While some states have floated controversial net metering legislation that would hinder solar growth, Hawaii and Connecticut offer options that provide more benefits for both utilities and solar homeowners. Questions about net metering and going solar in your state? Talk with a trusted Panasonic installer and get your answers today.
Distributed solar remains at the center of contentious debates across the United States. Public backlash has pushed California’s utility-friendly proposed net metering policy back to the drawing board. Similar fights over solar rate structures are unfolding in North Carolina, where rooftop solar companies are opposing policies they say will gut their industry, and in Florida, where Gov. Ron DeSantis, R, recently vetoed a utility-written policy that would have stifled solar growth.
While there are valid and important discussions to be had about equity, utility resistance to net metering has often been driven by the threat posed to their bottom line. Outcomes in California, Florida and North Carolina will set precedents either supporting or undermining climate goals and resilience nationwide.
Distributed solar paired with batteries can offset fossil fuels, slow climate change, and help communities adapt as climate change increases the risk of power outages from ice storms, hurricanes and wildfires. Yet regulations typically support utility profits over customer resilience, discouraging solar+storage sized to survive long outages. The urgency and severity of the climate catastrophe demand that regulations be reformed to grow resilient solar+storage.
Regulators have permitted and even required utilities to overbuild electricity generation, accepting added costs to ensure that emergency power is available. California requires utilities to have 15% more generating capacity available than the forecasted demand. Distributed generation lacks similar options.
Larger distributed solar+storage systems, which are needed to address a wider range of climate extremes, run afoul of current regulations that limit the amount of energy a distributed system can export. Limits on exports are needed, as existing infrastructure, utility organization, and regulatory structures were designed for energy to flow from centralized power plants to consumers, and for payments to flow from consumers to utilities.
When a distributed energy system exports large amounts of energy to the grid, the flow of power and payments are reversed. Grid infrastructure like fault protection sensors that detect excess current, and circuit breakers that open to prevent damage from excess current, historically look “upstream” toward the power plant. To protect against faults coming from distributed generation, additional sensors and new programming are required to look “downstream.” Until protective infrastructure is in place, regulators cannot support distributed energy that generates more power than the customer’s average use.
California provides a striking example. Billions of dollars paid by ratepayers to overbuild fossil-fuel powered peaker plants have failed to provide energy reliability. Yet proposed regulations would increase obstacles to distributed clean energy resilience.
The California Public Utility Commission’s proposed net metering decision cuts prices paid to solar exporters, and enacts the highest fees in the country to connect distributed energy to the utility grid. Industry and environmental advocates have argued against such fees, and Arizona recently ended a similar fee as an outdated economic drag that unfairly punished solar adopters.
Similarly, Florida’s net metering regulations have impeded the growth of distributed solar in the “Sunshine State,” and recent legislation continues the trend. Florida ranks fourth nationally in solar power, but it is twenty third in number of installations per capita — only about 10% is from residential installations and only 1% of households export power to the grid. Recently passed but subsequently vetoed legislation in Florida — written by Florida Power & Light — would have solidified their solar monopoly, reducing prices paid back to solar adopters and increasing fees for grid access.
These examples demonstrate two consistent barriers to resilient, distributed clean energy across the United States. (1) Prices for excess energy are often too low to incentivize renewables. Higher prices for exported energy — especially when exported at times when the utility needs more electricity — benefit both the adopter and the utility, incenting larger solar+storage, providing more renewable energy to the grid, and increasing local resilience. (2) Grid access fees based on installation size disincentivize larger solar+storage. However, some fees based on maximum power flow to and from a site may be justifiable, and can incentivize larger storage and more resilience.
Utilities and others often argue that expanding distributed clean energy creates challenges for energy infrastructure and for equity. Because utilities lose revenue when their generation is replaced, they are reluctant to invest in infrastructure that supports the growth of distributed generation. From an equity perspective, net metering has tended to benefit wealthier households and communities, as research shows persistently lower solar adoption in economically and environmentally disadvantaged communities.
But net metering policies that gut rooftop solar won’t help solve equitable adoption, and won’t help utilities address energy shortfalls and outage concerns arising from the shutdown of fossil plants and failure to bring enough renewables online. Connecticut and Hawaii, though, demonstrate how to overcome these concerns.
In February of 2021, Connecticut’s Public Utilities Regulatory Authority reinforced the importance of net metering in stabilizing and supporting distributed solar adoption, while also adding measures to support equitable adoption in low-income and disadvantaged communities. By ensuring a consistent, long-term price for exported energy, the new rules support continued growth in solar and battery adoption.
The rules allow homeowners to upsize their systems to prepare for future needs like electric vehicle charging, and conversion from gas to electric heating and cooking. Connecticut households with low incomes or in distressed communities are eligible for higher prices on the electricity they sell back to the grid, making solar energy more available to more communities. Low-income and distressed communities may still lack access to capital, financing, and home-ownership, all of which may still limit equitable adoption, but those are challenges that can (and must) be addressed outside the rate structure.
In Hawaii, after years of utility pushback on distributed solar, Hawaiian Electric is offering cash bonuses and retail prices for electricity put back on the grid, so long as that energy is exported in the evening hours when the grid needs more electricity (requiring solar+storage).
Hawaii offers an early view of the challenges many utilities will face as they retire fossil generation plants. When the utility faced challenges ramping up enough clean energy to replace fuel-based generation, they turned to household solar as a potential solution. When paired with batteries, ample Hawaiian sunlight delivers the needed power. This is true even in the evening, when demand is high, but the sun has set.
A key part of Hawaiian Electric’s plan is cash incentives to households that install storage and contract to deliver power to the grid. To make large-scale exports of distributed energy possible, the utility has also invested in and proposed additional grid management solutions that enable distributed solar to replace fossil generation. It remains to be seen if Hawaiian Electric can enroll enough households to meet energy needs. While higher incentives would likely further increase growth, the utility must still strive for affordable energy for all their customers.
Hawaii and Connecticut are exploring future technical and economic solutions, which California, Florida, and others can learn from and improve upon. Future improvements should include support for larger, interconnected solar+storage that can provide communities, especially disadvantaged communities, with resilient power even when the grid is down.
Distributed solar+storage can provide clean power when it is most needed on the grid, and locally when the grid is down. To meet climate goals and to survive a warming planet, the United States must triple renewable generation capacity by 2050 according to a recent report from the International Energy Agency.
Achieving this will require solar installation rates to increase four-fold. Large-scale solar will be key, but distributed solar+storage has a critical role to play in supporting greater energy resilience. Utility regulators must consider the value of more and larger solar+storage toward slowing warming and adapting to a warmer world, taking lessons and warnings from early adopters like Hawaii and Connecticut.
This is a contributed article by Patrick Murphy, a senior scientist at the nonprofit research institute PSE Healthy Energy.
This article was written by Patrick Murphy from Utility Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.