Solar Battleground: Is Net Metering Needed for Residential Solar to Work?

Posted: April 5, 2019 Author: zach
solar energy battle

For decades, the promise of cheap clean energy has lured thousands of homeowners to residential solar power. And, why not? With Federal tax incentives making installation affordable, many systems can be had for little or no out of pocket cost. Everyone likes free, especially when the product is drastically reducing your carbon footprint and saving the planet for future generations.

Net Metering Has Been the Key to Residential Solar

To make residential solar affordable, home owners rely on something called net metering. Simply put, whatever power your panels make is put back into the community grid and you use power whenever you want. Normally, the power is bought and sold at standard residential prices, making big producers of solar power end each month with very little on their tab. It’s this system that has led to the rapid growth of residential solar in the past two decades due to incredibly low bills for those enrolled in the program.

It sounds like a perfect solution for everyone’s energy needs. Tens of thousands of panel owners sure thought so. That is until the power companies decided to revisit the arrangement.  And what they found did not make them happy.

More Residential Solar Leads to Less Power Company Revenue

In many parts of the U.S. residential solar has exploded. But, the people who run the power lines are not so sure this is a good thing. It seems that with more people on solar, less money is being generated and that is never great for business. So, many have decided to end net metering.

It is easy to call the utilities greedy and chalk this whole thing up to capitalism but the issue is not that simple. The power companies make an interesting case. They are making less money but the same amount of people are using their infrastructure. You know, the lines and transformers they bought and paid for. Plus, they are not usually in the business of energy storage, so excess power sometimes has to be dumped at a loss.

Residential Solar Does Not Provide for Infrastructure Maintenance

Remember, in order for a residential solar customer to take advantage of the program, they have to sell power back. And, they are getting high residential prices. So, at the end of the month when the bill is only ten dollars, how is the power company going to continue to provide service if upgrades or maintenance is required? Those things cost tens of thousands of dollars at times.

As residential solar continues to grow, less and less money is available for infrastructure maintenance, and the cost cannot be passed on to non-solar households. There aren’t enough of them and they can’t afford it.

Clean Energy is Available Elsewhere

Adding pressure to the problem is the establishment of large-scale solar farms now providing power to the same companies who previously relied on residential solar to satisfy their clean energy requirements. And, they are not paying residential prices for this power. Faced with diminishing revenue, fixed costs, and with no incentive to buy power from residential solar the power companies made a reasonable decision. They opted out of net metering.

Residential Solar Needs to Find Other Incentives

As you can guess, this has all but stopped residential solar in the Southwest in its tracks. Fortunately, a solution is being worked on. Energy companies are designing new programs to replace net metering with fair market value power buyback and are establishing programs utilizing smart controllers to manage usage.

The savings are not nearly as significant as before, but residential solar customers can still pay less than traditional users if they strictly manage their consumption. It is not a perfect solution and has yet to draw new solar installations back into popularity, but it is a start. Until better batteries make home energy storage viable, these buyback programs will have to suffice, but they are only a band aid. Federal and State incentives are now more important than ever to convince homeowners to use clean energy.  Without them, residential solar becomes too expensive to justify the cost of the panels.