Gonzalez)
AB 1139 Gonzalez is a utility backed bill, to pressure the PUC in their direction. AB 327 that was passed in 2013 kept solar growing but made changes as you see fit. If you don’t want to be capped, figure out the details as a regulatory industry, and utility companies want to make that decision un-grandfather the people from 2016 and NEM 3.0 would be what they all go on, default policy of the state, charge all solar users a $70 a month fee. This fee goes to PG&E because we have to build the grid and it is expensive. Solar overnight would become twice as expensive and only the super wealthy would bother to pay for it. Low income renters would see rent increases.
SB 100 (one hundred clean energy by 2045), is a utility profit grab bill, regulated monopoly deal in the whole US within the 1880’s large infrastructure projects. There have been a couple bills since PG&E filed for bankruptcy twice that taxpayers will buy out PG&E and so the monopoly would end. 2000 Enron scandal – 1996 deregulated (paid to manage the grid) the utilities, PG&E still had a monopoly (not vertical) given ownership of the poles and wires but had to sell the power plants (except for nuclear), private investors will build the power plants. Manipulated the system (electricity prices went through the roof and blackouts rolled through California), California then put safeguards in place. Localizing energy (million solar roofs initiative, community choice aggregation such as Marin East Energy or East Bay Clean Energy) cities buy electrons, not PG&E.
Wall Street seems to only care about shareholder backed companies that make money for their shareholders, the return on investment (profit) if that is based on quality of service (clean, reliable, safe), then they could change things. There is a 10 percent rate of return in every dollar they invest in a pole and a wire is the only way they make profit today. We need five times more solar energy to get to our clean energy goals in the very near future, not less.
- What is Net Metering?
- Why do utility companies like PG&E dislike Net Metering?
- California Solar & Storage Association (CALSA)
- AB 1139 (Gonzalez)
- SB 100
- Lifespan of rooftop solar and beyond
- How does Rooftop Solar work?
- Designing Electricity Rates for An Equitable Energy Transition featuring University of California, Berkeley; Economist, Severin Borenstein
- Lawrence Berkeley National Labs Report – Income Trends
- Lawrence Berkeley National Labs Report – Solar Demographics Tool