Net metering defined: Going solar on the backs of fellow ratepayers
Rooftop-solar customers typically don’t produce enough of their own electricity to handle all of their household or business needs. For example, at night and on overcast days they produce nothing. So, they have to buy power from the utility. And even when their rooftop photovoltaic panels are pumping out more power than they use during peak, sunny periods, they need some place to bank that extra electricity. So, they send and sell the power back up the line to the rest of the community. This is called net metering, which was authorized by Congress under the Energy Policy Act of 2005, and imposed on public utilities by state regulators to entice home- and business owners to install solar panels on their roofs.
The problem is that property owners who agree to rooftop-solar systems don’t end their reliance on their local public utility. They’re still tied to the local power grid—the power lines, transformers and so forth that are provided and maintained by the utility.
State and federal law governing net metering requires rooftop-solar-producing customers to be compensated for the excess power they route onto the grid. Fair enough. But compensated at what rate? Most states require public utilities to credit net-metered excess power at the local retail rate—the same rate those utilities themselves charge for the power they generate.
Utility companies need extra revenue to cover the cost of the infrastructure and manpower needed to provide power in the first place. Rooftop-solar users don’t, which means they’re being subsidized. They pay so little for the power they still need from the grid that they don’t pay their fair share of the cost of maintaining that grid. So, their non-solar neighbors have to pick up the tab instead.
The rooftop-solar industry lobbies legislatures hard to keep this generous subsidy in place; it is one of the most effective incentives they can use to pitch their products to prospective customers.
And keep in mind it is a subsidy atop other yet subsidies—all tax-supported—that have buoyed the rooftop-solar industry and arguably kept it afloat. Alongside wide-ranging, publicly funded, state and local incentives to install solar systems—including the likes of sales-tax exemptions on solar panels—there is a 30-percent federal income-tax credit for investing in solar. And it’s as likely to be claimed by huge investors in solar ventures, like Google and Apple, as it is by ordinary homeowners.
That’s right; even multibillion-dollar tech giants are cashing in on the smorgasbord of solar subsidies. And ordinary ratepayers—the vast majority who don’t have solar panels on their roofs—are left holding the bag.